Montenegro: A2A Italians remain in Power company EPCG, if conditions are meet by Government

Published on 20. November 2014., SEE Energy News

Conditions of A2A are secure profitability of invested capital, management autonomy and guarantees for regulatory framework. The President of the Italian company A2A Giovanni Valoti said that the agreement with the Montenegrin Government would be restored only if were completed the requests set by the Italian side.

A2A is a co-owner of the Electric Power Industry of Montenegro (EPCG) with 41.7 percent and manages by the company, in which the state has a 57 percent of stake, since the end of 2009th. Cooperation Agreement with the Government expires at the end of December.

“We consider the possibility of eventual renewal of the agreement for another five years, but we have set three conditions: to ensure the profitability of invested capital, to provide autonomy in the term of the companymanagementand that there are no guarantees with regard to the regulatory framework. We will be back in Montenegro before the end of the year with the intention to renew the agreement, but if we do not get a satisfactory answer, it is possible to letour share to the government”, said Valoti to the journalists in Italy after the presentation of financial results A2A.

The majority shareholders of the Italian power utility company are Brescia and Milan.

Severalmediahave transferrednews of positionrelated to work in Montenegro, including the “Corriere della Sera” in the local edition for Brescia, where thereis comment that “given the disappointing results, it was not told that the contract will be renewed”.

The regulatory framework that also dictates the electricitypricealso goes in the favor of the EPCG because the electricityprice for households reached ten cents per kilowatt-hour, and three years is adjusted upward.

According to the contract, there is a possibility that the Government buys shares of A2A, but it would bringthe over-indebted state coffers in a serious situation

According to the presented report, the company A2A decreased total debt by 11 percent (408 MEUR) to 3.4 billion EURduring the nine months of this year.

Shareholders A2A are not satisfied that the package of EPCGshares paid about 430 MEUR, and now, although it was thought about it, could not sell it for that much. Their management has not returnedthat investment, leading Montenegrin Company.

In the negotiations between the Government of Montenegro and A2A is disputable that Italians do not want EPCG to participate in the construction of the second unit of the thermal power plant (TPP) Pljevlja, because they believe that now is not the time to invest 277 to 356 MEUR, how much was offered for the TPP construction. The government announced that the country’s important energy investment.

Partners do not agree either on the further electricitysupplyof Aluminum Plant and the new owner of Uniprom, Veselin Pejovic.

A2A do not agree that the electricity is cheaper for sale to KAP because they got burned with the previous owner, the Russian CEAC, when KAP remained in debt more than 45 MEUR and that they cannot collect it in bankrupt.

It was announced from the Government in early October, after talks with Valoti and executive director of A2A Luca Camerano,that sought to redefine relations with a partner for EPCG, but that the investment areessential for that.

Parliamentary Committee on Anti-Corruption requires that the Chief State Prosecutor Ivica Stankovic examines whether there was corruption in the dubious consulting services of approximately 15 MEUR, which A2A and associated companiesprovided toEPCG.

They did not meet what was contracted; the impact analysis is expected by the end of the month

From the Government admitted that A2A did not fulfill the five-year cooperation agreement.

They should submit an analysis of what they have achieved from contractual obligationsduring this month.

Deputy Prime Minister Vujica Lazovic said that the further cooperation with the Italian companywould depend on this.

Italians cannot boast of investment in the power grid, because they did not improve the consumers’supply. They either did not meet condition of profit, rate of debtscollection, reduction of network losses, which cost consumers.