Montenegro: Power utility company EPCG, Interview with Srdjan Kovacevic board directors chairman

Published on 18. March 2014., SEE Energy News

Looking for a co-owner for the second unit, not for guarantee, choice of partners for the construction of thermal power plants in Pljevlja.A preliminary financial analysis will be made by the end of January ​​ and then we will have a clear picture of the economic feasibility of each of the four bids that have been shortlisted. After the construction of the second unit, the total production will be 4.800 gigawatts hours or 50 percent more than today.

If they keep the planned schedule, with all the risks, it can be expected that during 2014^th start preparatory works for the construction of the second unit of TPP Pljevlja. When I say risks I primarily mean at agreement with partner about the project financing, providing funds under the circumstances of long, complex procedures of banks or deal of major shareholders of Power Utility Company, said EPCG president Srdjan Kovacevic.

Kovacevic said that, from the company standpoint, the optimum model of partners participation in the future capital of the company, and thus to discuss with all partners. – From the dynamics of stands harmonization with the partner and completion of necessary procedures also depends on the start of the investment. The construction will take about three years, and significant advantage is the existence of common facilities and related infrastructure for both units – said Kovacevic.

The short list was made. When do you expect to continue negotiations with potential partners?

– After a detailed analysis of the submitted documents four offers have been separated. A preliminary financial analysis will be made by the end of January ​​ and then we will have a clear picture of the economic feasibility of each of the four bids that have been shortlisted. This will be the basis for the EPCG Board of Directors to define the final investment package and to send it to shareholders for consideration and decision. By the fulfillment of these requirements we will have a good basis for further talks with potential partners.

What benefits will felt state and consumers from construction of the second unit?

– By its construction would be achieved the strategic energy goal – ensuring the state power independence, improvement of consumers supply security and improvement of the stability and sustainability of the electricity system. A significant electricity surplus would appear by the joint production of both units. In fact, it is estimated that after the completion of the second unit the total electricity production will be 4.800gigawatts hours, or 50 percent more than today.

The ratio of the energy will be: thermo 62 percent – hydro 38 percent, in effect: thermo 38 percent – hydro 62 percent. In accordance with EU directives, thermal power plants in the region will be able to work from 2018^th to 2025^th. In total 20 thousand hours. We estimate that this is a great opportunity, given the expected trend of continuous lack of electricity in the region.

What are the other projects does plan Power Utility Company in the coming period?

– In recent months, we have intensified preparation of documents for better water utilization of Upper Zeta, which would increase production of HPP “Perucica” and better use of the existing potential. This involves translating parts of water accumulation in the Zeta River in the reservoirs of Krupac and Slano. The project envisages construction of several facilities for the introduction of Zeta water in Krupac (tunnel and channels) and facilities to connect Krupac and Slano. Construction of these facilities should take 18 months and would cost 20 MEUR. Converting part of the Zeta water increase the efficiency of the flow of HPP “Perucica”, this will allow a substantial increase in production. On the other hand, it would reduce flooding downstream of the intake, and it will not be necessary to translate the water in the period of very low Zeta inflows, so that Niksic citizens could use Krupacko Jezero. We plan to continue the installation of smart meters. The aim is to increase the number of new meters for 80.000, thereby to achieve the total number of 250.000, or 75 percent of all consumers.

Whether and how to invest in distribution system?

– We managed to make use of a good part of the investment plan. Much has been done on the modernization of the distribution network, facilities repair, and increase of production and safety of power plants. Considerable resources were invested in the distribution network during past three years, especially last year and this year, when in the system was introduced several new facilities with voltage of 35 kV. New powered substation 35/10 kV Kotor, Budva, Danilovgrad, Herceg Novi, Kolasin and Niksic are operational. The total amount of investment in the last year was 24MEUR, and in this 22MEUR. Substations110/10 kV ” Podgorica 4 ” and 110/10 kV “Podgorica 3” were reconstructed, from which are supplied 60 thousand customers, made ​​a huge number of substations and cables at the voltage level of 10 and 0.4 kV, built a number of new columns, made a low-voltage tension lines and ​​repairs to the medium voltage network . Energy Development Strategy until 2025^th envisages investment of 400 MEUR in the distribution network and EPCG, so far, fits into those plans.

Profit higher than 25 MEUR

This year has really been good for EPCG, especially due to the fact that there was sufficient rainfall and that our manufacturing units operate at maximum readiness. We should not forget that also a lot of work for system maintenance has been done, so we expect to finish 2013^th with a positive score of over 25MEUR. I expect a lot of challenges in 2014^th, due to the fact that “Piva” work in our system. On the other hand, it is necessary to work on strengthening the company capacity, in order to be ready for the market opening in 2015^th.

Source; Serbia Energy See Desk