Ignalina Nuclear Power Plant: Relevant Comment

1. Regarding State Enterprise Ignalina Nuclear Power Plant Project B2/3/4 Contract Amendment:

On 21 December 2011, Solution and Further Actions MoM was signed under which for the first time the fixed negotiating Parties’ position on Project B2/3/4 (Solid Radioactive Waste Management and Storage Facility) Contract Amendment’s price increase was stated. Responsible Officials of the Ministry of Energy and then Director General of INPP were the MoM signing Parties from Lithuania side. Even the condition that the agreement is conditional and non-binding until the Heads of Settlement Terms will be signed by both Parties and until Project B2/3/4 Contract Amendment will not come into force was included in the MoM, it created de facto indispensable precedent on negotiations for the value of the Project B2/3/4 Contract Amendment; the representatives of European Union bodies interpret the signed document as the agreement of the Republic of Lithuania to pay additional sums for the Contractor of the Project B2/3/4. Based on the progress of negotiations and interim results reached, 29 March 2012 the Parties of the Project B2/3/4 signed Heads of Settlement Terms foreseeing the Project B2/3/4 Contract Amendment value and setting the preconditions for signing the Contract Amendment.

In the view of situation created, all possible theoretical scenarios for the continuity of the Project B2/3/4 were analyzed. The analyze of the scenarios has shown that the most rational scenario is “Signing of the Project B2/3/4 Contract Amendment”, which is currently more cost effective, legally superior and less risky to the Enterprise and the Republic of Lithuania rather than refusal to conclude the Contract Amendment and attend to continue the Project B2/3/4 within the frames of the existing Contract. Only after the approval the Republic of Lithuania to continue the Project B2/3/4 implementation with the current Contractor by signing the Contract Amendment, 18 December 2013 Ignalina NPP and the Project B2/3/4 Contractor Nukem Technologies GmbH (the Contractor) signed the Project B2/3/4 Contract Amendment according to which the Project implementation will remain to be continued by the same Contractor and the Contractor will be motivated to implement the Project under the new agreed and approved Program of Performance linked to the monthly payment schedule; it shall ensure further constructive Project B2/3/4 implementation.

It shall be noted that before the above mentioned Contract Amendment was signed there was no relevant Program of Performance according to which the Contractor would be obliged to implement the Project. Without the Program of Performance the Enterprise had no Project B2/3/4 Contract implementation control tools that could be used for motivating the Contractor to implement their scope of works on time i.e., the Enterprise was not in the position to require contractual penalties (fines). The Contractor was implementing the work very slowly placing minor resources. The situation had a negative impact on the Final decommissioning plan implementation and raised danger of suspension or termination of European Union funding for this and other projects.

2. Regarding Services Provision Contract with the international Company Taylor Wessing LLP:

INPP wants to pay the attention that Services Provision Contract (the Contract) with the international Company Taylor Wessing LLP (TW) was signed 11th August 2010 only after the open public tender procurement procedures meeting the requirements of the law on public procurement of the Republic of Lithuania were fulfilled. Under the terms of the Contract, TW had to inform INPP about foreseen Agreement with the Subcontractor providing official letter guarantying Subcontractor’s compliance with the qualification requirements raised. Based on the condition mentioned above, TW sent a written appeal to INPP regarding intend to hire Law Firm Tark Grunte Sutkiene and Partners (TGS) as a local Subcontractor with the confirmation that TGS meets the qualification requirements and offer to reduce the price applicable to TGS to 115 EUR. In order to reduce the services provision price, all necessary procedures for changing the Subcontractor and price were implemented. In December 2011 INPP agreed to use TGS as a Subcontractor and to reduce the existing price, and applied to the Public Procurement Office with the request for hourly rate reduction applicable to the new Subcontractor. In January 2012 the permission to change the rate was received from the Public Procurement Office.

We repeatedly want to pay the attention that INPP has implemented all necessary procedures for the rate reduction for Subcontractor in order to use the Enterprise’s funds on a reasonable manner. Only then formalization for ordering TGS services according to additional procedures for ordering services under the contractual terms was stared. Services provided by TGS from January to December 2012 were paid under the 155 EUR hourly rate and TGS has never been paid under the generally applicable hourly rate to TW.

TGS as the Subcontractor of TW was providing services to INPP until December 2012, however, it shall be noted that tasks formulated in the second half of the year 2012 to TGS were reduced significantly. During the period from January 2013 till the TW Contract termination date and after changes in the Management of Ministry of Energy and the Enterprise, i.e. until the August 2013, services from TGS as the Subcontractor of TW were not ordered.