EU funds frozen for Lithuanian nuclear decommissioning

(VILNIUS) - European Union funding for the decommissioning of Lithuania's Soviet-era nuclear reactor has been frozen to raise pressure to wrap up talks on the operation, a top official said Friday amid growing irritation over delays.

"The decision was taken to suspend financing," EU taxation commissioner Algirdas Semeta told journalists during a visit to the Baltic state.

"The donors believe that freeze of financing could help as stimulus to finally conclude the negotiations," added Semeta, Lithuania's member of the EU executive.

In a separate statement, the European Commission said the suspension could be lifted as soon as Lithuania settles a dispute with a consortium of German companies GNS and Nukem, which were tasked with the decommissioning project.

The formal decision to freeze support was taken by European Bank for Reconstruction and Development, which administers the funding, it said.

In December 2009, Lithuania closed its only nuclear power plant, located near Ignalina in the country's northeast.

Shutting down the plant was a condition of Lithuania's admission to the EU in 2004.

The EU has committed 1.37 billion euros ($1.79 billion) to the end of 2013 for the decommissioning project.

In the latest proposal for its new budget, starting 2014, the EU has offered Lithuania another 400 million euros.

The Lithuanian government has acknowledged delays in the project, which includes the construction of storage facilities for spent fuel.

But Vilnius insisted that the responsibility falls on the main contractor, Russian-owned German company Nukem.

The closed plant was built when Lithuania was ruled by the Soviet Union, and remained the main supplier of power for the nation of three million in the wake of independence in 1990.

Lithuania has reopened several mothballed gas-fired plants to fill the gap since the shutdown.

Plans to build a replacement atomic plant near the former site by 2020 -- in a project with fellow Baltic states Latvia and Estonia -- have proven sluggish, however, with Lithuania's new centre-left government saying its needs to reconsider the deal.