Friday, October 28, 2022 - 09:07


Those who had been managing energy sector for over 30 years, nowadays often comment that EPCG is in crisis, that it has problems, that it is devastated and destroyed, and it is being underlined that all of that is the consequence of irresponsible management of the Company in the last year and a half. As a Chairman of the Board of Directors, I have an obligation – not towards petty politicians and malicious manipulators, but towards citizens and public in general – to present unbiased and argumentative analysis of the current situation in EPCG, because conclusions about the situation in EPCG can be made only on the basis of relevant indicators, who is responsible and for what, and who is praiseworthy and for what. For the analysis to be unbiased we must review the previous period, not to search for an excuse or reward for the current condition, but because energy projects and implementation thereof require significant time which is measured by years rather than weeks or months. So, let’s begin.   



Our oldest facility, HPP “Perućica” was commissioned in 1960 (units I and II were commissioned in 1960, units III, IV and V in 1962 and units VI and VII in 1977). Thereafter, HPP “Piva” was commissioned in 1976, while EPCG constructed the last electricity source, TPP “Pljevlja”, in 1982. From 1960 to 1982, in the period of 22 years, three power plants were constructed with total installed capacity of 874 MW. In the period from 1982 to April 2021 (39 years) EPCG did not construct a single new electricity source.



In addition to the fact that not a single electricity source was constructed in the previous period, it is important to mention several important business, i.e. non-business decisions that had, and still have, a significant impact to EPCG business operations. As a reminder, privatization of EPCG was carried out in 2009 through a fictitious River company. Funds sold their shares for €7.1 per share and made a profit on that basis in the amount of €138 mil. Should they had sold them then for €8.4 per share, as they did at a later point, the Government and minor shareholders would have made a profit of € 163 mil. These transactions were of no use whatsoever to minor shareholders of privatization funds. Funds spent the money within a short period of time. It is still not clear why the offer in the amount of € 11.1 per share from Green Consortium, established by a public energy company Public Power and a businessman Victor Restis, was not accepted, on which basis the profit of € 609 mil would be gained, exceeding the amount offered by A2A by € 170 mil. Both the state and EPCG suffered a loss. Nonetheless, someone acquired Sveti Stefan, and Prva Banka suddenly became the most liquid bank in the country (even though the state saved Prva Banka with € 44 mil), and owners of funds were not disregarded either.

On January 1st, 2017 EPCG had € 232,326,991.88 on its accounts, while on January 1st, 2021 there was the amount of € 39,596,540.93 on EPCG amounts.



Only two transactions which basically represented nothing but a cost to the Company in the amount of €137 mil, namely € 105 mil for the purchase of shares from A2A and € 32 mil for the purchase of Coal Mine Pljevlja shares.  Share capital of the Company was reduced by € 140.576.831 due to purchase of own shares and afterwards annulment thereof.  Reduction of EPCG capital happened in 2017 due to covering of accumulated losses, in the amount of € 148.380.692.  In December 2021, after finalization of the bankruptcy procedure in KAP, receivables on the basis of delivered electricity in 2012 in the amount of € 43.651.998 were not recognized to EPCG.  Out of this amount, through VAT return from December 2021, calculated VAT on these invoices in the amount of €5.614.236 was recognized to us.

In addition to the mentioned financial acrobatics, EPCG was significantly burdened by bad business, or rather political – economic transactions. Montenegrobonus had a debt on the basis of delivered electricity towards KAP in the amount of € 13 mil, KAP’s debt in the amount of € 17 mil was written off through so-called CO2 loans (Decision made by the Government and previous Board of Directors, against which criminal charges were filed before Special Public Prosecutor’s Office). Also, KAP owes almost € 5 mil on the basis of invoices from 2021, while the debt of the Water Supply Cetinje was inherited and today it amounts to almost € 10 mil.    In the middle of 2020 unnecessary advance payment for ecological retrofitting of Thermal Power Plant in the amount of € 10 mil was paid (this case is under the procedure before Special Public Prosecutor’s Office). Furthermore, the amount of € 6 mil remained in Prva Banka until 2028 as subordinated debt (the decision was made several days prior to releasing from duty of the former Board of Directors in march 2021).  On the basis of the mentioned several transactions only, EPCG lost the amount of € 198 mil and the capital was reduced by € 288.957.523. In addition to the mentioned unnecessary expenditures, there is a decision made by the former Government to pay € 30 mil to the Budget, for the first time in the last 30 years, which explains the ambient that was found by the new management which assumed the position at the end of March and beginning of April 2021. Perhaps it is important to mention in this context that during the last three months of 2020 and first three months of 2021, it was exported 788.581 MWh more than imported, whereby a significant income was gained. It is easy to assume, and therefore to conclude, that a remarkable hydrology at the end of 2020 and beginning of 2021 saved EPCG from bankruptcy. 



Promptly upon establishment of the new management, 425.482 MWh of electricity was imported in the next six months (beginning with April until September inclusive). Despite these negative data, EPCG concluded 2021 business year with the best result in its history, which reflected in the actual income amounting above € 47 mill.

Activities of Elektroprivreda in the last 18 months and its plans for the upcoming period, as well as the expected result for this business year are explained below. 

I will list everything that has been done,  as well as plans for the following period.

HPP Perućica – Reconstruction of two generators was finished (contract from 2019), the new transformer on unit U5 was delivered and commissioned, the initial two phases of the cooling system reconstruction were finished, there is one more phase to be completed, stop log at the intake gate valve chamber Norin was reconstructed (the contract in force since 2020), 90% of works on reconstruction of supply channels at Moštanica and Opačica was completed, overhead line protections at OHL 220 kV was completed, works on Forest Park Krupac were initiated, contract on II phase of modernization and reconstruction in the value of € 30 mill. is expected to be signed in the next 10 days, contract on consultancy services for development of project documents for unit U8 was signed in the expected value of about € 25 mill;    

HPP Piva – works on reconstruction and adaptation of unit U2 were completed, there is one more to be completed in the next year. The value of the set of these contracts for all the 3 units is € 10,5 mill., works on the main overhaul of unit U3 in the value of € 1,7 mill. were completed, contract on overhaul of the rotor of generator G1 in the value of € 600.000 was signed, a part of works on protective structure at the entrance to HPP Piva was completed, the project on construction of roundabout in the value of € 1,4 mill. was completed according to liabilities towards the Municipality of Plužine, phase I of the reconstruction of Employees' Hotel was completed, final commissioning of the group governor was finished for two units thus enabling the control to be conducted in line with the requirements of EEC in real time;

TPP Pljevlja – Works on ecological retrofitting of TPP Pljevlja were initiated, the contract in the value of € 15 mill. was signed for adaptation of boiler with replacement of economizer and air heaters, main overhaul of the turbine was carried out, works on reclamation of Maljevac slag and ashes landfill are in progress, Preliminary design of Pljevlja district heating was completed and revised, public invitation for development of the main design and performance of works was announced, the opening of which should have been completed but is postponed due to cyber attacks. The Project is implemented in cooperation with the Municipality of Pljevlja and Public Works Administration, whereat EPCG is financing the first phase, the contract was signed and delivery of equipment for the new laboratory is in progress so that it could be accredited in line with EU requirements. 

In addition to significant efforts made in order to improve the existing electric power facilities, EPCG initiated a huge number of new investment projects, whereof the most important ones are as follows:

Solari 3000+ and 500+ (30 MW, value of equipment € 22 mill.) The complete documents were developed, funds were provided, more than 10.000 physical and legal entities applied, the equipment was provided via public procurements, EPCG Solar gradnja company was established and it deals with installation works; more than 200 solar panels have been installed so far on the roofs of the buildings. Once the project is implemented, the planned annual generation will be 44 GWh. This represents the first new source of electricity generation in the last 40 years.

This project results in huge benefits for the citizens, EPCG gets considerable quantity of free-float energy that may be placed on the market and it also enables a hundreds of new working positions.

Solari 5000+  (50 MW – equipment value is 35 mill.) The documents are prepared and implementation of the project will start by the end of the year by provision of funds and procurement of equipment. Many legal entities expressed the interest in this project. 

Solari 10.000+  (100MW – equipment value is € 75 mill.) It has been nominated via the Government’s projects for financing from the European funds. Preliminary-technical solution and Feasibility Study have been prepared.

Our business philosophy – produce where you consume, is nowadays dominant in the whole region.

Gvozd (up to 72 MW in the value up to € 81 mill.) with the pertaining transmission grid which will be refunded by CGES). Preliminary designs and all investigation works and bases were completed. The processes of obtaining construction permits have begun (already obtained for access roads), as well as tender procedures for contractors. The first part of the tender for selection of wind turbines supplier was completed (GE, Nordex, Envision and Goldwind made it through the first round). Signing of credit arrangement with EBRD up to 81 mill. is planned for December 2022. It is expected for the works on access roads to begin, with the expected construction deadline up to 15 months. It is expected for WF Gvozd to be on the grid by the end of 2023. 

HPP Komarnica (172 MW, in the value of € 260-290 mill.) In cooperation with EPS and designers from Energoprojekt and Jaroslav Černi Institute, technical part of the Preliminary Design and Feasibility study was finished. The Study on environmental impact assessment is under procedure before the Agency for Environmental Protection, the complaint was filed by EPCG. Installed capacity of the power plant is 172 MW and expected generation is 213 GWh. EPCG got the concession by the Government of Montenegro.

SPP Vilusi, SPP Krupac and floating SPP at Slano Lake. Locations were defined and 3 new projects with the capacity of 85 MW initiated. All the information needed to include these projects in SUP of Nikšić, whose adoption is expected, were prepared. The contract with EBRD on providing of technical support for floating solar plant at Slano Lake was signed. 

SPP Slano-Vrtac Dam (4 MW – the value of 4 mill.) Completion of Preliminary Design is scheduled for October and development of the Study on Environmental Impact Assessment was initiated. Urban-technical conditions for Slano dam were obtained. Upon completion of these activities, with preliminary definition of the contractor (if it is ESG), tender for procurement of panels will follow.

HPP Kruševo (Development of the Study on construction of the plant – value 300.000). All the necessary bases for development of the study were prepared. Tender procedure was implemented and signing of the contract with designer is expected to take place once the state public procurement system is in function again. The opening was planned for September 1.

Gas power plants (Study for development of Preliminary-technical design for construction of gas power plants in Bar, KAP and Pljevlja). In cooperation with the Ministry of Capital Investments, the reputable company SSA from Switzerland was selected as contractor for development of the studies regarding gas power plants. Development of the study is in progress, its completion and adoption is planned by the end of 2022.

Having in mind the overall situation, FU Supply realized excellent results in the previous period. Debt of the customers as at March 31, 2021 amounted to 184.509.409, аnd as at August 31, 2022 it amounted to 180.086.705. Collection was above 100%.



Listing of previous activities leads to an obvious conclusion of how EPCG has been operating so far and what our future route looks like. Malevolent and politically motivated individuals use the period in which, due to their disastrous politics and bad hydrology during June, July, August and September, running of EPCG business is quite aggravated. Just as a reminder, in those months Montenegro could have had electricity to export due to its huge solar potential. Nevertheless, up until this year EPCG has not generated a single kWh from solar plants except for the solar panels it has on its rooftop. Having on top of this the global energy crisis reflected all over the world through electricity prices, which fetched the unbelievable 1000 €/MWh in August, it is necessary to provide some explanation: 

In December last year EPCG made a Decision establishing electricity price for large customers (exceeding 10 MW) at 115 €/MWh, based on HUDEX exchange prices. At that point even the established price was 20% lower compared to the market price. We were fully aware of the fact that this price was going to jeopardize business operation of CEDIS as well as some business entities.

Time will prove that if we hadn’t acted like that EPCG would have ceased to exist, and one can easily conclude what could have happened to our economy. Unfortunately to us, Aluminium Plant, at that time our biggest customer, consuming 570 000 MWh/annum declined our offer. CEDIS, simply, had no other option.  Being aware of the fact that we lost the biggest customer who used to pay 45 €/MWh and to whom we invoiced 25M€, which is a significant amount, we have decided to hedge ourselves by selling 20MW in 11 months (160.800 MWh), at price of 202 €/MWh following a fully transparent and marked based procedure securing thereby the revenue of 32.4 M€. Just for comparison purposes the revenue we secured by selling 28% of APP consumption exceeded by almost 30% the amount we invoiced to Aluminium Plant Podgorica on an annual basis. In hindsight the decision to sell was not good to those who like gambling and who have proved their talent by gambling on EPCG for 30 years. What could happen if the market prices started to decline and we failed to sell electricity? It is when we would be blamed for either not selling or cutting the EPCG’s revenue. Obviously they knew the war between Russia and Ukraine would burst out in January and the biggest energy crisis ever was to embrace us all where the prices of energy generating products at markets would stagger to unbelievable heights. 

Should we get back to serious analyses it is important to announce that in the first 9 months EPCG bought 991.374 MWh of electricity and has paid or is about to pay for it the amount of 222.474.667,54 €. In the same period we sold 907,270 MWh making thereby income of 164,332,747.67 €. As at the end of September the total trading amounted -58,141,919.87 €. This result may be considered unrealistic for evaluation of final 2022 EPCG business since in that period we have mainly imported electricity.  The reason why the purchase price exceeded the sales price is staggering of electricity price at the market. We sold (surpluses) in January, February, March and April but we had to purchase in May, June, July, August and September.

TPP Pljevlja underwent overhaul in May and June. Market prices staggered constantly and exceeded those of January, February, March and April. Someone might ask why hadn’t we preserve January, February, March and April capacities of electricity for May, June, July, August and September. The answer would be because it was impossible since 80% of HPP Perućica generation comes from inflows. Water from inflow goes directly to turbines. If Slano and Krupac would be 100% full, and HPP Perućica would operate in its full capacity lakes would be completely emptied in 25 days. HPP Perućica is almost run-of-the river plant. And that is why the stories of emptied reservoirs are completely unfounded. Those artificial lakes are mainly used to optimize our generation and cover deficit in summer period.



The extent to which the aforementioned data are irrelevant may be best illustrated by the following approximation: Should, in the next three months, we achieve the average export/import we had in in the same period in the previous three years (2019, 2020 and 2021) on December 31, 2022 the balances would have the following results, we would buy 1,245,246 MWh worth of 293,134,563.22 € and sell 1,256,701 MWh worth of 377,633,146.34 € while the surplus in trading would be 84,498,583.12 €.   

Ordinary citizens will find those figures unreal, which is, to repeat one more time, a consequence of a big energy crisis and extreme values of electricity at the exchange. 

It would be frivolous of us to highlight that this is be the best result in the history of EPCG but what we may highlight is that Montenegro hasn’t almost suffered the energy crisis. No state aid was provided for the most powerful energy company, electricity prices were not increased and there was no scheduled blackouts. EPCG remained firm, possessing great potential to be a leader in the energy sector as well as in the economic development of Montenegro. In order to achieve this we need to work a lot.




Milutin Đukanović

Chairman of the Board of Directors of EPCG AD Nikšić