At least 450 employees in the Pljevlja Coal Mine and the Thermal Power Plant Pljevlja will lose their jobs after the construction of the second unit of the thermal power plant, shows the Feasibility Study based on which the Government has proposed the implementation of the project, into which MANS Investigation Center had an insight.
Pljevlja Coal Mine
The study was prepared by the consulting company Deloitte from Belgrade for the needs of Montenegrin Electric Enterprises (EPCG), with regard to the feasibility of the construction of the second unit. Within the context of this analysis, presented are data from another consulting company, Fichtner, which has done an analysis of coal resources and the report on the reduction of production costs in the Coal Mine Pljevlja.
According to the study, in order for the construction of the second unit to be feasible, the costs of production, i.e. the selling price of coal, must be reduced. As the main measure for such reduction, the study envisages redundancies, increase of work efficiency and use of appropriate machinery in ore. The study further anticipates that the cost cutting measures should come into force by 2020.
According to projections presented in the study, the optimal number of employees in the coal mine should be 544 workers, should trucks be used as basic machinery for mining, and 520 employees if the bucket-wheel excavators were basic equipment for the production process.
According to data from the financial statements for 2015, the Coal Mine had 935 employees at the end of this year, which means that 391 workers will become unemployed in the coming years, if the company opts for trucks, or 415 workers if bucket-wheel excavators are chosen as the equipment.
When it comes to future employment in the second unit of the thermal power plant in Pljevlja, it is already clear that due to the installation of more sophisticated technology the number of employees will not be at the current level. Unit II should become operative at the end of 2020, and the Deloitte’s study projects that it will employ 147 workers in total.
According to the plan of the Government of Montenegro, the existing Unit I will run until 2023, and it employed 207 workers at the end of 2014. Earlier, it was announced that the employees of the Unit I would continue to work in the new unit. However, as the new unit will employ 147 workers, it is clear that 60 employees will lose their jobs.
Government officials and representatives of EPCG and the Coal Mine earlier said that building the new unit would preserve jobs in these companies, which was one of the key arguments for of the investment.
In addition, the fact that hundreds of employees in the coming years is going to become unemployed raises the question of severance payment and their amounts. Bearing in mind that is not yet known which organizational model will link the coal mine and future power plants, and that the Pljevlja mine currently has major tax and other debts to the state, which indicates its illiquidity, the question is whether and to what extent the severances will burden the state budget of Montenegro.
This is especially important, since the Government of Montenegro in 2009, on the eve of entering of the Italian company A2A in EPCG and the Coal Mine, at the expense of the budget and all taxpayers covered €40 million of receivables between the two companies. The state is the majority owner of EPCG, while A2A’s second largest shareholder. When it comes to the Coal Mine, A2A is the single largest shareholder, the state comes second, while the third largest shareholder is the Prime Minister’s brother Aco Djukanovic.
Official data on the number of employees in the TPP at the end of 2015 are not publicly available
According to official data of EPCG, the number of employees in the existing thermal power plant has been significantly reduced in the past years. Thus, in 2010 there were 333 employees, and at the end of 2014 there were 207 workers. Official data on the number of employees in the TPP at the end of 2015 are not publicly available.
On the other hand, according to the data available to MANS Investigation Center, the Coal Mine employed 2,053 workers at the end of 2002. It is interesting that they accounted for 30.6 percent of the costs of salaries and other personal earnings in those years.
At the end of 2015, the Coal Mine reportedly employed 935 people, while in the structure of the costs of salaries and other personal earnings they accounted for 38 percent.
The state will not be paid VAT
The study states that the closing of negotiations on how to finance the second unit with the Czech company Skoda Praha is expected later this year, while April 2018 is mentioned as the starting date of construction. The second unit would be completed in March 2020. Then, the trial operation would be in force for the following half a year, after which the plant would begin with the commercial production.
It is expected that short-term employment could be increased during the period of construction, but they are limited in scope, taking into account that a key part of the construction of the new unit makes the equipment, which will be delivered to Montenegro from abroad.
Pursuant to the amendments to the Law on Value Added Tax, the equipment will not be levied because the parliament has passed the decision that the import of equipment for power projects that are in the public interest are exempted from the VAT.
MANS Investigation Center
