Montenegro: JV negotiation for extension of contract for Power utility EPCG, A2A wants ROI guaranties and new partner for TPP Pljevlja project

Published on 17. July 2015., SEE Energy News

Negotiations between the Government and A2A, which were time deposited on June 30^th, will be extended for another month.

Both sides are close to an agreement. The executive director r of A2A Luka Valerio Camerano announced the possibility of extending the deadline for negotiations in early June.

“The goal of A2A is signing an agreement with the Government of Montenegro on the management of Electric Power Industry by end of June, but this deadline may be extended, if it is necessary more time to make a quality agreement”, said then Camerano, adding that dialogue was enhanced after meeting on the exhibition Expo Milano 2015^th.

A2A, which owns 41.7 percent of shares of Electric Power Industry, negotiates with the Government on a new five-year agreement on the management of EPCG. The first deadline for reaching an agreement was March 31^st when it was signed a new, temporary management agreement, which is valid until June 30^th.

Among the requirements of the Italian sides are guaranteeing the required rate of return on invested capital, management autonomy and security in the regulatory framework, finding a third partner for the construction of another thermal power plant in Pljevlja and the ability that A2A go out after the first two years.

The Montenegrin government insists on building the second unit of Thermal Power Plant as the resources in the first units expires for six years. By Interim Agreement, which was in force until today, A2A pledged not to hamper the activities related to the construction of the second unit. Therefore, it is selected as the best offer of Skoda Praha, which involves the construction of a thermal power plant of 254 megawatts to 338.5 million and the annual output of 1.6 gigawatt-hours of electricity, which would make Montenegro to become a net exporter of electricity. Skoda Praha is obliged to provide a loan for 85 percent of the required investment to the investor of the second unit.

Earlier, Deputy Prime Minister Vujica Lazovic said that if the Italian side was not in the mood for the construction of the second unit, EPCG will build the energy facility, which has a “significant amount of available funds, and that, as a profitable company can credit indebtedness”.

He recalled that A2A demanded that one of the models for the construction of the second unit was the inclusion of a third partner in the financial structure.

Therefore, it is planned to establish an SPV company (special purpose vehicle), in which, in this case would enter Coal mine and Thermal power plant Pljevlja, which would close the financial structure for the construction of the second unit.

The Government currently has a 57 percent of stake in EPCG, while A2A 41.7 percent. A2A has 39 percent of ownership in the Coal mine, the Government 31 and Aco Djukanovic 11 percent. , transmits Serbia-energy.eu