Lithuania Sees GDP Boost From Building Nuclear Plant

Lithuania predicts the construction of a planned nuclear-power plant, its biggest investment since the end of communism two decades ago, to boost economic growth by 0.7 percentage points a year.

The plant may cost 17.4 billion litai ($6.5 billion), the government in Vilnius said in an e-mailed statement today. The construction will create 6,000 jobs and 5 billion litai of orders for local businesses.

Lithuania wants to build the plant, with partners in Estonia and Latvia, to reduce the region’s dependence on energy imports from Russia. The Baltic country imports 62 percent of its electricity, the most in the European Union, after closing the Soviet-built Ignalina nuclear plant in 2009 to comply with European Union rules.

“This is a big step toward energy independence,” said Prime Minister Andrius Kubilius at a press conference in Vilnius today.

The government signed a concession agreement with Hitachi Ltd. (6501), Japan’s second-largest builder of nuclear reactors, for the building of a nuclear power plant on March 30. The accord requires the approval of Lithuania’s parliament by June 28.

Lithuania plans to hold a preliminary stake of 38 percent in the Visaginas plant, Economy Minister Arvydas Sekmokas said at the same press conference today. Estonia’s Eesti Energia AS may hold 22 percent in the atomic plant, while Latvia’s Latvenergo and Hitachi will each hold 20 percent, he said.

The new 1,300-megawatt reactor in Visaginas will probably start operating between 2020 and 2022. The price of electricity is estimated to average 18 centai ($0.06) per kilowatt hour, the government said.

The Lithuanian government is continuing talks with neighboring Poland and the project remains open for PGE SA, Poland’s largest utility, Sekmokas said. PGE dropped plans to participate in the construction in December as the company focuses on other investment projects.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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