Lithuania Announces Concession Tender for Investments in New Nuclear Power Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--Visagino Atomine Elektrine UAB (VAE) (Vilnius, Lithuania), the special projects company created to oversee the construction of a new nuclear power plant in Visaginas, Lithuania, has announced a concession tender for investments in the new plant.

VAE was set up in 2008 by the national power companies of Lithuania, Estonia, Latvia and Poland--Lietuvos Energija AB (Vilnius, Lithuania), Estee Energia AS (Tallin, Estonia), Latvenergo (Riga, Latvia), and PSE-Operator SA (Warsaw, Poland)--following an invitation by the Lithuanian government in 2006 to invest in the design and construction of the new plant. VAE is owned 51% by Lithuania, while the partner countries each hold 16.3% stakes.

VAE will accept bids for the project until January 29, 2010, and will then select the two best bids. Talks will be held with these bidders, and VAE hopes to conclude talks on the concession agreement within six months. The winning bidder will be offered a majority ownership in the company that will operate the plant.

VAE will be looking for bidders that have extensive experience in nuclear power plant operation and electricity generation. Bidders that fit this profile are expected to include Spanish energy company Iberdrola Ingenieria y Construccion SA, a wholly owned subsidiary of Iberdrola SA (OTC:IBDRY) (Bilbao, Spain); German power and gas company E.ON AG (OTC:EONGY) (Dusseldorf); and GDF Suez SA (EPA:GSZ) (Paris, France).

Other possible contenders could include RWE AG (OTC:RWEOY) (Essen, Germany), Electricite de France SA (EPA:EDF) (Paris), and the Vattenfall AB (Stockholm, Sweden).

The Ignalina nuclear power plant has supplied up to 70% of Lithuania's electricity. However, under an agreement made as part of Lithuania's entry into the European Union in May 2004, this plant is scheduled to be shut down at the end of this year. Membership in the E.U. was conditional on the decommissioning of the power plant, and Unit 1 was shut down December 31, 2004, while Unit 2 is scheduled for closure at the end of this year.

The new nuclear power plant proposed by VAE is expected to have two or three reactors with a power-generating capacity of up to 3,400 megawatts. The total cost is estimated to be between 3 billion and 5 billion euros ($4.3 billion-$7.2 billion), depending on the number of reactors and the technology used. The new plant is expected to be located close to the existing Ignalina power plant, and two possible sites south of the Ignalina site are currently undergoing environmental audits and assessment. These exercises are scheduled for completion at the end of this year.

VAE hopes to complete negotiations with the strategic investors and partner countries by the autumn of next year. The schedule calls for the plant to be constructed and operational between 2015 and 2017.

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