Bloomberg News

PGE Suspends Plans to Help Build Lithuanian Nuclear Plant

December 12, 2011

(Updates with company comment in second paragraph.)

Dec. 9 (Bloomberg) -- PGE SA, Poland’s largest utility, dropped plans to participate in building a nuclear power plant in Lithuania as it focuses on other investment projects.

“Considering other key projects of the group, participation in the project has been suspended before any formal commitments were made,” Chief Executive Officer Tomasz Zadroga said today in an e-mailed statement.

Lukasz Witkowski, a company spokesman, declined further comment. PGE is also halting talks with OAO Inter RAO UES to buy electricity from Russia’s Kaliningrad region bordering Poland, the Warsaw-based company said in the statement.

PGE plans to build Poland’s first nuclear plant by 2020 and expand its generating capacity by adding new power units fed by coal and natural gas. The company expects its reactors in the central European country to be “much more profitable” than the project in Lithuania, Zadroga said on TVN CNBC.

In November, the company picked contractors to add 1,800 megawatts of coal-fired power capacity at its Opole plant for 9.4 billion zloty ($2.8 billion). While growing power demand, rising electricity prices and planned decommissioning of old less-efficient power units will make the investment profitable, PGE’s new long-term strategy will have to reflect lower growth of demand for energy and a more difficult situation on the credit markets, Zadroga said earlier this month.

Lithuania had planned to build a new nuclear plant in Visaginas for as much as 5 billion euros ($6.7 billion) by 2020 together with Poland and its two Baltic neighbors Latvia and Estonia. Talks with Poland over the construction have been ongoing since at least 2006.

Lithuania picked Japan’s Hitachi Ltd. in July as an investor and technology provider to help build the atomic plant in the country to diversify the region’s energy resources. The Baltic nation closed its only, Soviet-era Ignalina nuclear facility at the end of 2009 to comply with accession pledges to the European Union.

--Editors: Rob Verdonck, Randall Hackley

To contact the reporter on this story: Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net or Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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