2011-09-27 Relevant Comment

Lately a lot of inexact information about State Enterprise Ignalina Nuclear Power Plant's (INPP) contract with international law company Taylor Wessing LLP for providing consulting services implementing key Ignalina nuclear power plant decommissioning projects have been presented in public space. In order to avoid the spread of inexact information about provided services and services tariffs, once again the attention should be fixed on following facts:

Contracts for the implementation of projects B1 (Interim Spent Fuel Storage Facility) and B2/3/4 (Solid Waste Management and Storage Facilities) were signed six years ago in accordance with English law despite of the fact that civil works of these projects are performed on Lithuanian territory. During the negotiation of the contracts, INPP did not employ English legal advisers for permanent consultations. Consultations were provided only by INPP Projects Management Group (PMG) - foreign technical engineering consultants who are not specialists of English law. These consultants were hired in accordance with the requirement of the European Bank for Reconstruction and Development (EBRD). For this reason, the contracts for projects B1 and B2/3/4 were not properly prepared to ensure Ignalina NPP's as well as Lithuania's interests.

Meanwhile project B1 implementing consortium GNS-NUKEM Technologies GmbH and project B2/3/4 implementing contractor NUKEM Technologies GmbH employ qualified lawyers and experts of English law. Therefore, in order to protect its as a customer's interests and to accelerate the implementation of the projects B1 and B2/3/4, Ignalina NPP announced international open tender for the projects B1 and B2/3/4 implementation assessment and provision of related services. On 11 August 2010, INPP signed a contract with the successful international law company Taylor Wessing LLP.

The opportunity to procure additional services, if required, has been provided both in the services provision contract as well as in the tender's procurement documents. After the inspection of these procurements Public Procurement Office has identified that Ignalina NPP as purchasing organization has not violated legal requirements and stated that signed contracts can be executed further. It should be noted that INPP has signed fixed rate contracts. Thus, final contract price depends on the final quantity of actually provided services. All the service-related expenses are included in the contractual hourly rate (490 Eur).

It should be indicated that according to this contract and additional agreements, executing legal analysis of the contracts of the projects B1 and B2/3/4 Taylor Wessing LLP provides continuous legal services which scope depends on the actions of consortium/contractor as well as on solving problems of the projects B1 and B2/3/4 and negotiations. Analysing the scope of provided and existing services, spent time and the amount of expense spent for legal services, it is necessary to consider the fact that the process of solving nuclear safety related problems of the project B1 as well as negotiations on the project B2/3/4 are hardly predictable. Ignalina NPP constantly receives new claims from the contractor related to projects B1 and B2/3/4 issues. Therefore, in order to properly assess these claims and protect INPP's interests, consultations of highly qualified English legal specialists are required.

Along with Taylor Wessing LLP and its sub-suppliers, Ignalina NPP's newly appointed projects management group accomplished a detailed analysis of Basic Design and performed works and identified essential matters of the project B1 implementation that do not satisfy technical requirements as well as a number of technological deviations from technical specification requirements in the construction of interim spent nuclear fuel storage facility. Namely due to the professional competence of the Taylor Wessing LLP and its sub-suppliers the optimal position in international disputes is chosen in order to ensure interests of INPP at the maximum. Due to the Taylor Wessing LLP assistance, above-mentioned problems were introduced at the summit of leaders in Brussels, Joint Steering Committee meeting in London and Donors Conference. Apart from donors countries, representatives of European Commission and Ignalina International Decommissioning Support Fund which is managed by the European Bank for Reconstruction and Development participated at this conference.

Since 11 August 2010 after INPP has signed the contract with Taylor Wessing LLP, the company together with its sub-suppliers provided services for the total sum of 9 586 543 LTL. In order to avoid any comments in the future that INPP is wasting money for legal consultations, it should to be noted that before the involvement of Taylor Wessing LLP into the negotiations between INPP and consortium and contractor, the price of project B1 rose for 79.6 million LTL and due to the 44 month delay INPP suffers huge losses. Also, because of the delay the whole Ignalina NPP decommissioning process is behind schedule. The value of the project B2/3/4 has already risen for 13.7 million LTL. In the first half of 2010 the contractor submitted an additional claim and demanded to increase the cost of the project additionally for 307 million LTL. In consideration of above-mentioned facts, it can be concluded that without the contribution of Taylor Wessing LLP Lithuania would fail to solve existing problems of key INPP decommissioning projects, to accelerate the process of projects implementation and to protect Lithuania's strategic interests.

Presently International Ignalina Decommissioning Support Fund (IIDSF) is administered by the European Bank for Reconstruction and Development. According to the signed contract between Lithuania and the EBRD concerning IIDSF, INPP has to employ consultants to supervise the implementation of the projects which are financed by the EBRD. It has to be emphasized that Ignalina NPP in order to save decommissioning funds notably reduces the number of consultants. For comparison: in the period of 2002-2010 (inclusive) 144.7 million LTL were spent on consultancy services what on an average composes 16.1 million LTL per year. In 2011 financing of consultancy services was reduced to 8.3 million LTL. The number of consultants: in 2002-2005 25 consultants worked at INPP, in 2006-2010 - 17 consultants, while in 2011 the number of consultants was reduced to 9. It is expected to reduce the number of consultants to 6 in 2012.

It should be underlined that experts of Swedish nuclear energy company SKB International AB were hired to assess the progress of the project B1 not by Ignalina NPP but the EBRD which finances their services. We remind that during the IIDSF Donors Assembly which was held on 8 August 2011 in London it was decided to impose international independent expertise in the case of a dispute between INPP and the contractor concerning technological issues of the project B1. Therefore, the EBRD has hired SKB International AB to assess the progress of the project B1. Final report of Swedish experts should be submitted during the next Donors' Assembly at the end of this year.

Daiva Rimašauskaitė,
Head of Communication- Spokesperson
El. p. daiva.rimasauskaite@iae.lt
Tel. (8-386) 24442

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