The Montenegrin Electricity Distribution System (CEDIS) has around 1.770 employees, which is 421 more than in 2020, while their salary costs are now 12.000.000 euros higher than then. This is precisely the reason why the Regulatory Agency for Energy and Regulated Utilities (REGAGEN) is asking how the number of employees has increased, and at the same time the expenditure on their salaries - which, they claim, is placing an additional burden on CEDIS's work.
This, among other things, is stated by REGAGEN in the Report on the State of the Energy Sector for 2024, which was submitted to the Parliament.
"Vijesti" also asked CEDIS about this position of the regulator, from which they said that for efficiency's sake they started working on projects themselves, which is why they needed specialist - technical staff for the maintenance of power facilities, design, measurement and network management - and that they achieved better results because of that. They emphasized that they still lack this staff today, but that the company's liquidity is not threatened, that they are regularly repaying loans and have no debts...
REGAGEN in a document signed by the Chairman of the Board Veljko Vasiljević, it is stated that CEDIS ended last year with a profit of 519.328 euros, but that this is 882,42 thousand or 63 percent less than in 2023. They also pointed out that the company generated 131.857.933 euros in revenue, or 13 percent more than the year before, while expenses amounted to 134.144.294 euros, or 21.060.963 euros more than the year before.
"The average number of employees in CEDIS in 2024 was 1.772, which is 51 more than in 2023. Although to a lesser extent, the employment trend characteristic of the previous period continued. Therefore, the average number of employees in CEDIS in 2024 is 412 more than in 2020, while the costs of salaries, compensation and other personal expenses in 2024 are 12.013.116 euros more than in 2020... And the fact that in the previous period there were no changes to the legal framework that would change the scope of activities and the way this entity operates calls into question the justification for increasing the number of employees and, consequently, the growth in the cost of salaries, as a cost that can be controlled and which, as such, is not fully covered through the established prices for the use of the distribution system. Such business decisions further strain CEDIS' financial operations burdensome, even though the functioning of the system was ensured with a much smaller number of employees," REGAGEN emphasized.
Minor losses and outages
When asked about salary costs, CEDIS explained that these expenses are not only higher due to the number of employees, but also due to changes in the law, namely the "Europe Now 1 and 2" programs, tax rates, negotiations with unions on increasing the calculation value of coefficients, winter allowances, higher salaries based on past work, so higher costs would occur even without a larger number of employees.
They pointed out that through an analysis of the previous way of working, costs, compliance with deadlines and the quality of the work performed, they made the decision to carry out the tasks that were entrusted to third parties using their own capacities for the sake of the company's efficiency and effectiveness, which is why periodic hiring of specialist and technical staff has begun, along with the procurement of vehicles, special machines and tools.
CEDIS emphasized that this decision proved to be the right one because REGAGEN also stated in its report that the average duration of outages was reduced by 35 percent compared to 2023, their frequency by 21 percent, while network losses were also lower due to the new meters.
"The employment of new workforce was primarily in organizational units that exclusively deal with core activities (maintenance of power facilities, facility maintenance, investment supervision, design, measurement and distribution network management). The results of such a business decision were visible in the previous year, and their growth and full achievement of the goal is expected in the current and next year. Since its establishment, CEDIS has lacked a workforce with specialist - technical competencies and occupations for performing core activities. The new employment has improved the age structure of employees, which in previous years was over 46 years of age, while the current age structure is 44 years, in organizational units where the largest number of new employees are involved in project implementation, the age structure is 43 years and its reduction is being sought in the future. We would like to point out that CEDIS' liquidity is not at risk, that we regularly settle obligations for long-term investment loans and that we have no outstanding obligations to the state, employees or third parties," they emphasized.
CEDIS also emphasized that they have stabilized their operations after the energy crisis, as shown by the profits made at the end of 2023 and last year.
The REGAGEN report states that the most significant increase in CEDIS costs was recorded in the category of purchase value of goods sold and costs of materials, which amounted to 36.451.178 euros last year, i.e. 13,32 million or 57,6 percent more than in 2023. It is explained that the increase in these costs was due to the parallel increase in those for the purchase of electricity to cover losses in the distribution system.
They also pointed out that CEDIS allocated almost 15 million euros for investments last year and achieved 41 percent of the plan, of which 7,5 million were allocated for investments from previous plans and 4,81 million euros for the purchase of electricity infrastructure. The regulator emphasized that legally, the applicant for a connection can build the infrastructure at their own expense, after which CEDIS is obliged to purchase the connection.
"The value of the planned purchase of electricity infrastructure for 2024 amounted to 3,55 percent of CEDIS' total assets at the end of the reporting period. However, the implementation was achieved in a significantly smaller volume than planned, namely in the amount of 4.816.566 euros. According to information provided by CEDIS, the key reasons for the reduced implementation relate to long-standing difficulties in providing legally required documentation by the infrastructure owner, as well as a significant increase in the estimated value of that asset compared to the initial plans," REGAGEN pointed out.
Salaries are higher also because of the law
The Montenegrin Electricity Transmission System (CGES) ended last year with a profit of 24.834.632 euros, which is 10.88 million euros or 30,47 percent lower than the previous year. The regulator pointed out that the main reason for the decrease in profit was lower income from capacity allocation, by 13.831.677 euros. It is also emphasized that CGES invested a total of 25.362.149 euros last year.
When it comes to salaries and other personal expenses, CGES's costs were almost 3.000.000 euros higher than in 2023, while the number of employees increased by 17 in the same period, so the company has 341 employees.
"When considering the growth of the above costs, it is necessary to bear in mind that in 2020 the Law on Amendments to the Law on Energy was adopted, which introduced new obligations for this regulated entity in terms of connecting the Montenegrin electricity market with the single European market. Based on the new legal obligations, in the process of determining the regulatory allowed revenue and prices for the use of the electricity transmission system for the period 2023-2025, CGES was determined to have higher costs of wages, salary compensation and other personal expenses, which reflect an increase in the number of employees by 12. Given that these costs belong to the category of costs that the operator can influence, to which incentives for improving efficiency are applied in regulatory terms, an increase in the costs of wages, salary compensation and other personal expenses outside the framework established by the Agency does not affect the prices for using the system, i.e. its burden is not borne by the system users, but by CGES," the regulator emphasized.
The document also points out that the Montenegrin Electricity Market Operator (COTEE) ended last year in the black with a profit of 11.216 euros, and that the majority of the company's expenses are salary costs and other personal expenses. It is also emphasized that the costs for 19 employees made up 70 percent of the total expenses last year.
Last year, 3.449 GWH of electricity was produced
In the Montenegrin power system, hydroelectric power plants have the largest share in production with 65 percent, thermal power plants 20,8 percent, wind power plants 10,9 percent, while solar power plants account for 3,1 percent.
Last year, the system produced 3.449,07 gigawatt hours (GWH) of electricity, with the Pljevlja Thermal Power Plant dominating with almost 40 percent of total production - while hydroelectric power plants recorded a decline.
According to data for last year, Montenegro has two large hydroelectric power plants, “Perućica” and “Piva”, while it has the same number of wind farms - “Krnovo” and “Možura”. On the other hand, 4.833 photovoltaic systems were connected to the distribution system in the buyer-producer mode.
When it comes to the amount of remaining coal, estimates are that at the end of last year, there were 177.015.328 tons left in the Pljevlja area, while Montenegro produces an average of 1,6 million tons annually.
EPCG invested almost 53 million
According to the report, last year, the Electric Power Company (EPCG) allocated 52.897.245 euros for investments, or 10,23 million more than in the year before, when 42.664.865 euros were invested.
The largest part, or 24,55 million euros, related to renewable energy projects, with 5000 million invested through the "Solari 21,9+" project, as well as 2,59 million euros for the construction of small solar power plants - while the rest was spent on wind power projects, the purchase of tools, inventory and the implementation of general projects.
Under the item related to production, 18.082.166 euros or 34 percent of the total amount was invested in that sector, and the money went to ecological reconstruction, adaptation of the boiler with replacement of the air heater and overhaul of the turbine in the Pljevlja Thermal Power Plant, replacement of the transformer block and high-voltage cables and overhaul of the Piva hydroelectric power plant, reconstruction of the small hydroelectric power plants "Rijeka Mušovića", "Lijeva rijeka", "Šavnik", "Rijeka Crnojevića", "Podgor" and reconstruction of the road to the Perućica hydroelectric power plant.
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