A number of projects in the energy sector to private ownership


State-owned energy companies have planned to invest €71 million this year. Half of the sum will be invested in projects that are dominantly in the private and not the public interest. At the same time, the Energy Regulatory Agency (RAE) relieved the owners of small hydro power plants of payment for technical losses in the power distribution network, unlike households and small and medium-sized companies, which will pay €32.8 million in the next three years through electricity bills.

RAE has approved to Montenegrin Electric Transmission System (CGES) an investment of €44 million for 2017, €27.6 million of which refers to investments related to the project the undersea cable between Montenegro and Italy, which will not provide any benefits to consumers, but will increase their electricity bills through a greater return on investment for energy companies.

CGES carries out the project of the undersea cable in partnership with the Italian partner Terna. The business plan of the Podgorica-based company for the next three years, when evaluating the economic and social benefits of the project, states that the cable connect the markets of Italy and Eastern Europe, which would increasing “profits of electricity producers.” The largest electricity producer in the country is Montenegrin Electric Enterprise (EPCG), but the private companies that build small hydropower plants and wind farms is increasing. Therefore, it is clear that the private interest to a largely subordinated to the public.

In addition, CGES will invest around six million in the construction of the substation Brezna this year, which should provide the connection of wind farms in Krnovo. However, CGES in its business plan states that this investment “has no significant impact” on economic and social well-being. Brezna has been designed to allow for the connection of small hydro power plants around Pluzine and Savnik, as well as potential HE Komarnica in the future.

The remaining 10 million in 2017, according to the plan, are to be invested in the rest of the transmission network in the country.

The other energy company, Montenegrin Electricity Distribution System (CEDIS), plans to invest €27 million, around 15 million of which in the installation of so-called “smart meters”, with which it will try to prevent consumers from steling the electricity. The new meters will also create the possibility of shutting out consumers by „pushing a button“ if they do not regularly pay their electricity bills. RAE has previously announced that the new Energy Law stipulates that 85 percent of consumers will have new remote meters until early 2019.

CEDIS’s business plan also shows that the company still does not intend to significantly invest in the modernization of the distribution network and it has budgeted around ten million for this purpose during 2017. The state of the distribution network has been disastrous for years, which was proved in the course of last storm earlier this year.

All these data indicate that the energy companies have significantly adjusted their investment plans to the needs of private investors, while the RAE’s latest methodologies for calculating electricity prices are an effort to further stimulate private business at the expense of the end customers.

The power generators that are connected to the distribution system are essentially excused from paying for the technical losses, because RAE did not recognize them as beneficiaries of the system, thus putting them in a privileged position compared to the others, especially households and small and medium size industries, which will pay €32.8 million for losses in the next three years. By doing so, the constitutionally guaranteed principle of equality has been violated.

Construction of small hydropower plants on Montenegrin rivers has been largely carried out by businessmen close to the ruling party or those being relatives or friends of the family of a former Prime Minister Milo Djukanovic. Thus, these facilities are being built by the son of the former Prime Minister Blazo, his best man Vuk Rajkovic, or companies owned by construction tycoons Tomislav Celebic and Baca Radovic.

Consumers pay a special fee for electricity produced from the so-called renewable energy sources through their electricity bills, while the new Energy Law has compelled EPCG to purchase such electricity from its manufacturers. According to the latest decision of the Government of Montenegro, on the average bill of €43 this fee will be increased to €2.13 from the next month.

Ines Mrdovic
MANS Investigation Center Coordinator

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