ENTSO-E says Montenegro should immediately return electricity taken for KAP - report

By bne IntelliNews June 6, 2013

The European Network of Transmission System Operators for Electricity (ENTSO-E) and its System Operations Committee are demanding that Montenegro and its national power grid operator CGES immediately return the electricity taken over illegally from European interconnectors by aluminium firm KAP in the February 22-May 23 period, Portalanalitika.me reported on June, quoting unanimous sources.

At the same time, the Europeans demand that Montenegro bans the operations of KAP if the company does not find an electricity supplier. If the state and the energy companies do not comply with the demands, Brussels has threaten to cut Montenegro off the European power grid.

An unnamed source from CGES has confirmed this information for Portalanalitika.me. The source said the details on the exact amount of electricity in question should be revealed on Thursday, June 6.

“The precise details are being drafted. Today we will know the exact conditions and terms. The network of the European Transmission System Operators has issued its harshest possible warning so far,” the source said.

CGES representatives visited Brussels this week to explain to ENTSO-E how Montenegro allowed the illegal supply to KAP to create imbalances in the transmission networks at home and in Europe. The officials are expected to quickly announce what amount of power Montenegro should return to the European network and under what conditions.

The problem escalated after ENTSO-E found out that Montenegro’s CGES is not returning according to the schedule the electricity taken from European interconnectors. ENTSO-E therefore summoned the company to Brussels to explain the situation.

CGES, on the other hand, was forced to take the electricity in order to prevent imbalances in the domestic grid. These imbalances were created by the need to send every day power to KAP – KAP, however, has been without a supplier since the start of 2013, therefore its supply since then has been illegitimate. Still, CGES has not so far cut it off the grid because of the complexity of the aluminium production process and the possible effects on the environment.

Following ENTSO-E’s latest complain, however, CGES warned KAP earlier this week it will automatically disconnected from the grid on June 13 if it does not find an electricity supplier until then. Power producer EPCG already agreed to temporarily step in and provide electricity for the aluminium firm until June 13 in order to relive the situation occurred in the grid because of KAP’s illegal power supply.

Last year EPCG and state-owned Montenegro Bonus cancelled their contracts to supply KAP with electricity as the firm did not service its obligations. KAP has accumulated unpaid electricity bills of EUR 44mn to EPCG, EUR 9mn to Montenegro Bonus and some EUR 17mn to CGES, Vijesti reports.  

KAP's board of directors is due to meet on June 19 to decided on the fate of the company. The crucial issue of whether to shut down the electrolytic cells in the aluminium smelter has been delayed for months - as the management has been hoping the government would step in and help the company settle its power supply problems, or rather decided to launch a structured liquidation as recently recommended by the IMF. 

The escalation of the problem outside Montenegro's borders could eventually contribute to the government finally making his mind and taking a firm decision, and actions, in the coming days on the future of the aluminium production in the country.

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