Exit option for A2A and second block remain doubtful

Italian side wants a deadline extension for one more month so that they could reach an agreement on two remaining doubtful issues, and those are exit option for A2A and building of the second block of Thermal power plant in Pljevlja. Negotiations have been intensified, and due to precision, negotiations are not being done by phone anymore but in writing, because teams of lawyers of both sides are included in all matters.

As for the exit option, Italian company wants Montenegrin side to commit to buy out their shares. Exit option means that Italian company will exit EPCG under the condition that they are cleared of the responsibility for the problems in functioning of Montenegrin energy company.

New management of Italian company, consisted of president Giovanni Valotti and CEO Luca Valerio Camerano, demands this exit clause, remembering the experience of Regulatory agency completely changing the market conditions at the moment when they entered EPCG. Montenegrin side, as Pobjeda reports, offered 200 million Euros for 41.7% of EPCG shares with the 10 year payment plan. Italians, who invested 430 million Euros in acquiring EPCG shares, refused this offer and then the negotiations started.

Currently discussed is an Italian offer that if and when the conditions are met for A2A to exit EPCG, a market value of their shares in Montenegrin company should be determined. Government, on the other hand, is trying to prolong the payment of the shares, so that yearly annuities are not bigger than the dividend it is supposed to receive for its shares in EPCG. Italians don’t like this option because they paid 430 million Euros right away and only this year, after six yeras of managing EPCG, they managed to make first 16 million Euros of profits.

Another issue to settle is the construction of the second block of Thermal power plant in Pljevlja. Representatives of A2A refuse to participate in financing of this project because, among other things, they don’t know how to explain to their shareholders how come they didn’t manage to retrieve even 4% of the invested money, and they want to invest another 150 million, which should be their portion of the total investment of 338 million Euros, which is the price of construction of this block by Skoda Praha. Besides, their shareholders, representatives of cities Milano and Brescia, oppose the investment in Thermal power plant because A2A is closing plants of this kind back home in Italy.

On the other hand, interest of the Government is to start building the second block as soon as possible, because the current will be out of resources in six years, which would cut the domestic electricty production in half. Besides that, country cannot depend solely on water power plants, or whether it will be a rainy year or not.

Both sides agree that the best option would be to find a third partner, but they cannot find one at the moment.

Negotiations will continue, and prolonging the existing arrangement in EPCG for one more month is a realistic option.