The Government of Montenegro is preparing to directly violate the Stabilization and Association Agreement that Montenegro signed with the EU and Law on State Aid, by providing companies that they own direct subsidies for electricity production, only for the sake of profit interests of the family of prime minister Milo Djukanovic.
The proposal of the Law on Energy, which is on the agenda of an extraordinary session of the Montenegrin parliament, introduced a number of provisions which were contrary to legal regulations that allow subsidies to companies that build facilities of so-called renewable energy sources, such as small hydro power plants, mainly owned by persons affiliated with the prime minister Milo Djukanovic.
Apart from “BB Hydro”, owned by Blazo Djukanovic, and “Synergy”, owned by the prime minister’s best man Vuk Rajkovic, companies that are already building small hydro power plants or entering the business, such as “Bemax”, “Hydro Montenegro”, the property of Oleg Obradovic, and “Celebic”, owned by the construction tycoon from Podgorica and prime minister’s close business associate, will also have the direct benefit from these subsidies.
The Draft law declares is the generation of energy from renewable sources the public interest, and when bearing in mind that the Law on State Aid Control provides the possibility of granting state aid for all activities that are of public interest, it is clear that it will open the door for granting soft loans from the Investment Development Fund (IRF) for financing private projects.
MANS has earlier announced that the IDF is already negotiating with the credit bureau in Norway for a loan of €55 million for the construction of small hydro power plants.
In addition, the draft law provided for a series of other subsidies for the construction of facilities of renewable energy sources, such as preferential electricity prices, its compulsory purchase by Montenegrin Electric Enterprise (EPCG), or financial release of balancing responsibility and purchase of the constructed energy infrastructure.
Because of the insufficient development of energy networks, private companies are given the opportunity to build their own part of the infrastructure, so that small hydro or other facilities would be connected to the network. EPCG or Montenegrin Transmission System (CGES) are required to purchase the infrastructure, depending on whether it is a distribution or transmission network. It is completely inexplicable that private companies can build energy infrastructure with the consent from the government and even when the Energy Regulatory Agency has not approved the construction. This means that the government directly interferes with the jurisdiction of the regulator.
Also, the data available to MANS Investigation Center show that the government and the State Aid Control Commission grossly abused their powers when deciding whether a proposed law on energy was in compliance with the law and the rules on granting the state aid.
Thus, on 29 July, the Commission adopted the first decision, by means of which it established that the Bill on Energy did not comply with the Law on State Aid Control, namely in a series of norms that granted subsidies for renewable energy sources. As a particularly disputable norm, the Commission identified an article defining an obligation to CGES to procure electricity from domestic producers of up to 15 percent of the total energy consumed in Montenegro, in order to avoid the lack of electricity.
Only a day later, on July 30, the government also adopted a draft law on energy, although at that time, the State Aid Control Commission did not confirm that the draft was in compliance with the Law on State Aid Control. On 3 August this year, only a few days later, the Commission passed a new decision, concluding that the draft law on energy was in conformity with the Law on State Aid Control, after the Ministry of Economy corrected some provisions that the Commission had identified.
However, those provisions were not corrected in a lawful manner and the Ministry of Economy fiddled with the law by foreseeing that decisions related to subsidies are delivered to the State Aid Control Commission for an “opinion”, although the commission, according to the law , only “assesses” whether an aid complies with the law or not, while opinions in the legal sense are not binding.
In addition, in the new solution from 3 August, the Commission completely ignored the provision on the obligation of CGES to provide electricity in the amount of 15 percent from the domestic producers, although it had previously indicated that it might potentially undermine competition in the market, so the provision remained in the draft which was submitted to MPs for consideration.
From all this, it is clear that responsible persons from the Ministry of Economy and the State Aid Control Commission seriously manipulated laws and severely abused their authority when making the Draft Law on Energy, which is why it has to be withdrawn from parliamentary procedure and returned to the government for revision.
In case the MPs adopt the bill in the form in which it was drafted by the Government of Montenegro, it will be a direct violation of the rules of competition and violation of the Stabilization and Association Agreement concluded between Montenegro and the European Union.
EU integrations as an excuse for giving subsidies to tycoons
According to official data, the Ministry of Economy has concluded agreements on concessions for 21 watercourses, which envisages the construction of 41 small hydro power plants with an annual production of around 259 gigawatts, while the indicative value of the investment is estimated at €109 million.
Due to the high risk of emission of carbon dioxide which penetrates the ozone layer and threatens the survival of life on Earth, which is mostly due to the production of electricity from thermal power plants, the European Union stimulates the production of energy from renewable sources. Therefore, it has set the goal that all states by 2020 produce 20 percent of energy from renewable sources. Montenegro, however, has proclaimed a whopping 33 percent as its target.
Having in mind that companies associated with the prime minister entered into the work of building small hydropower plants and that all the subsidies are paid by consumers through electricity bills, it is clear that private interests are behind such targets on the production of energy from renewable sources. It is important to emphasize that small hydropower plants do not provide any significant employment and benefits for the local community, but only allow a private investor to acquire an exclusive profit from the.
This text is created with the support of the European Union within the project “Zero Tolerance to Corruption”. Network for Affirmation of Non-Governmental Sector – MANS is solely responsible for the contents of this article, and the views taken herein shall not in any case be considered as those of the European Union.
