Montenegro: The future of Power company EPCG and Agreement with A2A Italy, A2A halted the new power gen projects

, SEE Energy News

Since the contract signing on the sale of part of the shares and recapitalization between the Government of Montenegro and the Italian company A2A, it has been exactly five years ago. At the end of the year expires five-year contract.

The Italian Ambassador in Montenegro, Vincenzo Del Monaco, does not seeany reason why the Government and the company A2A would not agree on the continuation of the partnership in the Electric Power Industry of Montenegro (EPCG).

Del Monaco is confident that EPCG and A2A will reach an agreement, although the new leadership of the Italian company made ​​it clear to Government representatives that were not willing to enter into a new investment cycle, because after five years, according to media, failed to recover anything from 430 MEUR invested in EPCG in 2009.

Media reports state that in the event that the management contract with A2A woulds not be extended, the Italians remain the owners of 41.7 percent of the shares, “as long as they do not sell them to someone”. Relations must be edited in any case. Currently, negotiations are carried out in several interactions. The Government insists on investing in development projects, and A2A on factors that provide quality business companies.

Agreement between A2A and the Government of Montenegro was concluded after privatization of 43.7 percent stake in the Electric Power Industry 2009th. In the meantime, A2A lost two percent of the share capital and the price of electricity was reduced, so that the Italian company failed to achieve the agreed objectives. The government now owns 56.9 percent of shares in EPCG and A2A 41.7 percent of stake, which is result of alignment due to unpaid taxes.

As a reminder, on September 3, 2009, it was signed a contract for the shares sale and recapitalization between the Government of Montenegro and A2A from Italy. In February of the same year it was published a public tender for the sale of state-owned shares, which amounts to 18.3% of total capital. By purchase of shares from minority shareholders, company A2A acquired ownership in the Electric Power Industry of Montenegro in the amount of 43.7 percent. In the agreement between the Government and A2A it was provided that executive management belonged to a strategic partner, an Italian company, and they officially took over that position in March 2010. Italian company’s paid 420 MEUR for the stake in EPCG.

The plan was to provide funds for the rehabilitation and modernization of existing or construction of new energy facilities through therecapitalizationprocess. It was envisaged the system centralization and modernization through the new organization (the reason for this is the large number of employees, the company dissection causes an extremely complex control process). All these changes were supposed to increase the effectiveness and efficiency of operations, to reduce costs and significantlyto accelerate the flow of information both within the company, and also in communication with partners.

Also there were planned significant investments in plants modernization: HPP”Perućica”, HPP”Piva”, TPP “Pljevlja”, as well as construction of new plants, HPP “Moraca”, HPP “Otilovici” and TPP “Pljevlja 2”. However, the Montenegrin Government is not satisfied with (not) participation of Italian company A2A in these projects. There is still some time that the parties agree and decide on ownership in EPCG.