EPCG: An answer that is not it

Immediately after the publication of my column "EPCG: The High Price of Political Success" in "Vijesti" on September 7, the EPCG management issued two statements that are difficult to understand otherwise than as a forced reaction to the issues I raised therein.

In the first, from September 7th, the public is informed that the thermal power complex in Pljevlja produced 442 thousand MWh of electricity from June to August, or about 65 percent of EPCG's total production. According to the company, this production had a market value of more than 51 million euros, while the same amount on the Hungarian HUPX stock exchange would cost about 57,4 million.

The data is interesting, but it does not answer the basic question: how much did EPCG really cost to produce those 442 thousand MWh?

The market value of the electricity produced is not the same as revenue, and revenue is by no means profit. For the real result of the Pljevlja power plant, we need to know all the costs - from coal, salaries and repairs to depreciation. Therefore, the comparison with HUPX is just empty PR math that does not say whether EPCG earned money on that production or made a new loss.

This is particularly important since January 1st of this year, when the CBAM mechanism, or carbon emission cost, began to be applied for electricity exports to the European market. For Montenegrin electricity, the implied CBAM cost in the first quarter was around 74 euros per MWh. This cost is formally borne by the importer to the EU, but it directly affects the economics of exports.

So, it is not enough to know how much that electricity would cost on the European stock exchange - one must also know how much its production actually costs and whether, after all the costs, it could even bring EPCG a profit. Given its high production price of around 84 euros per MWh, it is hard to believe that this was possible even at high seasonal prices. In the rest of the year, such a result is not even theoretically achievable.

More importantly, the EPCG management does not address my claim about mismanagement in the case of the ecological reconstruction of the Pljevlja thermal power plant. About 100 million euros were invested in that project, with approximately the same amount of lost revenue due to more than eight months of production downtime during 2025. Therefore, the total economic burden is about 200 million euros, and the thermal power plant is not in line with European standards for new plants, which is why it cannot obtain a long-term permit to operate at full capacity.

The EPCG management did not respond to this claim with a single word.

I don't expect him to answer either, although it would be of great help to the Special State Prosecutor's Office., which took over the processing of my report on the violation of public interest from the Agency for the Prevention of Corruption.

Second announcement, September 8th, was even more direct. EPCG boasted of unchanged prices for households, a larger number of regular payers, and around four million euros set aside for discounts.

And this is, obviously, an attempt to answer one of the key theses of my previous text: a stable electricity price in itself is not proof of successful business. It can only be so if a company simultaneously manages to keep costs under control, increase productivity, and generate sustainable profits.

Otherwise, the simple question arises: who pays the difference?

EPCG says that it has "taken upon itself" a significant part of the pressures of the energy market. That is precisely the problem. If EPCG has taken upon itself the burden of social policy, that burden has not disappeared. It has merely shifted from one pocket to another.

It appeared in the company's results, in its borrowing, in the reduction of space for other investments, and now in the need for the state to provide it with guarantees.

And the story here is no longer just about EPCG.

State guarantees are not an infinite resource. When the state guarantees EPCG's debt, it does not just give the company the ability to access money more easily. It takes up part of the state's limited fiscal space. That space will no longer be available for other needs to the same extent - for other state-owned enterprises that may need guarantees, for infrastructure projects, or to help citizens and businesses affected by natural disasters and other extraordinary circumstances.

That is why the 132 million euros in state guarantees is not just a technical issue of financing EPCG. It is a matter of priorities in the use of the state's limited fiscal capacity.

And here we come to the paradox of the whole story.

EPCG has been a company that has benefited the state greatly for decades. As the largest state-owned energy company, it should be one of the most important sources of profit and public revenue. Instead, it is increasingly dependent on state support. Instead of contributing its profits to the state budget, EPCG is increasingly draining it.

That is the best way to measure the real cost of a policy that has been presented for years as a great political success.

Because the price of electricity is not the only price that citizens pay. They also pay it through public revenues that provide state guarantees. They pay it through what the state will not be able to finance elsewhere because of those guarantees. They pay it through EPCG's future liabilities. And, finally, they pay it through the weakened financial position of a company that used to be able to borrow much more easily without state guarantees.

It is not disputed that households should be provided with affordable electricity. What is disputed is whether social policy should be conducted through the EPCG balance sheet, by keeping the price politically acceptable, and hiding the real cost of that policy in the company's operations and later transferring it to the state.

It is much fairer for the state to clearly state how much social policy costs and to direct the assistance towards those who really need it. Because a household that spends a few dozen euros per month and one that spends a few hundred euros do not have the same interest in subsidized electricity prices. If the burden of such a policy is ultimately transferred to the budget, then everyone pays for it through taxes and other public revenues.

That is why the two latest statements by EPCG, regardless of their intention, do not answer key questions:

How much does a policy of keeping prices unchanged for years cost?

How much does it cost to produce the electricity that EPCG is bragging about today?

How much does it cost to borrow money for a company that was once able to borrow without government guarantees?

And, most importantly, how much will it ultimately cost the state to maintain the image of EPCG's political success?

Data on megawatt-hours produced, the number of regular payers and millions of euros in discounts are not enough to answer these questions. Balance sheets, costs, debts, investments, their profitability and a clear plan for the company's financial recovery are needed.

The prices have remained the same. But the bill for their maintenance is no longer just EPCG's bill. It is increasingly the state's bill.

The author is an economic analyst