The consortium, which consists of the Chinese DEC International, Bemax and BB Solar and Permonte, is asking for an additional 54 million euros in addition to the contracted 15 million euros for the environmental reconstruction of the Pljevlja Thermal Power Plant (TE).
The reconstruction has already cost 11 million, which was paid in advance to the consortium last year, although the works have not even started.
More interlocutors Center for Investigative Journalism of Montenegro (CIN-CG) and Monitor, an expert in this field, claim that this reconstruction, if it happens, will not solve the key problems. Carbon dioxide (CO2) emissions will not be reduced, nor will energy efficiency be increased, so investing in the entire business is not justified. They warn that, considering the energy and environmental policy in Europe, it is necessary to look for better solutions and to give up wasting money.
The leadership of the Electric Power Company of Montenegro (EPCG) and the departmental Ministry for Capital Investments (MKI) have opposing positions. While the Ministry doubts that environmental problems will be solved and European directives will be met with the proposed interventions, EPCG claims that ecological reconstruction is the only solution and that otherwise the TE is threatened with shutdown, and Montenegro will incur huge costs.
At the end of last year, the thermal power plant consumed 20.000 working hours, which were allowed by the decision of the Ministerial Council of the Energy Community for the period from 2018 to the end of 2023. The European Energy Community has initiated proceedings and warns that it is possible that the continued operation of the TPP will be declared a violation of European laws.
Deadlines slip, works nowhere
"The commission made up of experts from TE Pljevlja and EPCG analyzed this contract in detail, and the representatives of the consortium defined that an additional 15 million euros is needed to properly fulfill the requirements from ecological reconstruction. With that, after the possible signing of that annex to the contract, the reconstruction will begin, which would last at least one and a half to two years,'' Draško Lončar from the Ministry of Capital Investments told Monitor/CIN-CG.
When asked by CIN-CG/Monitor about the start of the reconstruction, EPCG replied that the preparation of technical documentation is underway, that is, that "the main project has been handed over to the auditor".
"His comments and suggestions are expected. After harmonizing the documentation, the conditions will be created for the start of the works, because all the remaining documentation (eg building permit) has already been issued by the competent state authorities,'' EPCG says.
In November 2019, EPCG chose the Chinese DEC, supported by Bemax and a company co-owned by Blaž Đukanović, the son of the president of the country, Milo Đukanović, whose bid was 54,4 million euros. Competing bids of the Chinese Shangai Electric Group Co. Ltd, of EUR 97.922.683, and the German-Slovenian consortium Hamon - Rudis of EUR 72.539.500, were rejected as incorrect.
At that time, it was announced that the works would be completed in 2022, but last June, when the contract was signed, the deadline for the completion of the reconstruction was moved to 2023.
Activities related to the reconstruction, under the pressure of the EU, started at the end of 2017. The planned goal of the previous set of authorities and EPCG was to, in addition to solving environmental problems, extend the life of the thermal power plant to as many as 30 years. The new authorities and management of EPCG reduced it. In May of this year, the Assembly of shareholders of EPCG was informed that the goal was to "qualify the thermal power plant to continue its work in the next 15 years while meeting environmental standards".
Experts have been warning for a long time that these estimates are unrealistic, and that with compliance with European directives, the TE can be adapted to operate for 1.500 hours a year - four times less than before.
Meanwhile, officials are giving contradictory statements. EPCG executive director Nikola Rovčanin said at the beginning of June that the thermal power plant will meet all international standards and be the most modern in the region. During his visit to Pljevlja in mid-August, Prime Minister Zdravko Krivokapić said that the TPP will most likely have to stop operating by 2030 under pressure from the Energy Community and due to European Union rules.
The Ministry of Capital Investments told CIN-CG/Monitor that the additional money requested by the consortium is still being agreed upon:
"It turned out that the completion of the environmental reconstruction, which the consortium of contractors committed to by accepting the project task, cannot be completed at the original price in a way that would respect all the required parameters of the ecological reconstruction. That's why the consortium asked for additional funds (the amount of funds is still being agreed upon)".
Mrdović: 15 million is just the beginning
In their answers to CIN CG/Monitor, EPCG claims that "the potential works in the amount of 15 million are not related to the members of the consortium, but are professional specialist works on the reconstruction of the boiler plant, which are expected to be carried out by a renowned international company." Potentially, one of the contractors can be the Chinese company DEC International, as one of the leading manufacturers of equipment for thermal power plants".
"If the ecological reconstruction of the TPP is to be started, it is unlikely that the selected consortium will stop at an additional 15 million, but the work could end up costing 100 million euros," Ines Mrdović, legal advisor of the Action for Social Justice, told CIN-CG/Monitor. .
"And that for TE, which, after the reconstruction, could work for only a few more years, if there are new EU directives. I will remind you that the former management of EPCG launched a tender without a main project, i.e. according to the 'turnkey' system, so it is the chosen consortium that will propose technical solutions. In the meantime, additional tightening of air pollution standards is still expected from the EU, and it is highly questionable whether the reconstruction of the TE would satisfy them. It could easily happen that tens of millions of euros are practically "spilled" into the reconstruction, and that EPCG pays huge fees for pollution at the same time. "Unfortunately, Montenegrin consumers, as well as the state, which is the majority owner of Elektroprivreda, would feel the best," she says.
In the Information of the Agency for the Protection of Nature and the Environment on the initiation of the procedure for the revision and termination of validity of the Integrated Permit for the Pljevlja Thermal Power Plant, regarding the procedure that the Energy Community initiated in April against Montenegro due to the 20 working hours spent, the Government is advised to justify the pandemic .
To request "... the exclusion of working hours spent during the pandemic, as well as the suspension of the calculation of approved working hours from the beginning of the pandemic, i.e. the epidemic in Montenegro, while it lasts or until the decision of the Energy Community and/or the European Commission, which occurs later".
"The integrated permit issued by the Agency in 2018 stipulates that the environmental reconstruction be carried out within the approved 20.000 hours. This was not done, so that condition was abandoned. TE is operating illegally and I cannot now blame the pandemic when the contract was signed while the pandemic was ongoing, so that force majeure condition was present at the time of signing the contract," an energy expert who insisted told CIN-CG/Monitor on anonymity.
The Government has currently suspended the process of revoking the integrated license of the Thermal Power Plant, while the lawsuit with the European Energy Community is resolved.
The Secretariat of the Energy Community in Vienna confirmed to Monitor/CIN of Montenegro that "bilateral proceedings with Montenegro" are underway regarding the Pljevlja TPP case, as the first coal-fired power plant in the region whose operating hours have expired.
"If the operator does not ensure quick compliance, we will ask the Council of Ministers of the Energy Community to establish that Montenegro is violating its obligations under the Directive on large combustion plants. If the Council of Ministers agrees with the Secretariat, it will issue a binding decision declaring the continued operation of the Pljevlja Thermal Power Plant a violation of European laws. In the current version of the Energy Community Treaty, he cannot impose penalties. However, the affected citizens could request compensation in national courts based on the violation", Dirk Bušle, legal advisor and deputy director of the Secretariat of the Energy Community, told CIN-CG/Monitor.
In EPCG, they claim that they strive to harmonize the operation of this facility with EU directives:
"Any abandonment of the environmental reconstruction project, without first providing adequate replacement energy capacities, would be a violation of the regulations and would require the automatic shutdown of the thermal power plant".
A dramatic scenario and a job for the prosecutor
"The requirements that were presented through the project are aligned with EU directives when it comes to emissions of harmful substances into the air, as well as water pollution. After the work is completed, the contractor is obliged to guarantee emission limit values that are in line with the latest requirements of EU directives. Even if the shutdown period of the Pljevlja Thermal Power Plant is 2030, although EPCG's position is that the 'phase out' should take place in the period from 2035 to 2040, the ecological reconstruction project is profitable", claim EPCG.
The Ministry of Capital Investments gave a completely different assessment to CIN-CG/Monitor:
"The contract on the environmental reconstruction of the Pljevlja Thermal Power Plant, between EPCG and the consortium consisting of the Chinese DEC International, Bemax and BB Solar and Permonte is full of irregularities and requires a detailed analysis because, most importantly, the parameters set by the ecological reconstruction are based on the contract signed for the value of I cannot achieve 54 million euros".
The Ministry particularly points out that "CO2 emissions are not affected at all by this reconstruction, so the big question is whether to enter this process at all".
EPCG also admits that the reconstruction does not touch CO2:
"Works on the implementation of ecological reconstruction works, which developed countries have carried out in the previous fifteen years (or during the construction of new thermal power plants), imply the reduction of emissions of nitrogen and sulfur oxides and powdery substances into the air, as well as the treatment of waste water, but they did not imply the reduction of emissions CO2. Therefore, CO2 emission limits were not even the subject of the contract with the contractor".
The thermal power plant participates in Montenegrin electricity production with 40 to 55 percent, and the same percentage of carbon dioxide emissions it emits. Montenegro has undertaken European and international obligations to reduce CO2 emissions by at least 2030 percent by 55.
"Montenegro has committed itself to the Paris Agreement, and in that context, CO2 emissions must be at least halved. The thermal power plant emits almost half, and the rest everything in Montenegro. It is up to the Government to choose what to do: to reduce all traffic, tourism, agriculture, or to shut down one thermal power plant," Dejan Mijović, an economic analyst who has been dealing with the energy sector for a long time, told CIN-CG/Monitor.
Lončar from MKI, while reminding that TE with more than 40 percent of total domestic electricity production is the main supplier of the system, says that the question of its future is very sensitive and requires a decision at the highest level, with the consensus of the professional public as well as the non-governmental sector and local community.
In a recent interview with "Vijesta", the executive director of EPCG, Nikola Rovčanin, warned the public that if there is no reconstruction of the TE, there is a threat of electricity imports of one billion euros in a decade, the loss of 1.200 jobs and half of the electricity from own sources. He continues to claim that the reconstruction will meet "the standards of strict European environmental directives and will enable work for at least 10 years, and I hope more than that."
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In the already quoted EPCG document, it is emphasized that the possible shutdown of the TE would also affect the Coal Mine, CEDIS, KAP, Montecargo, Port of Bar and companies associated with them. The black scenario talks about the loss of jobs, the closing of companies, the withdrawal of potential investors, the negative economic image of the country...
Dejan Mijović believes that the standards mentioned by Rovčanin cannot be reached.
"European regulations require that reconstructed thermal power plants, in addition to environmental ones, must meet energy and economic efficiency criteria, and this project would not achieve that. Therefore, it would not reduce CO2 emissions, the energy efficiency of the boiler would remain at an unsatisfactory level of 29 percent, and the economic uncompetitiveness of the thermal power plant would be further reduced by new high production costs due to millions of investments that would not improve the business performance of EPCG", says Mijović.
And Ines Mrdović believes that the Government should order the management of EPCG to terminate the contract on that work and return the advance payment of 11 million, and that this money "be used as soon as possible for the construction of a facility with a renewable energy source (solar or wind)". She points out that there is no time to wait:
"Probably the interest of consumers is greater than the interest of Bemax, BB Solar Blaž Đukanović and certain companies from Pljevlja, which, as things stand, will be the only ones to benefit from the reconstruction".
EPCG says that there will be no termination.
"... As is known, the company has already paid an advance to the contractor and any unilateral termination of the contract would have additional financial consequences. If the contract were to be terminated, the company would be forced to immediately shut down the thermal power plant and put it out of operation, which would be disastrous on several levels, both for the electric power system and for the company's further operations, the economic activity of the state, and the loss jobs and not to mention Pljevlja itself".
The Ministry of Capital Investments says that at the moment they do not have an estimate of how much the termination of the contract would cost the state.
"Given the importance of the Pljevlja Thermal Power Plant, for the overall power system of Montenegro, all options, including termination of the contract with the consortium, are open. MKI, together with EPCG, will analyze in detail every possible option and consequences and decide on the best possible solution", claims Lončar.
Mijović believes that the top of the state and EPCG knew from the beginning that the environmental reconstruction project made no sense.
"As the tender was announced before the completion of the conceptual project, the contract was signed and the advance paid to the consortium which, we now know, gave a false price, half the price of other bidders - this is a classic criminal act of organized crime and high-level corruption extremely harmful to the public interest . In the future, the analysis of that tender should not only be handled by the Government and its Privatization Council, but also by the independent prosecutor's office.
Lončar confirmed that "on the occasion of this case, on March 5, 2021, the MKI submitted to the Special State Prosecutor's Office information about the possible existence of several criminal parts, and we have official confirmation that cases have been formed in the SDT on this occasion and that it is in the investigation phase."
Additives, gas and promises
Vasilije Miličković, representative of small shareholders, claims that EPCG is evaluating other solutions besides the announced reconstruction. He told CIN-CG/Monitor that at the beginning of June, he presented to the President of the Board of Directors, Milutin Đukanović, together with an expert from the EU, "one of the interesting solutions, where by adjusting the basic fuel (coal), the level of sulfur dioxide purification can be reached up to 100 percent, and carbon dioxide up to 75 percent". The application of this new technology, he claims, would not affect the production price of energy.
"Furthermore, the price of electricity in the thermal power plant would be drastically lower because the price of coal was artificially inflated. The new public procurement procedure would allow EPCG to almost fully finance this rehabilitation from European environmental funds," says Milicković. However, he states that, according to his knowledge, there were no further activities regarding this topic.
According to reliable sources of CIN-CG/Monitor, the Government and the management of EPCG are aware of the possibility of building a new gas-fired thermal power plant, which would be ready in two years, and the cost of which would be around 120 million euros.
The solution for the Pljevlja Thermal Power Plant and the entire city was recently announced on Twitter by the Minister of Finance and Social Welfare, Milojko Spajić. He claims that half a billion investments in Pljevlja and a thousand new jobs have been agreed upon.
How, with whom and when, he did not specify.
Black statistics
Experts have long pointed out that thermal power plants with technology like the one in Pljevlja have been shut down or are in the process of being shut down. A recent report by the European network CEE BankWatch and the Center for Energy and Clean Air Research shows that 16 thermal power plants from the Western Balkans pollute Europe as much as the other 296 in the rest of the Old Continent.
That it is not just about energy and money is also shown by the fact that, from 2018 to 2020, nearly 19.000 deaths occurred due to the total emissions of coal-fired power plants in the Western Balkans. Of these, more than 50 percent of cases (10.800) were in EU countries, almost 30 percent (6.500) in the Western Balkans, and the rest in other countries. The report states that there are 625 premature deaths in Montenegro due to the operation of the thermal power plant.
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