Ecological reconstruction of the thermal power plant in Pljevlja: Fear of contract annexes and more expensive work

When the story about the ecological reconstruction of the thermal power plant (TE) in Pljevlja was renewed, it was expected that the work would be completed next year.

At the end of last year, Elektroprivreda announced that the project would be completed in 2022, and after the contract was signed with the selected consortium on June 9 of this year, it was announced that the ecological reconstruction would be completed in 2023.

This important project costs 54,43 million with value added tax, and the work was won by the consortium Dec Internacional - Bemax - BB Solar - Permonte.

The opinions of experts and analysts in this field, with whom "Vijesti" spoke officially and informally, were divided - from the belief of those from the state enterprise that everything will be according to the plan and the contract, over the fact that this work will take significantly longer, that annexes to the contract are inevitable , a higher price than the contract, to the fear that the work will not be completed and that the Pljevlja Thermal Power Plant could be shut down.

EPCG emphasized that the goal is to extend the working life of the thermal facility by 30 years.

EPCG expects everyone to respect their obligations

The signing of the reconstruction contract, compared to EPCG's initial expectations that it would be made official at the end of 2019, was almost half a year late.

"As you know, the contract was supposed to be signed a few months ago, but the signing was postponed due to the development of the epidemiological situation and preventive measures of the NKT. That time was not wasted, but a lot of work was done on many prerequisites for the development of the main project that we expect in the next six months. Since then - after the creation of the main project, within about 18 months, the creation of a system for desulfurization and denitrification, as well as the creation of a thermal station for heating Pljevlja, is planned. EPCG will also donate an additional two million euros to Pljevlja for the primary heat pipe. We expect a responsible approach and respect for the assumed obligations of all parties involved in the realization of the project", it was announced from the state EPCG News".

Six months were planned for the development and revision of the main project, and earlier EPCG announced that 12 months from the signing of the contract, an energy source for the heating of Pljevlja would be provided.

At the tender where bids were opened on October 15, 2019, the EPCG Commission chose on November 8 a bid worth EUR 54.427.700 (including VAT) from a consortium led by the Chinese DEC.

It also includes the company BB Solar, co-owned by Blaž Đukanović, the son of the president of the country, Milo Đukanović.

In the tender, EPCG estimated 54,45 million with VAT for the work that should solve environmental problems, extend the working life of the thermal power plant...

Competitive bids from the Chinese Shangai Electric Group Co.Ltd, worth 97.922.683 euros, and the German-Slovenian consortium Hamon - Rudis, worth 72.539.500 euros, were rejected as incorrect.

As long as they don't raise the price with annexes

"One of the most common ways in which companies of individuals close to the highest officials of the government win tenders in Montenegro for years is to offer an unrealistically low price, which, after winning the job, these same officials subsequently "finish" with annexes to the contract. European rules and good practice dictate that such offers be rejected or that such a tender be canceled and re-announced. In our country, this is respected only when, due to some unforeseen circumstances, "other people's" bids have to be declared the tender winners. The only novelty that has become popular recently is that these officials are no longer hiding behind friends, but are directly handing out tenders to their closest family members," said Dejan Mijović, a former member of the EPCG Board of Directors.

That's why nobody is surprised today, adds Mijović, "that the son of the president of the state and DPS regularly "wins" at all the important tenders he participates in, and no one has any illusions that his price will not be adjusted later this time as well."

EPCG did not specify what will happen if the selected consortium encounters a possible problem in the next few months in relation to what the bidders have committed to in the contract and whether EPCG, in that case, will be in a position to prevent possible new annexes to the contract.

Mijović believes that a million dollar advance will be paid for the affected work and that it is "a pre-election promise that, like the other block of TE, will not be realized."

"Ecological reconstruction would not increase the efficiency of the thermal power plant, but its production costs would be far higher than the market ones, so it would not be able to survive without subsidies (financial assistance) from the state. And subsidies, as is well known, are prohibited in the European Union...", Mijović pointed out.

Agreement before the elections

Independent member of parliament, economist Aleksandar Damjanović, warned last year that the start of the project was delayed and that this would affect the completion date, as well as the cost of the project.

"The recent signing of the contract with the consortium that ranked first in the tender corresponds to the parliamentary elections, so one gets the impression that this serious project is being placed in the pre-election function of the ruling party, which causes additional public suspicion. Annexes to the contract are a situation that should be carefully monitored, bearing in mind that the tender for the selection of contractors lacked the offers of most of the world's serious companies in this field, while those that appeared were significantly more expensive than the estimated budget," Damjanović said.

At this moment, he pointed out, "it is ungrateful to bid with reasons for that, but it is certainly a reason for the increased attention of the Government, that is, the line ministry for the realization of the project".

"In any case, I have no doubt that the contractors have taken a good look at all the important parameters, as well as the challenges they will face during the realization of such an important job, and that none of the signatories of this contract is counting on any breakthroughs, both in terms of the deadline of works, including the budget," pointed out Damjanović.

The project includes the construction of a desulphurization system, a denitrification system, improvement of the electrofilter plant and construction of a wastewater treatment system...

It is also significant from the aspect of providing a source of thermal energy for the heating of Pljevlja.

Canceled tenders for supervision and audit of the main project

The State Commission for the Control of the Public Procurement Procedure canceled, ex officio, two tenders of Elektroprivreda in connection with the audit service of the main ecological reconstruction project of the TPP, estimated value of 121.000 euros, and procurement of expert supervision according to the revised project, estimated value of 980.000 euros.

On May 25 of this year, EPCG decided to have the audit of the main project done by the company Sistem - MNE from Podgorica, as well as to have the expert supervision performed by the consortium Steag Energy Services GmgH.

Without going into the complaints made by the Civil Engineer company, the state commission canceled both tenders because it found that the tender documentation was not in compliance with the Law on Public Procurement.

They point out that this led to the restriction of competition and discrimination of bidders in these tenders.

The cancellation of these purchases will probably not affect the realization of the investment because the selected consortium has half a year from June 9 to prepare the main project, which means that the work on ecological reconstruction will begin next year.

Terms and working life

When asked whether the deadline of December 31, 2023, until which the TE has a limited number of working hours with the existing technology, according to the decision of the Ministerial Council of the Energy Community, and how many working hours are still left, EPCG answered that it was the decision of the EC related to limiting the operation of thermal facilities stimulates the countries of the region to complete their obligations.

"Montenegro was the first to do it. In the structure of production capacities in the region, thermal capacities prevail and most of them do not meet the requirements of European regulations in the field of environmental protection. With the ecological reconstruction of the existing block, Montenegro is currently the only country that meets the given conditions, and thus the possibility of extending the operation of the thermal energy complex in Pljevlja for the next 30 years".