Montenegro: New TPP Pljevlja, interconnections, power cable with Italy and exploration of oil and gas in 1H 2016

Published on 18. January 2016., SEE Energy News

Improving the macro-economic stability and competition will be a priority for the Government in the next period, while the biggest risks could be the problem of unavailability of the source of finance to the real sector and high level of non quality loans, said the minister of economy Vladimir Kavarić.

“In order to minimize these influences, this year we will continue to stimulate the investments and business, through a Regulative on direct subsidies for opening new jobs, activities of the Investment-Development Fund and business zone project” said Kavarić. He stated that the fact that the expected growth was around 4.3 percent speaks about the success of Montenegrin economy, and it would be good to keep up that trend this year as well, through investment in the construction sector, tourism, energy and agriculture.

“We expect the continuation of intensive investment activities, especially through the project of building the highway, but also projects of interconnectivity cable connection with Italy and relevant infrastructure, second block of the thermal power plant TPP Pljevlja, oil and gas exploration, wind farm projects, as well as in the area of hydro potential, both big and small” said Kavarić.

“It is important to say that we have defined the best possible condition for the state in this process, through legislature, meaning we have defined that out of 63 percent, 68 percent of oil companies net profit in the phase of exploitation goes to the state, but also through evaluation of the offers and choosing the bidders, dividing the territory and selecting the obligatory working agenda” said Kavarić.

He added that the Government provided a quality way to valorize hydrocarbon potential of the sea in Montenegro, since that is the project that will bring benefits to future generations.

Kavarić said that a huge job has been done so far regarding the selection of bidders and finding the best offer and technical conditions for the implementation of the second block of TPP project.

He said that the public is informed about the details of negotiations between Elektroprivreda EPCG and the selected bidder, Škoda Praha, regarding the technical details of the project and the financial part.

“What is perceived by the public as the beginning of the project implementation, the actual start of physical work, to the Government it is the finalization. Of course the expectations are that it will occur this year” said Kavarić.

He thinks that in the negotiations on the continuation of the cooperation between the Government and the Italian A2A in EPCG, all posibilities should be covered in order to find a mutual interest.

Kavarić thinks that the development of EPCG and energy sector is of general interest not only to Montenegro but to A2A too, which owns a significant share in this company.

„Those are the issues we are discussing, having in mind that time is coming when we will have to have clearly defined stances regarding the way it is gonig to be solved“ said Kavarić

Italian Terma, which is partner to Montenegrin Elektroprenosni sistem CGES and which is implementing the project of installing an interconective cable between Montenegro and Italy, has already installed 140 km of the cable under the sea level, while the activities to prepare a plateau for the Converter are ongoing.

Kavarić reminded that the obligations of CGES in that project are divided into three segments, the construction of the substation Lastva, and 400 kV power lines Lastva Čevo and Čevo Pljevlja.

“Intensive activities are ongoing in all three segments” Kavarić said.

He reminded that EU has supported the project with 25 million euro grant through the West Balkans Investment Fund, according to the Agenda of the Berlin Initiative, because it recognized the impact the project would have on regional connectivity and safe functioning of the complete energy system. The money was intended for the construction of the power lines between Montenegro and Serbia and Bosnia and Herzegovina as well as other projects connected with the installment of the cable under the sea.

Kavarić announced that all means necessary to fund the entire project have been obtained, and the project is expected to be finalized by 2017, when the cable is supposed to become operational.

He stated that the Government continues activities regarding the project of the construction of small hydro power plants SHPP. Currently 21 contracts on the construction of 41 small hydro power plants with the integrated capacity of 72 MW and projected yearly production of 244 GWh, are ongoing.

„The expected level of investment, both foreign and domestic, based on signed contracts is around 110 million euro. Seven SHPP have started working, out of which six were opened in the past year, with the total integrated capacity of 9.3 MW and projected yearly production of 35.4 GWh. The approximate value of the means invested based on the construction of these six SHPP is 15.3 million euro“ Kavarić said.

He also said that it is planned to open four more SHPP.

Kavarić reminded that the work on the wind farm Krnovo, with the investment value of more than 140 million euro, started last year, and in March we are expecting the work on wind farm Možura to start as well. The value of that investment is around 65 million euro.

He added that the Government, while trying to create conditions for the construction of hydro power plants on Morača and Komarnica, is communicating often with potential investors from different states. In accordance with that a Memorandum of Understanding has been signed between the Government and Norinco International Corporation, which defines the preconditions for the implementation of the project of constructing large HPP, in order to increase energy capacities and potential.

Kavarić stated that recently a Memorandum of Understanding has been signed in Slovenia between the Slovenian Ministry of Foreign Affairs, Turkish Ministry of Forestry and Hydrology and Montenegrin Ministry of Economy regarding the cooperation in the area of hydro energy potential of Montenegro.

While answering the question on the posible danger of Montenegro loosing in the legal procedure to ex owner of the Kombinat aluminijuma KAP, the Central European Aluminum Company CEAC, he said that the state has fulfilled all its contractual obligations regarding the factory from Podgorica, and that it acted in accordance with the domestic and international legislature.

„We expect to prove that in the arbitray procedure“ Kavarić says.

He reminded that Bancrupcy Management and Board of KAP Creditors are in charge of folowing and realization of the obligations coming from the purchase contract, while the Government cannot interfer with the judicial authority.

„Off course we expect the process to end so that the money the owner deposited in the transfer account could become operational“ Kavarić concluded, transmits serbia-energy.eu