Montenegro exclusive: Uncertain construction of second unit of TPP “Pljevlja”, A2A against

, SEE Energy News

According to the Energy Development Strategy of Montenegro until 2030th, TPP “Pljevlja 2” is quite important. TPP Pljevlja project is projected with installed capacity of 225 MW and possible annual production of 1360 GWH (installed capacity can be up to 300 MW by adopting appropriate offer, which will be addressed in the Action Plan).

Indicative costs of the new TPP “Pljevlja” are estimated at 315MEUR. The White Paper envisages work of TPP “Pljevlja 2” from 2020th.
There have been negotiations on the construction of TPP “Pljevlja” for several years In Montenegro. The most interested in the project were the Chinese. The company China Hubei Power wanted to invest 275 MEUR in the construction of the second unit and expansion of coal mine capacity.

However, currently is actual competition between Electric Power Industry of Montenegro and the Italian company A2A. In fact, a five-year management agreement with A2A expires at the end of this year. The Montenegrin government is ready not to sign a new management contract if no agreement is reached about the construction of TPP “Pljevlja”.

It seems that the leadership of A2A does not agree with the conditions imposed by the Government of Montenegro and presumably they do not want to finance the construction of a new unit in TPP “Pljevlja”. The Italian company also sets the conditions for the renewal of the contract with EPCG, namely ensuring the profitability of investment capital, autonomy in the management of the company and guarantees regarding the electricity price.

The Montenegrins, except for investments in the TPP construction, seek from Italians to relinquish rights to majority ownership, and to commit themselves not to start arbitration, transmitted Vijesti from Montenegro.

Italians manage with EPCG since 2009th, when bought 43.7 percent of the share for 430 MEUR. In the meantime, they lost two percent of the shares, which are converted to tax debt of 45 MEUR. A2A did not regain money for five years and did not fulfil the parameters of the contract with the Government on which basis it could take a majority stake in Electric Power Company. In recent years Italians mentioned arbitration as a possible option in the case they do not agree after the management expiry on the continuation of cooperation or selling shares to the government.

On the basis of an agreement with A2A, the Government has the right to redeem the shares of A2A after a five-year contract. According to the report, A2A, they reduced total debt by 11 percent or 408 MEUR to 3.4 billion EUR in the nine months of this year. A2A shareholders are not satisfied that the package of EPCG shares paid about 430 MEUR, and now they cannot sell it for that much. Their management did not return this investment during managing Montenegrin Company, as it was stated in the media.

Even earlier the Italians had expressed dissatisfaction while the Russian CEAC led Aluminium Plant, which did not pay electricity to them and several times threatened to get out of work with the government if they do not resolve problems with KAP. The dispute was resolved in the way that Electric Power Industry has not paid contributions in the amount that was close to that which giant in bankruptcy owed to them.