Montenegrin power grid operator CGES to invest EUR 20mn in submarine power cable project in 2014

By bne IntelliNews February 19, 2014

Montenegrin power grid operator CGES plans to invest this year some EUR 20mn in the submarine power cable project that will connect the power grids of Montenegro and Italy, CGES’s director Ivan Bulatovic told Portalanalitika.me.

The overall investment of CGES in the project – some EUR 105mn, comprises around 20% of the total cost of the project, Bulatovic said. The funds have been secured via loans from Germany’s KfW and the EBRD.

CGES’ investment in the submarine power cable project is divided into three parts, or lots, which are in different stages of implementation, Bulatovic explained. Lot 1 is the construction of the Lastva power substation (400/110/35 kV, 2x300 MVA), which will be built on the Montenegrin Adriatic coast. CGES already spend EUR 12mn on this stage last year in preparation works, including land expropriation and hiring a contractor to build the substation. The contractor is now only awaiting a construction permit and should launch works very soon, Bulatovic said.

Lot 2 is the construction of the Lastva-Cevo subsection of the Lastva-Pljevlja power line. In this stage the land expropriation process was completed recently and the hiring of a contractor is underway, which is expected to take place in the coming month. Pljevlja – in northern Montenegro, is the hometown of Montenegrin energy producer EPCG and the country’s sole thermal power plant.

Lot 3 is the construction of the Cevo-Pljevlja subsection of the Lastva-Plevlja power line. CGES is in the process of opening the tender for a contractor. According to Bulatovic, the tender should be announced in the coming month and the signing of a contract with the selected bidder is expected in the third quarter of the current year.

PROJECT BACKGROUND

Montenegro and Italy have been preparing the launch of the projects for several years now. The cost of the cable is estimated at some EUR 800mn. The two countries signed an agreement on the establishment of the 415 km long (of which 390 km undersea cable) interconnection in November 2010. 

Italy's Terna, which is in charge of the project, will start works on the submarine power cable in the second half of 2014, the head of Terna Crna Gora - Claudio Marchiori, said earlier this year.

Terna is also a minority shareholder of CGES with a 22% stake. The government in Podgorica owns 55% in the power grid operator and the remainder belongs to smaller shareholders.

CGES SEES 2014 NET PROFIT UP 2.7 TIMES

Bulatovic also said that CGES’ business plan for the current year envisages a net profit of EUR 7.2mn, significantly above the EUR 2.7mn profit posted in 2013. He added that according to the 2014 budget bill, up to EUR 4mn from the company’s profit will be allocated to pay the debt occurred in the beginning of last year when the country’s system took electricity from the European interconnections without an authorisation for the needs of aluminium firm KAP.

CGES plans to allocate its entire 2012 profit of EUR 6.55mn as dividend and has called an extraordinary shareholders' meeting on February 24 for the purpose.

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