The Government of Montenegro intends to submit to the Parliament of Montenegro the project of construction of the Unit II of the Thermal Power Plants in Pljevlja and a new management agreement between Montenegrin Electric Enterprise (EPCG) and Italian company A2A, without an adequate debate and through the back door.
As of 1 January 2017, the European Union forbids its members to finance projects of construction of thermal power plants, so the Government of Milo Djukanovic is apparently in a hurry.
The new management agreement between EPCG and A2A will be in force until the end of the year, which clearly indicates that it is a short-term agreement designated to buy some time and which would be approved by the Parliament before the October elections and the formation of a new parliamentary session.
The new agreement envisages that the Italian A2A may leave EPCG after the agreement expires at the end of the year or if it blocked adopting the decision with regard to the construction of the thermal power plant in Pljevlja, when the state will have the right to buy back its shares for €250 million, which would have to be paid within seven years, or €35.7 million a year.
However, according to that scenario, the Government would regain ownership in EPCG in line with the annual repurchase or the shares, which means that complete share of the Italian company would be acquired after seven years. Therefore, A2A would be entitled to a potential share of profit, in proportion to its ownership share, whereas it would not be managing the electric company. Moreover, A2A is given an option to initiate the procedure of leaving EPCG in case it decides to sell its share to a third party, but it would first have to inform the State, which has the pre-emption right.
The agreement provisions define that the Government and A2A will take all the necessary actions to share the 2014 profit, where €14.6 million will go to A2A and €19.6 million to the State, despite the fact that the Securities Commission, as an independent body, is exclusively in charge of the whole issue and it is to determine whether EPCG legitimately conducted the procedure of reducing the book value of the company, thus „clearing“ it from losses and leaving open the possibility of profit sharing.
Moreover, it is stated in the agreement that the two parties will take actions to share the 2015 profit, at least 70 percent of it and, if possible, all 10 percent. Financial statement of EPCG shows profit of €10 million for in the last year, which means that the Italians would get around €4.1 million net profit, as they own 41.7 percent of the company, while the State has 54.7 percent.
According to the new management agreement, further cooperation between EPCG and A2A, which was characterized with many disagreements and reasonable doubts that the Italians drew millions from EPCG on the basis of fictitious consultancy work, is predominantly seen through the project of construction of new thermal power plant in Pljevlja and some other investment projects, such as transferring waters of the Zeta river to the lakes Krupac and Slano, installing new electric meters and the creation of a study on hydro potential of the river Lim.
The Government has estimated the cost of construction of the Unit II with the equipment, without the cost of the loan interest, at around €321 million, but the final price has not been agreed with the Czech company Skoda Praha, the bid of which was chosen as the most favorable last April.
However, MANS has been pointing out for months that the total cost of the project does not only consist of construction of the Unit II. The calculation has to include additional costs, such as the construction of new infrastructure and landfills for ashes and slag, costs of expropriation of land, opening new pits and their rehabilitation. Health and environmental issues are at stake here, as well, which all Montenegrin citizens pay through their medical treatment costs, but the Government does not even consider mentioning this, let alone taking it in into account when calculating the costs.
When it comes to the value of other investments which are the prerequisite for the continuation of cooperation with A2A, the Public Procurement Plan of EPCG for this year shows that the project of transferring water from the River Zeta into the lakes Krupac and Slano is worth €27 million. A new phase of installing new electric meters requires an additional sum of €25 million and the study of hydro potential of the River Lim requires €250,000. All EPCG investments are paid by consumers through electricity bills, because one of the elements that affect the price of electricity return on investment to the energy company.
The fact that the Government requires the Parliament to vote not only on the new agreement with A2A, but also on the interstate agreement with Czech Republic, which is the prerequisite for constructing the Unit II. In addition, some very crucial details and terms from the agreement for the investment worth hundreds million euro have not been agreed, which, in a sense, represents humiliation of the highest legislation institution.
At the same time, the Government has once again demonstrated extremely irresponsible approach to the project which it regards as one of the highest priority development projects. Until this day, besides mere rhetoric, the Government has done nothing to support alleged benefits that the citizens would have from the project, nor has it confirmed that those benefits will be larger than the damages the project will cause, especially when considering its impact on the health and the environment.
MANS
