Second block of thermal power plant precondition for continued cooperation Montenegrin government and Italian companies A2A

GOV-A2A

Podgorica, December 12, 2014/ Independent Balkan News Agency

By Adnan Prekic

At the end of the year expires the partnership agreement between the Montenegrin Government and the Italian company A2A in the state energy company. The Italian company after five years of management have not met the most parts of the conditions stipulated by contract, but regardless of that the intent of the Montenegrin government is to retain partnership with the Italians. In the last months negotiations between the two sides are intensified, but no agreement has reached yet.

The negotiating teams of the government and the Italian company A2A for contracting partnerships in EPCG have not come to the stage where one could say whether there will be a continued cooperation in the energy company. The most controversial part of the negotiations is the insistence of the government that the Italians, during the next period, incorporate in their business plan the construction of the second block of the thermal power plant Pljevlja. The Italians insist on stable operating conditions in terms of legal and regulatory attribution, because their goal is to make a profit of at least EUR 430 million, which is how much they bought the minority share package.

During the contract signing in 2009, the specific conditions that the Italian management should have fulfilled in order to keep their ownership and right to managing the company had been set. After five years of signing the contract on the strategic partnership, the Italian company A2A has no reason to be satisfied. Whether cooperation will be continued depends primarily on the construction of new power plants. The Italians are interested in building a second thermal power plant in Pljevlja.

When in 2009 the Italian company A2A bought almost half of the ownership of the national energy company it was announced that in five years the Italian partner could become the majority owner. The Italians paid at the time EUR 420 million for control of the Electric Power and the right to appoint their managers at the head of the company. The original plan envisaged an increase in revenue, reduction of network losses and the construction of new power plants.

On the Government’s call for the construction of the second block of TPP the companies that answered were: the Czech company “Skoda Praha”, two Chinese companies – “Powerchina Hubei Electric Power Survey & Design Institute”, “China Machinery Engineering Corporation” (CMEC) and the Slovak company “Istroenergo Group”.

The development plan envisages that the second block of the thermoelectric power plant Pljevlja will be 200-300 MW, which will be built on the site of an existing power plant. The project will provide for the town heating, in cooperation with the municipality of Pljevlja.

The new block will be built using the latest technologies that are consistent with the protection of the environment in mind. The issue of the heating system is one of the key points on which both the government and the local administration insist. Due to the special geographical conditions and the presence of a large number of industrial plants, Pljevlja is one of the most polluted towns in Europe.

The construction of the second block will provide a heating system for the city and so will the furnace, which will be used during the winter season, and then cease to operate. This would solve a major environmental problem in the country. The construction of the second block of thermal power plants will achieve a strategic objective in the field of energy in Montenegro. This is the energy independence of the country, improving the security of supply to consumers and to improve the stability and sustainability of the power system in Montenegro, which will position the country as an exporter of electric energy.

Source: Independent Balkan News Agency (Montenegro)