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Lithuania counts down to nuclear shutdown

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(VILNIUS) - Lithuania braced for the EU-ordered shutdown of a key nuclear plant on Thursday, a move set to push up electricity prices in a deep economic crisis and leave it counting on former master Moscow for power.

At 11:00 pm (2100 GMT), the last reactor was due to go offline at the 26-year-old Soviet-era plant near the eastern town of Visaginas, which provides 70 percent of the Baltic state's electricity.

It is similar to the one that exploded at Chernobyl in then-Soviet Ukraine in 1986, the world's worst nuclear accident.

Lithuania, which won independence from the Soviet bloc in 1991, agreed to shut the plant by 2010 in order to win admission to the EU in May 2004. One of the two reactors was closed in December 2004.

Vilnius subsequently tried and failed to convince Brussels to allow it to keep the plant running until a replacement was ready -- something not expected until 2018-2020.

The country of 3.3 million people is now facing a surge in power prices from January 1: 30 percent for households and 20 percent for companies.

That is bad news amid one of the world's deepest economic crises.

Lithuania earned a reputation as an economic "tiger" after joining the EU, with rising wages, easy credit and money sent home by emigrants fuelling a boom.

But it was hit hard as the global crisis battered key export markets elsewhere in the EU, plus Russia.

Its economy has shrunk by 15.2 percent this year, the government estimates, and the nuclear shutdown could dent its performance in 2010, shaving up to one percentage point off gross domestic product, experts warn.

Violeta Klyviene, an analyst at Danske Bank in Vilnius, told AFP that individuals and businesses would "feel the aftershock" of the shutdown. She said the economy could shrink by 4.5 percent in 2010.

The nuclear plant's director Viktor Sevaldin came from Russia to work there on the eve of its opening in 1983 and has stayed ever since.

"For years, nuclear power here was something normal and invisible. In the coming months, we're going to realise what we've lost," he told AFP.

While closing a plant that generates the bulk of a country's power may seem to raise the spectre of a massive electricity shortfall, Vilnius has long had plans to plug the gap.

"I can offer assurances that after the shutdown, Lithuania won't lack electricity," said Prime Minister Andrius Kubilius, who was elected in October 2008 and opposed last-ditch attempts to extend the plant's life.

Lithuania has turned to mothballed gas and oil-fired power stations. But the former will have to rely on supplies from Russia, whose relations with Lithuania are rocky.

"The Lithuanian energy system was and is dependent on Russia, because our energy sources, our supply of gas and power, are tied to that country," President Dalia Grybauskaite told the Baltic News Service.

Moscow's critics often accuse it of using energy as a political tool -- although Grybauskaite, in power since July, has adopted a softer line than her predecessors.

Russia has cut off oil to Lithuania in the past, blaming repairs to a key pipeline -- but critics noted it was after Vilnius sold Lithuania's only refinery to a Polish, rather than Russian, buyer.

In another Soviet legacy, Lithuania is connected to Russia's power grid but not to those of fellow members of the 27-nation EU.

It has signed a power deal with fellow Baltic state Estonia, and, beyond the EU, with Ukraine -- whose electricity goes via Russia.

The role of Russia is not set to last, however.

Lithuania plans hook-ups with the Polish and Swedish power grids, also enabling electricity imports from elsewhere in the EU.

On December 8, it also launched the tender for a new nuclear plant, a project involving Poland, Latvia and Estonia and expected to be ready by 2018-2020.

Construction is forecast to cost three to five billion euros (4.3 to 7.2 billion dollars).

Decommissioning the existing plant is expected to take 25 years and cost around one billion euros.

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