(Podgorica, 16 January 2011) – Following the most recent, wanton and unlawful electricity price hike, Montenegro’s citizens are no longer willing to pass over in silence such measures or quietly wait for the institutions of another country to inform them about the acts of corruption associated with the privatization of the Electric Power Company of Montenegro (EPCG). It is for this reason that we insist that the Prosecutor’s Office and the Police Department immediately raid the EPCG in order to defend the interests of our citizens, whose household budgets can no longer pay the price of corruption or continue to finance the enrichment of local and foreign tycoons.
Montenegro’s citizens pay one of the highest electricity bills as well as the most expensive phone prices in the region thanks to: the insatiable appetites of key individuals; agreements signed behind closed-doors; and the complete passivity of state institutions responsible for protecting the public interest.
US institutions have recently revealed that some high-ranking Montenegrin officials and their families embedded themselves within the privatization of Montenegrin Telecom so that they could personally benefit from the deal. As a result, the current owners can now extract millions of euros from the country, while its citizens are left paying the most expensive phone prices in the region. In this way, US institutions shed light on the blueprint for numerous privatizations that have been carried out in Montenegro over the past decade in deals that have cost the country’s residents dearly.
We believe that a similar scenario played itself out in the sale of the Electric Power Company of Montenegro (EPCG), where very little has been done since the arrival of the new owners to improve conditions in this enterprise. The EPCG was reportedly sold in order to secure new investments, reduce costs and thus ultimately lower the price of electricity for consumers. In practice, the opposite has occurred: new investments have been minimal while the price of electricity continues to rise.
Instead of investing in the company, the EPCG’s new ‘strategic partner,’ Italy’s A2A, continues to deposit its money in the First Bank (Prva Banka). The Djukanović family controls a large stake in this troubled financial institution whose liquidity is essentially being propped up by A2A money deposited during the privatization deal. This money could be used for new investments but currently seems to be serving another purpose.
At the same time, we as citizens also continue to subsidize the electricity consumed by the Podgorica Aluminum Combine (KAP), allowing the EPCG to overlook what it is owed by that company.
Through our electricity bills we’re essentially enabling the creation of extra-profits for both Italy’s A2A as well as for the Russian tycoon who owns KAP, all the while securing the necessary liquidity for the survival of the First Bank.
While Distribution is still owned by the EPCG and managed by A2A, part of the ownership over the Transmission lines were sold to another Italian company – Terna. This later privatization was carried out according to the same recipe used in the Telecom sale – without public knowledge and behind closed doors.
For all of the above reasons, we now pay one of the highest electricity bills in the region, as well as recklessly high fees for transmission and distribution services. Namely, the share of electricity consumed by households, on average, makes up only 40% of the EPCG bill we receive, while the remainder goes towards transmission and distribution costs, as well as additional taxes and levies.
In addition to these shamelessly high electricity, distribution and transmission prices, the government found it necessary to further demonstrate its generosity to its ‘strategic partners’ by exempting them from VAT payments exceeding 10-million euros in 2008 and 2009. The tribute was therefore effectively paid twice, once by paying our EPCG bills, and a second time on the basis of additional appropriations from the state budget. Put simply, money that was to be spent on the building of roads, schools, hospitals…ended up in the pockets of our ‘strategic partners.’
In this way, Montenegro’s citizens, instead of being spared additional expenses in the midst of a global financial crisis, are paying the price for the corruption of our high officials and assisting the country’s ‘strategic partners’ to acquire enormous profits.
For all of these reasons, MANS is calling on the Prosecutor General to immediately raid the premises of the EPCG and associated companies instead of waiting for the institutions of another country to again reveal the corruption currently unfolding before our eyes.
Vanja Ćalović
Executive Director, MANS
