Montenegro: PowerChina interested in the construction of second unit at TPP Pljevlja

, SEE Energy News

Representatives of Chinese company PowerChina said during the meeting with Vice President of Montenegrin Chamber of Commerce Ivan Saveljic, that the company is interested in participating in energy projects in Montenegro, especially in the construction of second unit at thermal power plant Pljevlja.

Zhong Xiaoping, Vice President of Sichuan Electric Power Design & Consulting, which operated within PowerChina Group, said that the company sees great potential of Montenegrin energy sector, particularly regarding to the country’s connections with other energy markets in the region and it is interested in TPP Pljevlja project, especially now when Skoda Praha withdrew from the project. Representatives of the Chinese company discussed the Montenegrin energy strategy, public opinion on the construction of second unit at TPP Pljevlja and the possibility of the state providing guarantees for the project.

In late December 2017, the Montenegrin Government has terminated the agreement signed with Czech company Skoda Praha on the construction of second unit at coal-fired thermal power plant Pljevlja.

In September 2016, a contract for the construction of second unit at TPP Pljevlja worth 324.5 million euros between Montenegrin power utility EPCG and Czech company Skoda Praha has been signed. It marked the completion of a two-year period of negotiations and this will be the first major energy facility to built in Montenegro in the last 35 years. Last year, the Government selected the offer of Czech company Skoda Praha as the best on public tender for the construction of the second unit at TPP Pljevlja. Skoda Praha offered to build 254 MW unit for 338.5 million euros, and to secure a loan for 85 % of the required investment. However, due to the request for additional works, the cost offered by the Czech company increased to 359.4 million euros, but the Government managed to lower the price by some 25 million euros through the negotiations, so the final price is 324.5 million euros.

However, in October same year, Czech Export Bank (CEB) informed the representatives of Montenegrin power utility EPCG and the company Skoda Praha that the bank is having trouble providing financing for the project for the construction of second unit at TPP Pljevlja. The bank cited difficulties in obtaining Government guarantees as the main problem, because the Government previously refused the bank’s request that the state should be a guarantor for the loan that should be used for financing the project. Czech Export Bank insisted on obtaining guarantees from both the state and EPCG during negotiations, but the state refused to provide any guarantees since it was not a requirement in the public tender in 2013.