The collapse of EPCG party governance

The regular annual shareholders' meeting of EPCG, scheduled for Vidovdan, was not held because the government representative did not show up. It was the third postponed meeting in just forty days, after two previously postponed extraordinary sessions. There is not a word about it on the EPCG website. It is as if nothing had happened.

And a lot happened.

The meeting was supposed to discuss the financial statements and the Management Report for 2025, which show that the largest state-owned enterprise is in the most difficult financial situation since the beginning of this millennium.

The loss of around 92 million euros is only part of the problem. The company has seriously increased its debt, accumulated liabilities to suppliers and practically exhausted its cash reserves. From a former significant contributor to the state budget, EPCG has become a beneficiary of state aid of as much as 70 million euros.

Why, then, did the Government not want to hold the Assembly?

According to well-informed sources within the company itself, the reason is not a disagreement over the financial statements. A government representative would have adopted them without any problems, because the government itself has been a sponsor of the poor business to a large extent, approving key decisions by the company's management. The problem, by all accounts, is much more mundane. Lome is arguing over whether the company will get a CEO with broad executive powers or a new model of collective executive management in which executive power would, as before, be shared by the coalition partners.

According to this information, the Europe Now Movement (PES) advocates the election of a CEO, in whose place it sees its candidate, while the New Serbian Democracy (NSD) insists on a collective model in which executive control over the company would continue to be shared "equally".

The discussion is therefore not at all about how to financially restore EPCG and finally establish professional management, which was the main purpose of the new Law on the Management of State-Owned Enterprises. It is solely about how to preserve party influence over the company within the new legal framework.

EPCG is currently in dire need of independent professional managers with proven experience in crisis restructuring of energy companies (turnaround management). If they are not available in Montenegro, they should be hired abroad. No matter how much they cost, it would be an investment that would pay off many times over.

However, in the perception of party leaders, the only important unit of measurement seems to remain political capital and control over the resources that come with managing the largest state-owned enterprise. While this struggle continues, the most important question remains unanswered - how to financially restore EPCG.

To answer that question, we need to go back a few years. When the Italian company A2A left EPCG in 2018, it left behind around 250 million euros in cash. It was a unique development opportunity.

Instead, the former government poorly prepared the environmental reconstruction of the Pljevlja Thermal Power Plant, controversially awarded the tender for its implementation, and was late in completing the project before the expiration of the allowed 20.000 operating hours at the end of 2020. This lost the basic purpose of that project - to meet the more lenient environmental standards envisaged for the operation of existing power plants on time.

The new government had the opportunity to review all of this and cut off the practice of hiring incompetent personnel. Instead of turning towards professionalization, it did not correct the mistakes of its predecessor, but rather took them on as its own. In April 2022, it continued the project with the same contractor, increased the value of the contract by an additional 15 million euros and invested about a hundred million in a facility that it must have known even then that it would not meet the new, much stricter European standards.

In response to my questions as a shareholder, published on the EPCG website on June 26th of this year, the company's management finally laid bare the real situation. With their explanations, they practically admitted that the Pljevlja power plant, after the ecological reconstruction, will not meet the stricter ecological efficiency standards. The legal consequence of this is that, according to rigorous European regulations, the plant will be able to operate for only 1.500 hours per year in the long term - or barely two months out of the year.

The project, which took the thermal power plant offline for eight months and cost citizens over 200 million euros in total, has definitely not achieved the goal for which it was launched and publicly justified. The final balance is devastating: in just eight years, since the state took over management, EPCG has slipped from 250 million euros of pure cash into the red and lost approximately half a billion euros of its financial strength.

Due to this enormous damage that has been directly caused to the company, its shareholders and all citizens of Montenegro, I have filed a complaint with the Agency for the Prevention of Corruption (ASK). After four years of investigation, the ASK recently finally forwarded the case to the Special State Prosecutor's Office (SDT).

It is devastating that the responsibility for these disastrous results is not being discussed in public at all. While political negotiations on a new distribution of control are taking place behind closed doors, no one is offering a financial restructuring plan. Such restructuring would have to include a bold, fresh look at the disastrous decisions of the new government to employ as many as 1.500 new workers in the EPCG system. Without opening this issue and facing the fact that the electricity giant has been turned into a party safe house for adoption, no recovery of the company is simply possible.

That is why EPCG today does not need a party-based CEO, nor a new collective model of dividing executive power "by depth." The company urgently needs a completely independent, professional management with a clear mandate to implement radical crisis management.

Because what is on the test today is not the question of which party will control the electricity sector in the long term. What is on the test is the elementary ability of the state to admit that the model of party parasitism has exhausted all its possibilities, and that the time has come for it to be replaced by professional management.

The author is an economic analyst