Montenegro exclusive: CEZ Skoda Praha, Lower price for new build TPP-a matter for negotiation with the EPCG, the report

Published on 24. December 2013., SEE Energy News

Cooperation and possibly lowering prices from 329.5 MEUR for the TPP, in the words of Daniel Jiricka, will be “the issue of talks with the Montenegro energy company EPCG”. For the construction of the second block of the thermal power plant (TPP) in Pljevlje should be chosen the optimum, not the cheapest solution, said Chairman of the Board of Directors and CEO of Skoda Praha, Daniel Jiricka. Besides Skoda, five offers of Chinese companies are considered for construction of TPP, as well as offers of consortiums of Slovakia and Poland, and only bid from Poland (520 MEUR) IS more expensive than the one of the Czech Republic.

Asked whether, if they are part of the list of companies to negotiate with the investor – EPCG will drop the price from 329.5 MEUR for the TPP, Jiricka replied that it would be “the issue of talks with the EPCG.”

Jiricka said that in China’s bids, which are cheaper, efficiency of future power plants is much lower.

“The difference in price is the effect of the fact that we do not want negative impact on the environment and a higher consumption of coal. We provide European quality, we are close to Montenegro, and we can provide fast service. Because of all, we think that our bid will be the best, “said Jiricka journalists from Montenegro during a visit to the Czech company Skoda Praha.

Besides Skoda, five offers of Chinese companies are considered for construction of TPP, as well as offers of consortiums of Slovakia and Poland, and only bid from Poland (520 MEUR) IS more expensive than the one of the Czech Republic.

Skoda would deliver equipment for TPP, the project would be financed by the Czech Export Bank, and from business plan of EPCG will depend whether they are interested in the ownership share in TPP. They are also looking for business partner in Montenegro. State energy giant CEZ, which is the sole owner of Skoda Praha, does not participate in the project.

“There are more offers from the companies on the Montenegrin side, we talk with representatives of the three construction companies,” said Jiricka, and he could not announce with whom they negotiate.

They would hire about 1,500 workers

He announced that in the peak period of construction of the energy facility they would hire 1,500 workers for the construction part of the work, installation, insulation…

Deputy Commercial Director of Skoda Praha and Project Manager for TPP Pljevlja, Richard Kuba said that they will employ a workforce of Montenegro because it’s better than bringing workers from the Czech Republic.

Skoda Praha wants for the project in Pljevlje to copy the block of power plant in Tusimice or easier in Prunerovo, and they indicated that these sources of energy have good energy and environmental performance.

“We have over 500 engineers and we can deliver what the investor wants (EPCG)”, said Kuba.

Power plants Tusimice (owner CEZ), which are modernized with about one billion euros, are on the border with Germany. Four blocks of plants Tusimice II produce four billion kilowatt-hours of electricity, which is four times more than TPP Pljevlja.

When asked about the interest of Skoda Praha to realize the project of building a power plant in Pljevlja, Jiricka said that they intended to use their capacities in the design and construction of energy facilities, stating that they participated in the construction of power plants in the former Yugoslavia.

“We believe that Montenegro is a stable country with a great perspective , which is the main reason why we come. The realization of this project would reinforce the partnership between Montenegro and the Czech Republic. In this work we do not calculate with extreme gains, but with normal margins, which would correspond to both parties”, said Jiricka, and he did not answer how much they would earn from the project.

He pointed out that Skoda Praha is a supplier of EPCG, which is engaged in reconstruction of the Czech energy sector since 2005 and have completed projects similar to those offered by Montenegro.

“What is important for Montenegro, is that the projects implemented here show excellent results”, said Jiricka.

Submitting an offer for HPP

When asked whether they are interested also to build hydropower plants in Montenegro with partners, as in the Czech Republic is negligible share of electricity production from hydro power plants, Jiricka replied that they would consider that if the project of construction of hydropower plants would appear.

“We would consider it through partners, and we would submit the offer if the project would be proved real”, said Jiricka.

When asked why CEZ was not behind the job of TPP, Jiricka said that the owner of Skoda Praha directed its attention to nuclear power, but it left the possibility for some of the partners to enter into the ownership structure. He said that it would not be a problem to implement the heating system of Pljevlje, and that a decision is on the investor – EPCG.

Cuba has said he expects that Skoda is part of the short list for negotiations with EPCG, he could not say who could be a major competitor, because he does not know who will be others who will get a chance for a second round. He said that the choice of of companies to negotiate does not take long but “within the deadline for this kind of work”.

Bids for the power plant are submitted to EPCG on 31 October, a list of those with whom they will negotiate on terms of the partnership for the construction of the second power plant was announced in mid-December. For this work nine companies and consortiums have applied, but the Russian offer was rejected. Majority state owned EPCG, managed by Italian A2A, will probably resume talks with representatives of Skoda, Slovakia Istroenergo Group, China’s Hubei Powerchina and possible CMEC.

By 2018 they would complete the second block of TPP

On the question when, if they are selected for Montenegrin project, they would start to build, Cuba said he would be satisfied if the contract is signed during the next year.

“Since the signing of the contract, it is estimated that TPP might be completed in three years”, said Kuba.

This would mean that Montenegro, after 35 years, will get thermal power plant in late 2017.

The journalists, who were on a study visit to TPP Tušimice, they saw that in the immediate vicinity of the plant agricultural crops are planted, and the smell of burnt coal felt friendly.

Tušimice II, with four units of 200 MW, is operating since 1973. It has been restored so that the efficiency of the plant is increased, resulting in a saving of coal for production. In Skoda they claim to comply with the most stringent limits in discharge of harmful emissions. Investment to extend the life of the power plants have reduced emissions of nitrogen oxides by 70 percent, sulfur dioxide by 79, and the emissions of polluting substances by 87 percent.

Cuba said that Skoda offers Montenegro-proven technology, that is European story with European standards and quality.

It is offered…

When the other TPP would begin to operate in 2018, the first unit would produce with a third of capacity and therefore air pollution would be reduced.

Cuba said on a presentation that the Czech Republic offer is appropriate, in order to optimize the existing Pljevlje infrastructure, stating that the construction of the second block would solve environmental problem in Pljevlje.

“We offered a block of 250 MW, of energy efficiency as much as 39,5 percent, which is about 12 percent higher than the efficiency of the old block. Block two would produce more energy than existing, and spent significantly less amount of coal (800,000 tons per year)”, said Kuba.

Skoda, as they said, prefers the latest technique of wet desulfurization through the cooling tower. Principle of desulphurization of gases copied from TPP Tusimice would contribute to cleaner air in Pljevlje, which has no chimney. This plant would produce major raw materials for gypsum boards, as they do in Tusimice. If EPCG decided to perform desulphurization of existing TPP, they estimate in Skoda  that it would cost about 7 MEUR of the total cost of 20 MEUR in the first block.

Head of Commercial and economic office of the Czech Republic in Montenegro Izudin Gusmirovic said that the important thing is that, if Montenegro chooses Skoda Praha, it would get the “European partners with European standards, environmental, and security.”

“We get a very reliable energy facility for which a solid and stable company from the Czech Republic guarantees”, said Gusmirovic.

Škoda Praha is engineering – supplier company engaged in delivering energy components, component technology units, modernization and increasing blocks power of power plants, and complex partial restoration of power plants, as well as the construction of thermal power plants “key in hand”. The annual turnover of the company is around one billion euros. They have operations in 25 countries worldwide. During the 60 years of its existence they installed total capacity of 40,000 MW. The average salary in the Czech Republic is 950 euros, and Skoda claims that the average salary in the company is several times higher.

Source; Serbia Energy See desk