Montenegro: Revision of Power company EPCG business, no evidence on part of the property

Published on 19. August 2014., SEE Energy News

Audit firm Pricewaterhouse- Coopers (PWC), assessing the consolidated statements of operations of the Electric Power Industry of Montenegro EPCG in 2013^th, gave its opinion with a reserve because the company misses the evidence of assets ownership worth 215 MEUR. The management of the majority state-owned Electric Power Industry, run by Italian A2A, in 2009^th , started the process of harmonization of the fixed asset register with ownership papers.

The total EPCG capital value of July this year is one billion EUR. “On December 31^st, 2013^th, the parent company reported over the property, plants and equipment that did not have adequate documentation of ownership, in the balance sheet in the amount of 215 million EUR”, writes, among other things, in PWC report.

Therefore, the auditor was unable to determine adjustments that may be necessary for land and buildings, as well as the effects of possible adjustments to the consolidated income balance, consolidated report of changes in equity and cash flows of the last day of 2013^th and 2012^th.

The management of the majority state-owned Electric Power Industry, run by Italian A2A, in 2009^th , started the process of harmonization of the fixed asset register with ownership papers.

The process has been continued in the following years; as a result, management has found out there was a lack of documents confirming ownership of certain items of property, plants and equipment used by the parent company over which EPCG has control.

“In addition, according to the agreement signed on September 3^rd 2009^th between the Government of Montenegro and A2A S.P.A from Italy, the government ensures that the total assets in the financial statements at the date of signing the sale contract, is in the property of the parent company”.

Accordingly, management believes in the accuracy of these assets recognition in the business records of Electric Power Company on December 31^st, 2013^th, and strives to complete the documentation of ownership”, according to the statement on opinion with reserve given by the auditor.

Total property of Electric Power Company is worth a little more than billion EUR, of which, according to data from the balance sheet, to property, plants and equipment goes 827.54MEUR.

Compared to a previous year, the estimated value of this part of EPCG was higher by more than two million. Electric Power Industry, according to the consolidated income statement, ended last year with a net profit of 25.15MEUR. It is a multi-improvement compared to 2012^th when it lost 5.5 MEUR.