Montenegro: Environmentally oriented reconstruction of TPP Pljevlja planned

, SEE Energy News

Montenegrin Minister of Economy Dragica Sekulic said in an interview that an environmentally oriented reconstruction of coal-fired thermal power plant Pljevlja, worth some 40 million euros, will be completed over the period of next three years.

According to Minister Sekulic, after the reconstruction, the operation of TPP Pljevlja will be optimized and all conditions for its operation at full capacity will be met. She also added that the final decision on the construction of second unit at the plant has not been reached yet.

Regarding oil and gas exploration in the Adriatic Sea, Minister Sekulic stressed that the project is not in collision with Montenegro being a tourist country, adding that the project for submarine electricity cable to Italy will position Montenegro as an energy hub and will create conditions for increased production of electricity from renewable sources. She said that four new small hydropower plants (SHPP) will be commissioned next year, while in 2017, the first Montenegrin wind farm – Krnovo has been put into operation, as well as three SHPPs.

In September 2016, a contract for the construction of second unit at TPP Pljevlja worth 324.5 million euros between Montenegrin power utility EPCG and Czech company Skoda Praha has been signed. It marked the completion of a two-year period of negotiations and this will be the first major energy facility to built in Montenegro in the last 35 years. Last year, the Government selected the offer of Czech company Skoda Praha as the best on public tender for the construction of the second unit at TPP Pljevlja. Skoda Praha offered to build 254 MW unit for 338.5 million euros, and to secure a loan for 85 % of the required investment. However, due to the request for additional works, the cost offered by the Czech company increased to 359.4 million euros, but the Government managed to lower the price by some 25 million euros through the negotiations, so the final price is 324.5 million euros. However, in October same year, Czech Export Bank (CEB) informed the representatives of Montenegrin power utility EPCG and the company Skoda Praha that the bank is having trouble providing financing for the project for the construction of second unit at TPP Pljevlja. The bank cited difficulties in obtaining Government guarantees as the main problem, because the Government previously refused the bank’s request that the state should be a guarantor for the loan that should be used for financing the project. Czech Export Bank insisted on obtaining guarantees from both the state and EPCG during negotiations, but the state refused to provide any guarantees since it was not a requirement in the public tender in 2013.

In February 2017, Skoda Praha has selected US company General Electric as its partner in the project, also submitting an alternative proposal for financing the project. Negotiations on closing the financial construction of the project are still ongoing.