President of the Board of Directors of Elektroprivreda (EPCG) Milutin Djukanovic in an interview with "Vijesta" he announced that after the purchase of the Željezara's property, a subsidiary company "Željezara Solari Nikšić" would be established, which could deal with activities that are a function of the activities of the state energy company.
"After that, the realization of the idea of building a solar power plant would follow, which represents a great development opportunity, bearing in mind the strength of the connection. At the same time, substructures for the needs of EPCG would be built on the area covered by the purchase agreement. As for other activities, for now we can only say that any subsequent activity in terms of expanding our business in Željezara would take place in phases, i.e. in accordance with the needs of EPCG, so it is premature to talk about those activities", said Đukanović, adding that will select workers for the needs of the daughter company at the competition.
Đukanović said that precise preliminary data on EPCG's operations in 2022 can be expected in the second half of January, and that the state energy company will be able to largely mitigate the negative consequences it had due to disruptions in the electricity market and extremely high energy prices on the stock market in a period of highly pronounced import dependence and unfavorable hydrology.
"On the basis of maintaining the existing price for electricity, we saved citizens 11 euros in 737.829.670,91 months, because if the prices for them had been adjusted to market changes, the average bill would not have been 33,38 euros, but 141,90 euros", Đukanović pointed out.
He assessed that it will not be easy for EPCG to replace the production of TPP "Pljevlja", which will be out of operation for seven and a half months (from 01.03.2024 to 15.10.2024) due to works on ecological reconstruction and adaptation of the boiler, and that the plan is to the state energy company replaces electricity in two ways - partly through hydro and solar production, and partly from imports.
Đukanović said that the Special State Prosecutor's Office (SDT) has restarted the investigation based on the EPCG criminal complaint from April 2021 against the former prime minister Duško Marković, former Minister of Economy Dragice Sekulić, the owner of Uniprom and Kombinat aluminum Veselin Pejović and others, because the former government gave away free emission CO2 credits, which Uniprom later sold to EPCG for 17 million. This application was rejected by the SDT during the recent special prosecutor Milivoj Katnić.
EPCG bought the assets of Željezara. It was announced that solar panels will be assembled in its halls in the future, and that there will be solar power plants on the roofs. How many workers will you hire and when, and will the current employees of the Steel Plant have priority? Will you save the blast furnaces in the steel mill, so that steel production can be restarted?
The signing of the contract on the purchase of Željezara property is expected in the coming days. In that part, we make the maximum effort so that the process runs at an optimal speed, but not everything depends on us, since, according to the logic of things, we are not the only party in the negotiations. The second phase of the process refers to the formation of a daughter-company, "Zeljezara Solar Nikšić", which could deal with activities that are part of EPCG's activities. After that, the realization of the idea of building a solar power plant would follow, which represents a great development opportunity, bearing in mind the power of the connection. At the same time, as you mentioned, substructures for the needs of EPCG would be built on the area covered by the purchase agreement.
As for other activities, for now we can only say that any subsequent activity in terms of expanding our business in the Ironworks would take place in phases, i.e. in accordance with the needs of EPCG, so it is premature to talk about those activities. When it comes to the workforce, it is understood that, through a competition, we will choose candidates whose references would best suit the production needs of the daughter company. I believe that among the former employees of the Ironworks there are many whose knowledge and experience can be compatible with the needs of the daughter-company, with the fact that, at this moment, while we are waiting for the signing of the contract, it is really ungrateful to talk about the details of the further course of the process.
Basically, the most important thing for us is that, due to the fact that the state bought a part of EPCG's shares, at a price of 15 million euros, we got the opportunity to use these funds to buy very valuable land and thus get a chance to expand the company's production portfolio. If it weren't for that buyout, we would now be in a position where the entire contingent of own shares - a process that, by law, had to end on September 26, 2022 - would be canceled, as it already happened once, three years ago.
In April 2021, EPCG filed criminal charges against former Prime Minister Duško Marković, former Minister of Economy Dragica Sekulić, the owner of "Uniprom" and Aluminum Combine Veselin Pejović and others, because the former government gave away free CO2 emission credits, which "Uniprom ” later sold to EPCG for 17 million. Do you know what happened with that criminal report and whether there were any answers from the prosecution?
The criminal proceedings were initiated by the EPCG Board of Directors, and the acting lawyer is Miroje Jovanović. The criminal complaint was filed during the current Chief Special Prosecutor's Office Milivoj Katnić was first rejected, and the complaint against the decision on the rejection of the criminal complaint was later accepted by the VDT, which canceled the rejecting decision as premature, so that the case is again in the investigation phase.
What business result do you expect EPCG to end 2022 with, and what are the management's projections for 2023?
We can expect more precise preliminary data on EPCG's operations in 2022 only in the second half of January 2023. Until then, we are obliged to remain reserved because until the end of 2022, a number of circumstances and significant elements of the balance sheet are still in place, which, to a considerable extent, determine the sign of the business results for 2022.
Despite all the objective circumstances, which were reflected in unpredictable disruptions in the electricity market and extremely high energy prices on the stock exchange in a period of highly pronounced import dependence and unfavorable hydrology - with precipitation during the last weeks, the total amount is only 83% compared to the annual average - it is evident that EPCG will succeed in mitigating the negative consequences of the mentioned circumstances to a large extent by the end of the business year.
The hydrological situation improved at the end of November and the first half of December, when our company, in just over 30 days, earned over 80 million euros from exports, and it is realistic to expect that significant positive effects will be achieved in terms of the relationship between export and import of electricity and in to the greatest extent, they rehabilitate the expressed deficit and losses from the second, and especially from the third quarter of 2022. Whether that success will be reflected already on December 30 or January 15, I appreciate that it is less important than the fact that we successfully overcome the effects of the crisis, especially since the similarity of the structure of production in the countries of the region, to a significant extent, also dictates movements on the stock market: prices are, logically, higher during the second and third quarters, when everyone deals with hydrology, and decrease during the first and fourth, when others have less need for imports.
The management's projections for the year 2023 are optimistic, because they indicate positive results, mostly due to the expected more favorable ratio of imports and exports, but also the benefits expected from the projects "Solari 3000+ and 500+" and "Solari 5000+ (70 MW) ”, in terms of freed surplus electricity and preservation of citizens' and consumers' standards, which ensures a high level of billing.
Montenegro is one of the few countries that did not increase electricity prices during the energy crisis in 2022, and they will not be higher in 2023 either. Do you have comparative data on how much the final electricity prices for households with all items on the bill and VAT will be in 2023 in Montenegro, and how much they will be in neighboring countries and EU members?
EPCG determines the price of active energy, and the prices of other items on the bill (engagement of network capacity, losses in the network, fees for the market operator and fees for encouraging RES) are beyond our authority. Regarding the comparison for the part of the bill whose amount is affected by EPCG, we can say that the price of active energy, according to the two-tariff model, in 2021 and 2022 was 5,2424 €c/kWh for the higher and 2,6212 €c/kWh for a lower rate. The price of active energy, according to the single tariff model, in 2021 and 2022 was 4,2686 €c/kWh. As we have already pointed out, these prices will not change even in 2023.
On this occasion, we are obliged to mention that, based on maintaining the existing price for electricity, we saved citizens 11 euros in 737.829.670,91 months, because if the prices for them had been adjusted to market changes, the average bill would not have been 33,38 euros, but 141,90 euros. Also, we did not resort to restrictions, and we paid 30 million euros into the state budget last year, which makes us one of the few energy companies that, without the help of competent institutions, bore the burden of the energy crisis on its own, so I think it is justified to say that we have proven the vitality of the system and the ability to operate responsibly and successfully even in difficult circumstances.
What are your expectations about future electricity prices on the European market. If and when can we expect the stabilization of those prices and is it even possible to expect the price of a megawatt hour to return to the level of 30 to 40 euros that it was two years ago?
Electricity prices are market-based, so, in this regard, they depend on the supply and demand of electricity on the markets of Europe. EPCG is a market-oriented company, which means that the decision about the price at which we will import and/or export electricity directly depends on energy and the price of all energy sources in Europe. As long as the war in Ukraine lasts, Europe will be in a state of energy instability, especially in terms of dependence on gas and coal. However, even when conditions stabilize, the energy situation will depend to a significant extent on geopolitical decisions.
Primarily, the decision on how and how quickly Europe will find replacement energy for energy sources originating from Russia. It is difficult to expect that electricity prices will reach the previous level of 10-30 €/MWh in the next 40 years. A prerequisite for this level of electricity prices is to build a large number of new capacities - solar, wind, but also nuclear and hydropower. Futures prices that can be seen today on the German stock exchange show that price stabilization can only be expected in five years (level of €110/MWh), while in the next two years, prices can be expected to exceed €200/MWh. By building additional MW, EPCG sees its chance: to provide money for good business and quick return on investments in production facilities through the export of its surplus electricity.
Which energy projects does EPCG plan to launch in 2023 and when will they be completed?
After the launch of the historical project "Solari 3000+ and 500+", worth 30 million euros, which EPCG is realizing in cooperation with the Investment and Development Fund of Montenegro, and which foresees the installation of 30 MW of newly installed capacities, with an expected annual production of 44 GWh, in 2023 The realization of the "Solari 5000+ (70 MW)" project is planned for the year 70, which envisages the installation of new 100 MW solar capacity with an expected production of about 70 GWh and a value of about XNUMX million euros.
Further in 2023, we expect the start of the construction of VE "Gvozd", with a capacity of 54,6 MW and an expected annual production of 150 GWh. The project is implemented in cooperation with the European Bank for Reconstruction and Development, with which we will sign a credit arrangement worth 82 million euros. The estimated construction time is 18 months from the start of the works, so we expect VE "Gvozd" to be online in 2024.
In addition to the fact that in 2023, work on the reconstruction and modernization project of HPP "Perućica" with the Austrian company "Voith" worth 29,4 million euros will begin, in 2023, in cooperation with the German Development Bank, activities will also be initiated in in connection with the project of installing the unit A8 HPP "Perućica", where, without any significant impact on the environment, we will reach the newly installed 58,5 MW of power. In 2023, we are also expecting the signing of a new arrangement with KfW Bank, worth 30 million euros, and the signing of the contractor's contract for the installation of the A8 unit, the installation of which requires 36 months.
Additionally, in the spirit of promoting solar potential, in 2023 we will implement a project to install solar panels on our dams "Slano" and "Vrtac" with a total capacity of four MW, and there are also preparatory activities for projects of floating SEs on Slano and Krupac. We are especially pleased by the fact that in 2023 we will complete the activities related to the preparation of the study for HPP "Kruševo" in two variants of preliminary energy assessments of the power plant from 90 to 100 MW with an expected production of about 265 GWh and create the preconditions for the further development of this important project from the field of hydropower, i.e. creation of a conceptual project.
The Pljevlja Thermal Power Plant will be out of operation for about eight months in 2024 due to reconstruction. How much of a problem will it be then considering that it produces more than half of the electricity needs and how do you think you can solve it? Will any new energy projects be completed by then to alleviate the shortfall?
TE Pljevlja, according to the currently valid dynamic plan, will be out of operation for seven and a half months (from March 01, 03 to October 2024, 15) due to works on ecological reconstruction and adaptation of the boiler. Certainly, it will not be easy for EPCG to replace the Pljevlja TPP production during that period, but we plan to replace this electricity in two ways: partly through hydro and solar production, and partly from imports. The production plan of TE "Pljevlja" for the year 10 is 2024 GWh, which is some 2024% of the average annual production, precisely because of the stoppage lasting seven and a half months.
At today's prices, replacement electricity on the market is worth close to 200 million euros. In discussions with the contractor, we plan to speed up the dynamics of the works and shorten the downtime of the "Pljevlja" thermal power plant to about six months. This is important to us because of the better business results of both EPCG and Pljevlja Coal Mine. We will plan the operation of our hydroelectric power plants so that the level of reservoirs in that period is as high as possible. Also, by 2024, through the development of renewable energy projects, we plan to have additional production in the system (VE "Iron", projects "Solari 3000+ and 500+" and "Solari 5000+"), which will, in part, to compensate the missing energy from TE Pljevlja for that period.
How do you evaluate the "Solari" project? So far, how many mini solar power plants have been installed on the roofs of households and legal entities, and how many of them are connected to the grid and produce electricity? Why do some users wait months for connection and can it be speeded up and how?
I think that the quality of the "Solari 3000+ and 500+" project is best expressed by the fact that, with the recent announcement of a public call for individuals and legal entities and a public call for domestic and international financial institutions to participate in the "Solari 5000+ (70 MW)" project, we have shown that it is a very successful concept. By the last week of December, our agents visited 3.137 potential customers (the total installed power of their facilities is 34.465 KW), where it was found that 1.501 facilities (21.166 KW) meet the technical requirements, and the contract was signed with 1.343 clients (14.900 KW), while are photovoltaic systems installed in 930 buildings (7.501 KW).
As for waiting for the connection, we understand that it represents a difficulty, with the reason for the mentioned wait being that the procedure for obtaining the certificate also includes external factors, which means that public invitations must be issued on that basis, and they, in general, known, take considerable time.
How do you see the development of the Solari project and how many mini solar power plants on roofs will be installed in 2023? When will EPCG install the announced floating solar power plants on lakes Slano and Krupac, and when can we expect the start of construction of the solar power plant "Briska gora"?
We expect that, in the context of the "Solar 5000+ (70 MW)" project, we will reach the indicated figure in 2023, which would relieve the energy system quite a bit, and citizens would be given the opportunity to, in accordance with the slogan "Produce where you spend", achieve significant degree of energy independence.
When it comes to the other projects from your question, we can say that part of the preparatory activities for the floating SE on the Slano and Krupac reservoirs will be carried out already in 2023, and the conceptual solution envisages the phased construction of the solar power plant project "Briska gora", and that : phase I - installed power 50 MW, expected annual production around 90 GWh; phase II - installed power 200 MW, expected annual production around 360 GWh. The deadline for the construction of phase I is 18 months. The adopted business plan of EPCG envisages that phase I SE "Briska gora" will be put into operation in 2024.
Employed 1.149 workers, average salary 1.108,18 euros
How many employees does EPCG have now and what is the average net salary in the company? Will there be new employment in 2023 or will you perhaps reduce the number of workers as proposed by the Ministry of Capital Investments?
EPCG has 1.149 employees, of which 146 are temporary. The average net salary in EPCG for the period from January 1 to November 30, 2022 was EUR 1.108,18. In accordance with the company's business plan, i.e. following the needs of production and the organization of the work process, EPCG will, in workplaces that are already in deficit or will be in the next period, due to the retirement of employees - next year, over 20 employees will end their employment by force of law due to the completed years of life - engage new executors in accordance with the law and company procedures.
The commissions completed their work and sent the report to the MKI
When you became the head of the EPCG board, several commissions were formed that checked the operations of the company's former management. Did the commissions complete those checks and what did they discover? How much money was spent on the work of those commissions and how many were formed?
The commissions - twelve of them - were formed with the task of analyzing the previous work in the subject areas, as well as making proposals for improving the processes that are the subject of the analysis. After the formed commissions completed their work and prepared detailed reports (which are based on the review of business documentation, which number about 700.000 pages), they were submitted at the beginning of May 2022 for review and further action to the Ministry of Capital Investments - Department for the fight against corruption . Our company is certainly not competent, nor is it authorized to give certain qualifications from the aforementioned reports regarding the behavior and way of working in certain processes, which took place in the company in previous years.
What is important to emphasize is the fact that the commissions for certain business segments gave their recommendations and suggestions, after which the company's management implemented a certain number of them or initiated procedures that will create preconditions for their further implementation. Also, through the report on the work of certain commissions, the problem of legal and by-law provisions and procedures, which put EPCG in an unequal position, and in connection with which it was initiated, and in one part already implemented, changes to them. Regarding the fees based on engagement for the work of the mentioned committees, please note that they are determined in accordance with the company's acts and procedures that regulate this matter.
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