LITHUANIA PUSHES TO RETAIN/REBUILD NUCLEAR POWER

UNCLAS SECTION 01 OF 02 VILNIUS 000030

SIPDIS

STATE FOR EUR/NB, EUR/ERA, AND EB/ESC/IEC

SENSITIVE

E.O. 12958: N/A
TAGS: ENRG ECON LH
SUBJECT: LITHUANIA PUSHES TO RETAIN/REBUILD NUCLEAR POWER
PLANT, ENERGY SECURITY

REF: A. 2004 VILNIUS 1505

B. 2004 VILNIUS 1439


1. (U) SUMMARY: Lithuanian authorities are using the recent
Russia-Ukraine gas dispute as an action-forcing event to
build a new nuclear power plant and, possibly, to seek EU
permission to keep the Soviet-era Ignalina plant online
until a new facility is complete. Expectations are low that
Brussels will agree to release the GOL from its pre-
accession commitment to end operations in Ignalina by 2009,
but political momentum to keep Lithuania nuclear is growing.
End Summary.

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Keeping Lithuanian Lights On
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2. (U) The GOL decommissioned the first of the two reactors
at the country's Chernobyl-style Ignalina nuclear power
plant (INPP) in December 2004 (ref A). It committed to
close the second in 2009 as a precondition to EU membership.
Before the decommissioning of Unit I, the INPP generated
approximately 90 percent of the electricity Lithuania
consumed and enabled Lithuania to be a net exporter of
electricity. The second reactor currently generates about
two-thirds the total output that the two units produced
previously.


3. (U) President Valdas Adamkus announced January 5 that
Lithuania must consider constructing a new nuclear power
reactor at the INPP and to avoid increasing Lithuania's
energy dependence on Russia. Alluding to the recent Russia-
Ukraine gas-price crisis, Adamkus stated that those who have
gas and oil "weapons" can "not only blackmail an individual
country, but also paralyze half of a continent." Minister
of Economy Algirdas Dauksys, echoing Adamkus, declared
January 9 that Lithuania should make a decision on a new
reactor without delay. A new nuclear plant, he estimated,
will require an initial government outlay of 350 million
euros. The Economy Ministry has already indicated it
intends to invite 25 investors (including Westinghouse) to
compete to construct a new plant once the GOL gives the
project a nod. Dauksys said that Estonian and Latvian
energy companies have expressed interest in a joint project.
The Minister expects and will recommend that the Government
retain a minimum 34% stake in the new plant, which he
estimates will cost USD 3.6 billion.

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Keeping Ignalina Aglow
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4. (U) Lithuania's leaders are scrambling to develop a plan
to secure as best they can the country's electricity supply.
Prime Minister Brazauskas, following a January 6 special
meeting of representatives of Lithuania's energy sector,
told the press that the GOL had been unable to come to terms
with either the old or new Polish governments on
construction of an energy bridge that would link Lithuania
to the EU power grid. In a radio broadcast January 10,
Brazauskas said Lithuania should consider extending the life
of the Ignalina reactor. Pointing to the security and
safety upgrades to INPP, the PM suggested that the old
arguments for shutting down Ignalina no longer applied. He
alluded to the risk of dependence on Russia for oil and
natural gas supplies and delivery, remarking, "Things may
happen; we have to prepare for all possibilities." The PM
said he had "no objections" to construction of a new, modern
nuclear facility if the Baltic States determine a need for
additional energy resources.


5. (SBU) Opinions of members of parliament diverge.
Parliament is currently in special session with a limited
agenda, but most parties are talking about the need to
develop an energy strategy. On January 10, the
Conservatives and one independent MP introduced resolutions
calling for the government to initiate negotiations with the
EU on construction of a new reactor in Lithuania. Labor and
Social Democratic MPs told us their caucuses would take up
the issue before the general session begins in March. In
principle, Labor supports Dauksys' position on the need to
extend the life of the Unit 2 reactor, but opinions among
SocDems vary. Social Democrat Algirdas Paleckis told us
that he will recommend caution in taking on the construction
project, and worries about loss of credibility should
Lithuania seek an extension, but he admitted that most of
his party colleagues want to keep nuclear energy alive in
Lithuania. Some politicians also doubt Lithuania's ability
to manage the construction, waste disposal, and electricity
exporting that a new reactor would entail.

6. (U) All parliamentarians with whom we talked anticipate
difficulty in getting EU approval for either proposal. At
the same time, most saw recent events in Ukraine and the
German-Russian pipeline agreement as reason enough to take
up the discussion. Conservative Rasa Jukneviciene said it
would be important for all branches of government to adopt a
unified position and action plan before petitioning
Brussels.

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Comment
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7. (SBU) Lithuanian leaders have toyed with the idea of
building a new reactor almost since the day they agreed to
decommission their old ones. Current events have confirmed
their worst fears about increasing reliance on Russian
energy. Building a new reactor or keeping the old won't
make Lithuanians energy-independent, but it will allow them
to continue to generate electricity if supply of other
sources of fuel should stop. We think it likely that
Lithuanians' need for energy security will overcome concerns
about the political cost of seeking Brussels' support for
continued nuclear power generation here.
MULL