Tiesiogiai

Tiesiogiai po gaisro Paneriuose: ugniagesių vado ir oro užterštumo tyrėjų komentaraiTiesiogiai po gaisro Paneriuose: ugniagesių vado ir oro užterštumo tyrėjų komentarai

2012 06 29

Visaginas Nuclear Power Plant – what's in it for Lithuanian businesses?

The government tries to lure Lithuanian businesspeople with multi-billion contracts for Visaginas Nuclear Power Plant (VNP), yet what is often being left out is the fact that they will have to compete with hundreds or even thousands of bigger and more-experienced competitors from abroad. According to the most generous estimates, Lithuanians will only slice one third of the pie.
Daugiausia darbo Visagine turės statybininkai, bet lietuviams teks tik pagalbininkų vaidmuo.
Builders will get much work in Visaginas, but only some of them will be Lithuanians. / Andriaus Ufarto/BFL nuotr.

The plant is the biggest infrastructural project in the region in decades. Its extent is estimated at 17-18 billion litas (5 billion euros), but it could easily top 23.5 billion (6.8 billion euros) if we take into account interest, inflation, and currency exchange fluctuations. The sum sounds impressive but if Lithuanian businesspeople wish to get some of the money, they must start doing homework well before actual calls for tenders are announced, according to Minister of Economy Rimantas Žylius.

Minister calls to join forces

There seem to be serious obstacles waiting ahead: Lithuanians have no experience in nuclear construction, their capacities are comparatively small, while international competitors are aplenty. Vilnius-based ambassadors are already making inquiries about the project, there are many international events scheduled to discuss the topic.

The leading contractors will most likely be foreigners who will hire Lithuanians for smaller tasks only. “You have an exceptional opportunity to introduce yourselves to foreign companies, to make partnerships, employ yourself as liaisons between them and the power plant,” Žylius points out the silver lining. “It will be your hour of fame, you will be very interesting to international companies.”

However, he warns against putting on pink glasses. “We are too small,” the minister notes. “Lithuanian companies will have to look for partners, since our technologies will simply not do. In order to get a bigger share of contracts, they'll need to find partners for joint tenders. Partnership will be the keyword in VNP construction. I know from my own experience that Lithuanian companies are not very good at working in partnerships. We ship exports to China, but some say: no, we are not going with them, we are competitors. Competitors in the Chinese market! This is not sport, it's business. The nuclear plant is a project of so massive dimensions that we will only win in concert, not separately.”

VNP director Rimantas Vaitkus agrees: “Cooperation is one of the main conditions as tasks will be of extraordinary dimensions. Hitachi keeps stressing this point to us. They are going to work with familiar contractors – so we are going to deal with both Hitachi and one of the world's big construction companies that knows how to meet deadlines and budget requirements.”

The bulk going to foreigners

After Lithuania signs a concession agreement with Hitachi, what follows is a 236-million-euro (980 million litas) contract for designing works and a call for tenders from construction contractors. It is clear even now that Lithuanian companies might not even bother.

The construction is projected to conclude by 2020-2022. In the interim, 4 to 5 billion litas (1-1.5 billion euros) in contracts are promised to various businesses. Half of it could go to construction companies, another 800 million litas – to designing, licensing, and engineering service providers.

Local businesses, mostly transport and construction companies, could at best provide 30 percent of all services, so the bulk of the massive revenue will leave the country. According to the Ministry of Economy, national and regional companies have the capacity to provide services in designing, site preparation, general construction, installation, to supply auxiliary equipment and construction materials.

In addition to that, there will be a need for additional services and infrastructure, directly unrelated to the construction: hotels, cafés, roads. The value of these services are harder to estimate: “While Ignalina Nuclear Power Plant was working, it provided a living for the entire town. Construction is a great boost for the local economy,” Vaitkus told 15min.

He believes that “the extent of construction works is much to big for any of our companies to tackle it separately.” Lithuanian companies, however, are staffed with local people who know the country's laws and work ethics and can offer other advantages. However, public procurement will be aimed at finding the best price, so there can be no talk of barring foreign contestants.

The government quotes one more figure to win public support – the power plant construction should create up to six thousand new jobs in the region. However, Linas Vainius, spokesman for environmental association Atgaja, doubts it, pointing to Finland's experience. According to him, when Finland was building a nuclear power plant, only 23 percent of the workforce were Finns and only about a fourth of investment remained in the country. As Vaitkus has put it, the 6-thousand workforce is expected during the construction peak, not the entire period.

The Ministry of Economy and public agency Enterprise Lithuania (Versli Lietuva) is planning to start a programme for engineering and construction companies in autumn. Part of the expense for VNP preparations – like acquiring required certificates – are promised to be covered by EU structural funds (a total of 7 million litas). Talks are being held with the Ministry of Social Security and Labour on assistance for employee training.

All companies looking to take part in the plant construction can sign up on www.hitachiasd.com

Production in Poland?

Besides lack of experience and resources, another factor dwarfing Lithuanian ambitions for multi-billion contracts is the strategy of Hitachi itself. In March, the Verslo Žinios daily reported that the Japanese were planning to produce power plant component parts in Poland. Hitachi does not even consider investing in Lithuania, as it has a subsidiary in Poland that will be charged with making Visaginas Nuclear Power Plant component parts to be transported to Lithuania.

Polish GE Energy, owned by Hitachi, produces large-scale steel modules for power plants. The production is usually based in shipyards from where finished products are shipped by sea to the site of the plant. Poles are already competing for contracts in Finland's new power block project.

More ambition than expertise

Henrikas Mykolaitis, director and vice-president of Lithuania's engineering industry association Linpra, says that domestic companies are so eager to be part of the VNP project not only because it promises generous income but also because of opportunities for gaining new experience and growth.

linpra.lt nuotr./Henrikas Mykolaitis
linpra.lt nuotr./Henrikas Mykolaitis

The association unites over 80 companies working in metallurgy, machine and equipment production, electronics and electrical engineering. Representatives of these industries have shown interest in the way a nuclear power plant construction is developing in Finland, where over 5 thousand companies are involved, up to 2 thousand working at once. Implementing such projects requires multi-level organization, where one contractor hires others.

Mykolaitis speculates that the Japanese will take charge of the so-called reactor island themselves, for security and efficiency reasons, while Lithuanians could undertake more basic construction works, like setting up the site, laying concrete, armature, supplying equipment and installation works. “We will try to get involved according to our capacities. There are companies with great potential,” he told 15min.

Back in spring, Linpra signed agreements with the Builder Association, the Lithuanian Energy Institute to cooperate in their preparations for the VNP project. They also maintain links with Finland's Nuclear Energy Suppliers Association.

Whether or not Lithuanians will manage to slice the promised 30 percent depends on how companies prepare themselves for work within complex structures. Not only will they be required to get certificates, employ competent specialists and skilled workers, but also do everything according to tight schedules with some tasks to be completed within days or even hours. When contractors fail to meet deadlines, a lack of workforce or late suppliers will not be an acceptable excuse.

“Hundreds of Polish and Czech companies are working in Finland. They are looking forward for the beginning of construction here. There are plenty of experienced competitors and they are up-and-doing. Therefore we must do our homework too. The money won't be easy to get, it won't be enough simply to buy cheap and sell dear to get the profit. A skilled and responsible workforce is needed. In order to achieve the required level of expertise, companies, like sports teams, will need to work hard and invest into themselves,” Mykolaitis warns.

The Linpra director would like to see the state coming to assistance. Many Lithuanian companies, he says, lack confidence and are likely to not even compete for contracts or invest into preparation. “We need to encourage companies to be ambitious – to improve their management, technology in order to successfully compete with foreigners. The state will get benefit from it too: there will be new jobs, additional tax money,” says Mykolaitis quoting Finland's experience.

He says Lithuanian companies are definitely qualified enough to take part in the VNP project. “The turnover of our industry is about 7 billion litas (2 billion euros) annually; that is likely to be Lithuania's share in the power plant. So our engineering industry builds a nuclear power plant each year. The only problem is our lack of young specialists who are trained and capable of joining in instantly,” says Mykolaitis.

Scale of construction

According to data provided by the company administering the VNP project, the estimates for materials and components needed for the construction are the following:

420 thousand cubic metres of high-quality concrete

70 thousand tons of steel

2.5 thousand kilometres of electric wire

210 kilometres of pipelines

36 thousand valves

870 pumps

In addition to that, the project will require a big army of skilled workforce. The number of people working on the construction will vary from stage to stage. The likely estimates are:

900 jobs in management

3,300 jobs for skilled and semi-skilled labour

800 jobs for unskilled labour

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