Montenegro: Several companies expressed interest for the construction of second unit at TPP Pljevlja

, SEE Energy News

Montenegrin Prime Minister Dusko Markovic said that the Government is not seeking for another partner for the construction of second unit at thermal power plant Pljevlja nor for the buyer of A2A’s stake in power utility EPCG, but several credible companies have expressed interest in the construction.

PM Markovic stressed that the Government is carefully examining the interest of potential investors and will make a decision regarding the construction of second unit and reconstruction of the existing unit at TPP Pljevlja, as well as regarding the new partner in EPCG, in the first quarter of the year, adding that, after some time, the state will again have significant stake in this power utility, allowing it to create development policies in the country’s energy sector.

In late December, the Government terminated the agreement signed with Czech company Skoda Praha on the construction of second unit at coalfired thermal power plant Pljevlja. Executive Director for Development and Engineering at EPCG Ivan Mrvaljevic said that the reason for the termination is the fact that EPCG was unable to reach technical and financial agreement with Skoda Praha, despite significant efforts made by both companies.

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.