Poland and Lithuania have finally signed an agreement that paves the way for a landmark project interconnecting the two countries’ electricity systems.

Lithuania’s Lietuvos Energija and Polska Grup Energetyczna of Poland have created a joint venture to implement the EUR 237 million project that will improve the operation and reliability of Baltic power grids as well as connect Lithuania to the European Union via Poland.

“The interconnection project of Lithuanian and Polish power systems will make it possible to complete the Baltic Energy Ring, interconnecting Lithuanian, Latvian, Estonian, Finnish, Swedish and Polish power systems,” said Rymantas Juozaitis, General Director of Lietuvos Energija AB. “This will help ensure the operation security and reliability of Baltic power grids, their integration into a common European power market and connection to UCTE system, while for Poland it will help secure power supply for the country’s north-eastern region.”

The project involves the construction of a 400 kV link as well as reinforcing both Poland’s and Lithuania’s power grids. It will be completed by 2015 and forms a key part of plans to build a new nuclear power plant at Ignalina.

The new joint venture will start operations in April 2008, initially conducting an environmental impact assessment, preparing technical documents and approving new routes for the power lines.

The interconnection is expected to require investments of EUR 71 million in Poland and EUR 166 million in Lithuania. On top of this, additional investments of EUR 371 million in Poland and EUR95 million in Lithuania will be needed to reinforce the countries’ domestic power grids.

The two companies will build a 154 km 400 k double-circuit power transmission line from Alytus in Lithuania to Elk in Poland. The EU has given the project priority status.

Poland, Lithuania, Estonia and Latvia are planning to construct a new nuclear power plant at Ignalina. Lithuania had agreed to close the existing Russian built Ignalina nuclear plant by 2009 as a condition of its entry to the EU, and needs to secure power supplies to make up the expected shortfall.