The management of the aluminum plant (KAP) announced to its workers to prepare for the gradual shutdown of cells in Electrolysis, that is, the complete cessation of aluminum production from December 15 due to high electricity prices from January 1, when the existing supply contract with Elektroprivreda expires, "Vijesti" learns. ".
KAP now pays for electricity at a price of 45 euros per megawatt plus VAT, while in recent months the price on international exchanges has reached a price of 250 euros per megawatt due to the gas and energy crisis on the entire European continent. Elektroprivreda (EPCG) is not ready to suffer losses, because it itself procures part of the electricity from imports, which is why it gave KAP an offer for the next year of 183 euros per megawatt, which KAP cannot sustain.
Uniprom, which became the owner of KAP in August after the end of bankruptcy, confirmed to "Vijesta" that they will not be able to do business with the new electricity prices, and that under these conditions they will shut down the company, which will leave 500 people without a job.
"The existing contract with EPCG expires at the end of the year, and there was no agreement on the continuation of cooperation because, among other things, the basic condition was not met, which is the categorization of Uniprom KAP into the category of direct consumers with the determination of the price that would apply to Uniprom KAP. We have received a draft contract that from the first of January we will pay the price in such a way that the average price of the official report for the BAND profile with HUPX DAM (Day Ahead market) - Hungarian Stock Exchange for the month of January will be taken on the first of February and a 15 percent discount will be granted on that for regular payment , which would amount to EUR 183,48 MWh according to the price on the stock market today. According to the existing contract, other consumers from our category and we pay 45 euros plus VAT. For example, the Railway Infrastructure pays a higher tariff - EUR 55 per day and EUR 37 per night, which is approximately the same price," they stated in Uniprom's answers.
Changes in the market
They were told by EPCG that this proposal came about "due to changed circumstances on the market..."
"Of course, they didn't let us know what the price is for the Railway or the Ironworks, and we are in the same category. We do not want to agree to such discrimination, which is why we are starting preparations for the closure of three factories - Electrolysis, Anode and Foundry, after 50 years of work, which at the same time means the dismissal of 500 workers. It is obvious that EPCG intends to discriminate against KAP and make future business impossible, which is just a continuation of a huge pressure on the company Uniprom with a single goal - its destruction. The problem is that the lives of 3.000 family members are being destroyed in this way, not to mention the direct threat to the Montenegrin budget," said Uniprom.
Uniprom took over the management of KAP production in July 2014, a year after the introduction of bankruptcy. They state that from then until yesterday they regularly paid 125,7 million euros to EPCG for electricity, and that today there is no debt. They regularly paid the electricity share to other state energy companies - Montenegrin electricity market operator (COTEE) 4,7 million and Montenegrin electric transmission system (CGES) 15,9 million. "In our opinion, the most acceptable thing was to tie the price of electricity so that it follows the price of aluminum on the stock market, which was not accepted. KAP paid a fixed price for electricity even when the price of electricity was below production costs in 2020, so we did not offer such market conditions to EPCG in order to obtain a lower price. Now, according to the offered price, the cost of electricity to produce one ton of aluminum would be $3.100, while the selling price of a ton of aluminum is $2.930. And as inputs, in addition to electricity, the necessary are also added: alumina, coke, pitch, aluminum chloride, labor, depreciation, cell overhaul, spare parts... KAP has no conditions for further work, so there will be a suspension of production and its closing after 50 years of operation at the moment of the highest price of primary aluminum on the stock market in the last 10 years. We will repeat, 500 workers will lose their jobs, Montenegro will be without 300 million dollars of exports, payment of taxes, customs, VAT... 200 smaller companies that did business with KAP will be endangered, as well as the state companies Montecargo and Luka Bar", they stated. from Uniprom.
MER: EPCG operates according to market principles
The Ministry of Economic Development (MER), which is responsible for monitoring the industry, stated that they cannot influence electricity prices, as well as that EPCG is a company that operates according to market conditions and has the right and freedom to negotiate the price of its goods independently and under conditions deemed sustainable by the company.
"We remind you that the Government paid severance pay to all former KAP workers who were in the factory at the time of bankruptcy. For this purpose, it allocated almost 5 million euros for the care of 291 former employees. The right to participate in the social program was granted to workers who were in the factory at the time of the opening of the bankruptcy proceedings, and who did not have the possibility of continuing their employment with the new employer. According to the information we received from the media, the Court of First Instance concluded the bankruptcy proceedings against the debtor "Kombinat aluminijuma AD in bankruptcy" at the end of August of the current year, while only one person is employed at the new employer "Uniprom KAP", stated the MER.
EPCG: We import electricity at higher prices than what we charge KAP
EPCG told "Vijesta" last night that they were not informed that the management of Uniprom had given instructions to the workers to start preparations for shutting down the Electrolysis cells.
"The fact is that the management of EPCG, in accordance with legal obligations and previous practice, has repeatedly sent an invitation letter to the management of Uniprom with the aim of defining a new contract, because the current one expires by the end of 2021. So far, we have not received any official response to our invitation, and we are still waiting for a response to the last letter sent on November 29. In accordance with business policy and the Law on Energy, and in light of the historical growth and disruption of market prices, both electricity and aluminum prices, EPCG timely proposed a draft price policy for the new contract, which they would discuss at a meeting with representatives of Uniprom", they replied from EPCG.
According to the current contract for this year, EPCG delivered electricity to Uniprom at a price of 45 euros per MWh.
"In the middle of this year, there was a drastic disruption in the market of electricity prices and they ranged up to 400 euros per MWh, while the current price is around 250 euros per MWh, thus several times higher than what was delivered to Uniprom. The average price at which EPCG imported electricity for the previous eleven months of 2021 is 92 euros per MWh. In the previous period of 11 months, EPCG supplied Uniprom with 526.424 MWh of electricity and on this basis earned about EUR 23,7 million, and if we compare that with the realized prices on the HUPX stock exchange, the electricity supplied would amount to EUR 53,4 million. Despite this fact, EPCG has fulfilled its contractual obligations for the year 2021, both with the price and with the safe delivery of the required amount of energy", stated EPCG.
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