The former Government of Montenegro headed by Duško Marković, with its decree and unrealistic estimates of the amount of harmful gases emitted into the air, created an environment in which it was possible to transfer about 17 million euros from the coffers of Elektroprivreda (EPCG) to the Aluminum Combine.
This was done in February, on the eve of a change in the management of the majority state-owned energy company.
The new management of EPCG is asking the Supreme Prosecutor's Office to investigate the financial operations that took place immediately before their arrival.
As a basis for this transaction, according to the findings Center for Investigative Journalism of Montenegro (CIN-CG), was the Government's decision on the free allocation of so-called emission credits, which determined that EPCG, ie Thermal Power Plant Pljevlja (TE) and KAP, could release almost the same amount of carbon dioxide into the atmosphere (CO2). EPCG emitted more harmful gases than the amount of the loan, and KAP less, so it sold the "surplus" with the approval of the former government to a majority state-owned company.
CIN-CG interlocutors claim that the amount of emission credits to KAP was disproportionate and based on projections from the period 2005-2008. year, when a record production of aluminum was reached, almost three times more than now, with the consumption of huge amounts of fuel oil, which has since been replaced by gas.
Practically, for 17 million euros EPCG bought from KAP - nothing.
The Ministry of Capital Investments also assessed CIN-CG that it was an abuse of the previous government, because carbon dioxide emissions from KAP and EPCG, i.e. TE were estimated based on consumption from 15 years ago.
In an interview with CIN-CG, the new president of the EPCG Board of Directors, Milutin Đukanović, says that it is a matter of hidden state aid to KAP, which has been privately owned by Veselin Pejović's company Uniprom since 2014.
Đukanović claims that EPCG had no need to give money to KAP, but based on higher consumption, it could have directly purchased the missing loans from the state and paid about 18 million euros to the newly formed Eco Fund, a significant part of which would be returned through the financing of environmental projects.
By adopting the Law on Confirmation of the Paris Agreement in 2017 and the National Strategy on Climate Change, Montenegro undertook to contribute to the global reduction of greenhouse gas emissions by reducing emissions by at least 30 percent by 2030 compared to the base year 1990. . According to the national report, it already achieved this in 2013.
In order to limit the emissions of harmful gases from the biggest environmental polluters (Thermal Power Plant, KAP and Iron Works), the former DPS government adopted the Law on Protection from the Negative Impacts of Climate Change in December 2019. In February of last year, the former Government passed the first by-law - the Regulation on activities that emit gases with the greenhouse effect. It defines that the total permitted emissions of harmful gases will be reduced by 1,5 percent per year, from 3.303.542 tons of CO2 in 2021 to 2.840.155 tons in 2030.
The decree also established the distribution of free emission credits until 2025, until the plant transitions to more modern technologies. With the explanation that they are doing this "in order to ensure the eventual return of the level of activity of the existing plants to the level from the period 2005-2008", KAP and TE were granted credit for 1.020.840 tons of CO2 emissions each, and Željezari Tosčelik for 5.800 tons.
The thermal power plant lacked 2020 tons of CO307.000 emission credits in 2, and it needed the same amount if it continued to operate this year. With this assessment, KAP had a huge surplus, so the transaction was made with a discount of five percent compared to the price established by the Regulation (24 euros per ton), which is a total of almost 17 million euros including VAT.
There is no strict obligation for EPCG to buy missing emission credits from other companies from the government decree, and the most it could risk, even if it did not pay money into the state Eco fund, was a fine of up to 40 euros. The increased emission from TE also did not breach the limits that Montenegro set for itself in relation to international agreements. In addition, Montenegro is not yet a member of the so-called Gothenburg Protocol, so even if more gases had been emitted than the assumed obligations, it would not have risked international sanctions.
Sanctions are currently threatening Montenegro, because the Thermal Power Plant has exceeded the 20 working hours allowed for the period until 2023, so it can expect severe penalties from the European Energy Community.
Although, due to this and the delayed reconstruction, the further operation of the Termoelektrana this year is uncertain, the figure of 17 million euros included in the purchase is KAP emission credits for the year 2021, which further fuels the suspicion that this is a serious affair.
Milutin Đukanović calls the participants in this business an organized criminal group and has filed a criminal complaint with the Supreme State Prosecutor's Office. It includes former Prime Minister Duško Marković and Minister of Economy Dragica Sekulić, owner of Uniprom Veselin Pejović and director of Eco Fund Jovan Martinović, as well as members of the former Board of Directors of EPCG.
Most of them indirectly, or directly, rejected the allegations from the application.
Duško Marković stated in his response on Twitter that it is easier to construct affairs and devise media appearances than to work seriously and dedicatedly.
"After all, Milutin would have had neither time nor resources for sensationalism - if we had not left him a strong company owned by Montenegro, and a fat balance on the accounts," Marković wrote.
The company Uniprom confirmed in its response that KAP has reduced its emissions many times compared to the base year of 1990 and made a concrete contribution to fulfilling international obligations.
Uniprom KAP refers to "laws and logic" and claims that nowhere in the orderly world are resources distributed according to needs, but according to how much belongs to whom in a fair distribution.
"Every free CO2 emission credit granted so far, according to all laws and logic, absolutely belongs to Unipro KAP and EPCG. And whoever needs more, let him buy it", they said from Uniprom, with the assessment that "it is complete nonsense that the legal solution from 2019 favors the production of aluminum in Montenegro in any way compared to anyone, especially compared to production of electricity from coal".
Even on Uniprom's website, there is indirect evidence of the disproportionate allocation of emission credits, because they themselves boast that they have reduced emissions of harmful gases.
It says that they installed all the necessary, ecologically certified installations for liquefied natural gas, and "the gas infrastructure was installed through the complete Uniprom KAP, so that all negative parameters in production generated by the old way of working, which represented environmental pollution, were reduced by 70 percent." .
In the Energy Balance of the Government for 2020, it is pointed out that KAP completely eliminated the consumption of fuel oil and switched to cleaner fuel.
The director of Eco Fund, Jovan Martinović, commenting on the criminal complaint against him, told CIN-CG that it was a matter of great ignorance of the matter.
"The Eco Fund, i.e. the Environmental Protection Fund, was founded as a limited liability company on March 3, 2020, and as such has no public authority. This is important to point out, because operations and decision-making within the Eko fund as a doo cannot have any influence on the distribution of free CO2 credits", Martinović stated for CIN-CG.
He pointed out that the regulation dealing with CO2 credits was passed less than a month before the actual registration of the Eko Fund and that it stipulated that the Eko Fund should maintain a register of CO2 credits.
"The decree stipulates that in the event that CO2 credits are issued at a public auction by the Government, all revenues would go to the account of the Eco Fund for the implementation of projects in the field of environmental protection in accordance with the Government's decision. When the Regulation was passed, we had information that the previous government had the intention of announcing the issuance of CO2 credits that would be offered at a public auction," says Martinović.
That is why, as he adds, they informed the new Government about this possibility in letters in December 2020 and January 2021 to the line ministries in order to take this possibility into account.
"In this way, it would be possible to finance capital projects of strategic importance for Montenegro on the basis of the sold CO2 credits through the Eco Fund. That's why we were even more surprised by the information that I was included in the criminal report, which I perceive as an attempt to discredit on a political basis, the material evidence and the meetings held say something completely contrary to that, which is that we were the initiators of the show and the suggestion that it enter state budget plan for 2021," said Martinović.
The Government Decree defines that loans are granted through a public auction. Đukanović claims in the application, however, that "Marković and Sekulić never formed the commission that was supposed to conduct the auction, all with the aim of enabling Uniprom to gain an illegal benefit."
He sees Martinović's fault in the fact that, as he claims, the purchase and sale of emission credits between EPCG and KAP was carried out on the basis of an agreement between the two companies and that Eco Fund was not allowed to accept this when registering the emission. According to the register of the Eco Fund, the transfer of emission credits from KAP to EPCG took place on February 12, a month before the dismissal of the Board of Directors of EPCG.
Đukanović: Already contracted work is covered by the regulation
In a statement to CIN-CG, Đukanović says that the work with KAP was previously agreed upon and the former government only "covered" it with the Regulation.
In his application to VDT, he states that through the Decree for 2020 and 2021, the former Government determined the number of free emission credits for the year that benefited only Uniprom, even though they were aware that it was really unnecessary, "and all so that Uniprom would not use transferred the number of free emission credits with an enormous fee to Elektroprivreda Crne Gore".
The non-governmental organization Eko Team told CIN-CG that it is not clear how and why the same amount of emission credits was allocated to the Pljevlja Thermal Power Plant, nor is there any logical explanation for this.
"Such distribution of emission credits enabled KAP to profit and earn additional funds only because at the time of the preparation of the Regulation, it was allocated a significantly larger number of emission credits that do not correspond to KAP's current production and CO2 emissions," said Diana Milev Čavor from this NGO.
According to the Government's Second Biennial Update Report on Climate Change from 2019, the total emissions of greenhouse gases (GHG) in 1990 in KAP amounted to more than 4.000 gigagrams (Gg or one gigagram is equal to one thousand tons), and In 2015, below 2.000 Gg.
"Montenegro has set ambitious goals for reducing GHG (greenhouse gas) emissions in its Nationally Determined Contribution (NDC), a 30 percent reduction in GHG emissions by 2030 (compared to the reference year 1990). Already in 2013, Montenegro achieved and implemented the targeted reduction of 40 percent compared to 1990 levels. This was the result of reduced economic activity in the KAP and in the agricultural sector, but also a general decline in industrial activity since 1990, and later the financial crisis," states the second report on climate change, while the third needs to be done. this year.
Hours wasted, reconstruction far away
At the end of last year, TPP Pljevlja spent 20 working hours, which were allowed for the period from 2016 to 2018 by the decision of the Ministerial Council of the Energy Community from 2023, and the ecological reconstruction project has not yet been implemented.
TPP Pljevlja, i.e. its only unit, is one of ten in the members of the Energy Community - the other nine are in the Kolubara A (Serbia), Kakanj (BiH), Tuzla (BiH), Morava (Serbia) power plants, which are part of the opt-out mechanism.
This mechanism allows members to exempt certain coal-fired power plants from the application regime of the EU Directive on large combustion plants, which entered into force on January 1, 2018, and prescribes the reduction of sulfur dioxide and nitrogen emissions, as well as dust and other substances harmful to the environment.
The EC told CIN-CG that the number of working hours in the opt-out mechanism is defined by that Directive and the corresponding decision of the Ministerial Council.
"Any change could only be approved by the Council of Ministers based on the proposal of the European Commission. The Secretariat cannot extend the opt-out period. Considering the confirmation that the rules from the opt-out were not respected, the Secretariat is currently preparing procedures for resolving disputes against Montenegro", said the EC.
If a signatory to the Agreement persistently fails to fulfill its obligations, the Ministerial Council can suspend certain rights derived from the Agreement, including voting rights and the right to participate in meetings or mechanisms provided for in the Agreement, which happened in Bosnia and Herzegovina in January.
The EC reminds that in the Report for 2020 they stated that TE Pljevlja will use up hours from the opt-out mechanism by the end of 2020 and that they are worried about whether and under what conditions it will continue to operate.
“After 20.000 hours, the plant can only remain in operation if it meets the (stricter) standards of the Industrial Emissions Directive. In order to achieve this goal, the reconstruction of the plant is inevitable," said the EC.
The ecological reconstruction of Pljevlja Thermal Power Plant worth 54 million euros was awarded to a consortium consisting of the Chinese DEC international, Bemax, BB Solar of Blaž Đukanović (son of the President of the Republic Milo Đukanović) and the Podgorica company Permonte. The contract was signed on June 10, 2020, but the start of the works is uncertain.
At the beginning of April, the Ministry of Capital Investments submitted information to the SDT due to suspicion of abuse of position in connection with the consumption of working hours and the initiated environmental reconstruction of the existing thermo-block in Pljevlja.
The Ministry also states that the contract was concluded in violation of the legal and tender procedures, a delay was tolerated in the preparatory phase of contract implementation and the works have not yet started, "which calls into question whether the works will even be completed by the end of 2023".
Because of the reconstruction of the TPP at the end of June last year, a criminal complaint was filed against Duško Marković, Dragica Sekulić and Deputy Prime Minister Milutin Simović, as well as the EPCG management at the time, by the MP of the Movement for Change, Branko Radulović.
"The suspected persons did not comply with the Law on Public Procurement and the regulations on the preparation and control of technical documentation, tender procedures, whether it is a project task, conceptual design or main project, auditors, so that competitiveness, equality or the criteria of the most economically advantageous offer were not ensured and nor technical and technological advantages, which is the basis of the investment," Radulović stated in the application.
The Prosecutor's Office did not answer CIN-CG's questions about what they did regarding the submitted report.
They gave it to Deripaska, with fists and KAP
Even when KAP was owned by CEAC of Russian businessman Oleg Deripaska, it received help from the state through guarantees that the citizens had to pay in the end.
The audit established that the Government, in the Settlement Agreement, gave 135 million euros in guarantees for KAP loans, and in the decision to borrow Montenegro another 49,6 million, without corresponding counter-guarantees and with a significant risk of activation. And that case of guarantee for KAP is in the state prosecutor's office.
In that period, the government also gave subsidies for electricity to KAP.
Thus, in 2009, the subsidy was 15 million, in 2010, 20 million, and in 2011 and 2012, a total of 25 million euros. The government received a warning from the European Commission due to subsidies.
KAP was declared bankrupt in 2013, to be taken over by Pejović in 2014.
Fuel oil is no longer consumed
In the period 2005-2008, on which the distribution of emission credits was based, KAP was the largest consumer of fuel oil in Montenegro. According to the annual reports of Monstat, the total consumption of fuel oil in 2005 in the country was 82 thousand tons, in 2006 112 thousand, in 2007 110 thousand, and in 2008 115 thousand tons. Consumption of fuel oil in Montenegro already decreased to 2009 thousand tons in 40, when KAP was hit by the global economic crisis.
Production of aluminum ingots, according to Monstat data, fell in 2009 to 63.960 tons, while from 2005 to 2009 it was over 100 tons. In 2019, only raw aluminum production of 36.522 tons was recorded.
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