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Lietuvos Energija CEO Dalius Misiunas said that the Commission's approval was very important for the financing of the plant, which is one of the largest projects in the country's largest heating sector in recent years.

"It will come in the form of national support that Lithuania receives from EU funds. It needed approval from the European Commission. It is a very important step. With this approval, we now have a complete financing model in place," he told.

It was announced in June that the European Investment Bank (EIB) would provide a 190-mln-euro loan for the project.

The Vilnius cogeneration plant is expected to be built by the end of 2018. It will consist of two units: one fuelled by non-recyclable municipal waste and the other by biomass. The waste-fired unit will be able to produce 18 megawatts of electrical power and 53 MW of thermal power, and the biomass unit will have a capacity of 70 MW of electrical power and 174 MW of thermal power.

The plant is to be built by a consortium led by Germany's Steinmueller Babcock Environment and including Poland's construction group Budimex and Lithuania's Kauno Dujotieko Statyba under a 178.3-mln-euro contract. Its biofuel burning equipment and supplies infrastructure is to be installed by Poland's Rafako for almost 150 mln euros.