The government has decided to terminate the contract with the Czech company Škoda praha, which was the current partner of EPCG on the construction project of the second Block of Thermal Power Plant (TE) Pljevlja, and by the end of January next year a new solution will be proposed for the implementation of that project.
It was also decided to start the ecological reconstruction of Block I of the TE, which will cost 40 million euros and will be financed with EPCG money, and the heating of Pljevlje will also be done in parallel.
Those two projects, as planned, should be completed by 2021.
In September 2016, the government signed a contract on the development of the main project (EWA contract) and a contract on the execution of works (EPC contract) with a partner from the Czech Republic.
Škoda's obligation was to provide a financier for the project worth around 338 million euros.
Škoda Praha was supposed to provide 85 percent of the required money. The plan was for the Czech Export Bank (CEB) to give a loan, but it gave up lending, due to, as it previously stated, the impossibility of obtaining a state guarantee.
Škoda Praha then proposed the Bank of China as an alternative financier for the project of the second unit of the TE.
The Executive Director of the Directorate for Development and Engineering at EPCG, Ivan Mrvaljević, said that the Management Committee of the Block II TPP construction project decided today to terminate the contract with the Czech partner on instructions from the Government.
"The reasons for this are the impossibility of realizing the project in accordance with the signed contracts from September last year, that is, the fact that even after a year after the withdrawal of the Czech Export Bank, the partner did not offer an acceptable financing model. Despite the efforts made by the representatives of both teams, we did not manage to find agreement on a satisfactory structure of project implementation (technical specification and financial conditions)", said Mrvaljević, today at a press conference.
He explained that the decision does not mean that EPCG is abandoning the construction of the second block and that an alternative solution will be found by January 2018.
He said that the Management Committee and EPCG decided to implement the ecological reconstruction project of the first block of the TPP, which will be completely reconstructed by 2021.
"The reconstruction will be in accordance with the strictest ecological standards and the decision of the EU from July this year, and the estimated value is 40 million euros. In parallel with that, the Pljevlja heating project will be implemented in cooperation with the Government and the municipality until 2021. These two projects will contribute ecological situation in Pljevlje," said Mrvaljević.
Economy Minister Dragica Sekulić explained that the Government decided to terminate the contract and urgently reconstruct the first block of the thermal power plant in order to provide citizens with a safe supply of electricity, as well as to ensure the operation of the thermal energy complex in Pljevlja.
She added that they had been looking for an alternative solution with the Czechs for a year, and that there was no time to wait.
Minister of Sustainable Development and Tourism Pavle Radulović said that after the reconstruction, the first unit of the thermal power plant can operate for another 20 years.
"The environmental situation in Pljevlje is bad, but we are now on track to change it. After December 27, the tender for the reconstruction of the main city heating plant will be held, which will significantly improve the situation before the reconstruction of the second block," said Radulović.
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