EPCG: Autopsy of the collapse

While the state leadership prepares for anniversaries, the Electric Power Company of Montenegro (EPCG) is reporting to the public about its own demise. The latest financial statements have confirmed what the profession has been warning about: a net loss of 92,1 million euros in 2025, with a record increase in debt and a decline in liquidity. This is not a statistical error, but an autopsy of bankruptcy caused by incompetent multi-party management and incomprehensible insistence on a project that has long since lost all logic.

The central cause of this collapse is the so-called "ecological reconstruction" of the Pljevlja thermal power plant (TPP) - a meaningless project that did not harmonize the operation of the power plant with legally binding technical standards for new plants, and was implemented even though it was known that this could not be achieved after the exhausted limit of 20.000 operating hours. This investment cost the electricity company around 200 million euros, and it will not be able to fill the emptied coffers with income from its further operation. On the contrary, it can only increase the already huge losses.

Domestic law, harmonized with the EU acquired-em, orders that the further operation of the TPP be reduced to only 1.500 hours per year, which is economically unsustainable in a fully integrated market. Everyone knows this, but no one is allowed to say it. The Minister of Energy is still silent, and he should finally disclose the decision of the Ministerial Council of the Energy Community, which concluded that the contract with that institution was violated. Without recognizing this fact, the closure of Chapters 15 (Energy) and 27 (Environment) and Montenegro's accession to the EU in 2028 are seriously questioned. The only benefit from further delaying this recognition can be for companies and individuals to whom this project, harmful to EPCG, the state and citizens, brings profit.

Although the opposition MPs in parliament spent hours criticizing the EPCG management for its disastrous financial results, their blade remained blunt - it was a blank shot. The reason is devastating: none of them dared or did not want to point out that the failure of the ecological reconstruction was the real cause of the problem. In order to successfully call out the management and demand its responsibility, the opposition MPs would have to - and they are clearly not ready to - go through their own catharsis and admit their own initial mistake.

Because they, as the former government, are precisely "to blame" for the failure of this project to meet the standards for the operation of existing power plants within the given deadline and within the allowed 20.000 operating hours, which was feasible. If they admitted this mistake, they would have the moral right to demand the same from those who succeeded them and continued to make even greater ones after prohibitively high penalties for CO2 emissions were officially announced, and the standards became stricter and unattainable for the project to be launched.

From today's perspective, it should also be clear to those MPs that they were wrong to have put undue pressure on the Italian A2A as the government to invest in the failed Second Unit of the TPP instead of renewable sources. By acknowledging this fact, they would confirm that they are aware that they have thereby postponed Montenegro's energy transition by about 4-5 years, which is additionally delayed by that much due to inaction since the Paris Agreement in 2015. Until that happens, their criticism will have no effect. And there is no such recognition, even though the Energy Community and the European Union have clearly stated that after this "reconstruction", the TPP not only does not meet the standards for new power plants, but that these standards will be further tightened from 1 January 2028.

Without this catharsis, there will be no expert debate in parliament, but only a continuation of the futile clamor that makes the EPCG management immune from liability for hundreds of millions of euros in damage. If they do not plan to admit their mistake and offer the truth, it is better for the opposition MPs to abandon the intended hearing in parliament than to further embarrass themselves in front of a public that is demanding solutions and accountability.

Without admitting one's own mistakes, it is unconvincing to demand accountability from those who today, at no cost and against the public interest, are selling off resources to privileged partners from the UAE. While the financially exhausted and technologically frozen EPCG no longer has the capacity to lead the transition, the Government is using this deliberately caused collapse as an excuse for the urgent sale of energy sovereignty through arrangements with the UAE. These contracts, concluded without a tender and under the protection of interstate agreements, irresistibly evoke the idea of ​​high corruption. Unlike the one with A2A, which, despite all its flaws, was subject to clear rules and left 250 million euros in EPCG's coffers upon termination, these new arrangements are a legal "black hole" into which the future of generations can disappear.

Given the long and bitter experience, it is difficult to believe in the possibility of catharsis and sobering up of our political class, whether in opposition or in power. The non-governmental sector also rarely or never speaks out about this unnecessarily created major problem, and individuals who do so are not understood. The interests of citizens, in the given circumstances, can only be protected by institutions. In this regard, I call on:

- Constitutional Court to urgently declare unconstitutional agreements with the UAE that suspend domestic legislation;

- Anti-Corruption Agency (ACA), to whom I provided detailed information about the administration's unscrupulous actions, to finally come out of hibernation. The new director has the opportunity to initiate proceedings that will show whether the state is stronger than the energy lobby and whether its priority is public or particular interest;

- Delegation of the European Union to publicly announce and discourage the further accumulation of hundreds of millions of euros in losses that will be passed on to citizens through higher electricity bills.

It is also time for the era of complete impunity in Montenegro to finally end. By law, the company leaders who made decisions about unsuccessful and harmful ecological reconstruction, despite warnings, would have to compensate for the damage with their own assets. That would be the first real step towards a mature society. Without such responsibility, every anniversary of independence will be just a celebration of the elite's right to spend our future with impunity.

CHRONOLOGY OF THE DOWNFALL

- 2015: Paris Climate Agreement signed. Montenegro ignores global alarm and continues with coal plans, while the transition to renewables essentially stalls.

- 2015-2017. A2A SCHEDULE: Strategic conflict with Italian partner. The government insists on the Second Unit of the Pljevlja TPP, while the expert partner seeks a shift towards green energy. The Italians leave, leaving EPCG in the coffers 250 million euros.

- 2018-2020. "ECOLOGICAL RECONSTRUCTION" LAUNCHED: Due to the slow preparation of technical documentation and awarding the tender to the controversially selected bidder, the contract with the contractor was only signed in mid-2018. 2020..

- COUNTRY 2020. END OF THE YEAR: Pljevlja TPP consumes the allowed 20.000 working hoursThe Energy Community Secretariat also noted this at the beginning of 2021. initiates a dispute against Montenegro because the TPP is not in compliance with EU standards. The EU decides on high CBAM penalties on electricity imports from coal-fired TPPs.

- APRIL 2022. MISSED CHANCE: Instead of looking for alternatives and building a new production facility compliant with EU standards, EPCG, with the support of the Government, is increasing the value of the contract with the contractor for 15 million euros and begins the implementation of "ecological reconstruction" which is known in advance to not meet strict EU standards and that exports will be burdened with huge CO2 penalties.

- 2023-2025: EPCG is investing around 100 million euros and loses income due to the shutdown of the TPP from additional 100 million eurosAt the same time, mass party recruitment continues, further exhausting the company.

- MAY 2026: Financial statements confirm the collapse: net loss of 92,1 million eurosThe coffers are empty, and the dependence on imports and rain has never been greater.

- JANUARY 1, 2028: Even more rigorous EU standards are coming into force.

The author is an economic analyst