July 15 (Bloomberg) -- Lithuania may have won an “attractive proposal” from Hitachi Ltd. to build a nuclear power plant because of Germany’s decision to give up atomic energy, said DnB Nord Bank economist Jekaterina Rojaka.
The government picked Hitachi Ltd. together with its Hitachi-GE Nuclear Energy Ltd., a joint venture with General Electric Co., yesterday for what is expected to be the biggest investment project in the Baltic region in two decades. Lithuania is seeking to cut its dependence on energy imports after closing the Soviet-era Ignalina nuclear facility at the end of 2009 as part of its agreement to join the European Union.
Germany unexpectedly boosted Lithuania’s leverage in the bidding process to build the planned Visaginas plant when Chancellor Angela Merkel decided in May to shut more than 25 percent of the country’s atomic capacity after an earthquake in Japan triggered a meltdown at a plant in Fukushima. Germany plans to close all of its nuclear reactors by 2022.
“That’s good timing for Lithuania,” Rojaka said by phone from Vilnius. “Germany is exiting nuclear energy, which opens more opportunities for Lithuania to pick an investor and also increases the interest of investors in the Lithuanian project.”
The Baltic region needs to diversify its energy resources after energy costs soared because of an increasing dependence on Russian energy sources. Lithuania imports almost 50 percent of its power. Russia’s OAO Gazprom supplies all of its gas.
Lithuania picked Hitachi’s bid over Westinghouse Electric Corp. because it was “the most-economically attractive proposal,” Deputy Energy Minister Romas Svedas said at a news conference yesterday. He declined to disclose preliminary costs of the investment.
Hitachi shares rose the most in a week, adding 1.1 percent today to 484 yen in Tokyo.
Both bidding investors saw the project as “commercially viable and attractive because of decisions in Germany” which is turning the country into a power importer, Svedas told Verslo Zinios newspaper in an interview today.
The government, which has said the investor may be offered as much as a 51 percent stake in the plant, aims to sign an agreement with Hitachi by the end of the year and to complete construction by the end of 2020, he said.
Path for Region
“For Lithuania and the whole region it is important to have independent capacity to generate electricity,” Prime Minister Andrius Kubilius said on June 1. “We are choosing a path that we believe is the best for Lithuania and for the whole region.”
Hitachi offered its ABWR reactor technology with a proposed capacity of 1,300 megawatts in output at the projected plant in Visaginas, about 160 kilometers (100 miles) northeast of the capital.
A tender for a strategic investor to build a nuclear plant failed last year after Korea Electric Power Corp withdrew its bid. Lithuania continued to look for an investor through direct negotiations.
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