Montenegro: Skoda Praha submitted alternative proposal for financing TPP Pljevlja second unit

24. March 2017. / SEE Energy News

Montenegrin power utility EPCG announced that the Czech company Skoda Praha has submitted an alternative proposal for financing the construction of second unit at coal-fired thermal power plant Pljevlja.

The statement from EPCG said that the project management team will review the proposed alternative and after further negotiations try to reach an agreement with the financial and insurance institutions provided in the proposal (Bank of China and Sinosure). In accordance with the dynamics agreed in the signed documents development of the main project should last 18 months, while the entire project should be completed within 36 months.

Earlier in February, Skoda Praha has selected US company General Electric as its partner in the project for the construction of second unit at TPP Pljevlja. CEZ Group, within which Skoda Praha operates, announced that the two companies have agreed to work as partners with the aim of building the second unit at TPP Pljevlja and helping the power utility EPCG to find a suitable source of funding for the project.

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, 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.

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