Montenegro’s KAP management delays again crucial decision on possible shut down until June 4

By bne IntelliNews May 23, 2013

The management of Montenegrin aluminium firm KAP was expected to vote on a possible shut down of its electrolytic cells on May 20 but the crucial session was delayed once again, for a seventh time, until June 4, radio station AntenaM reported, quoting unnamed sources. The delay was approved again upon a demand of the government representative in the board of directors, Nebojsa Dozic.

The management was hoping that the government would in the meantime come up with a solution on solving the company’s electricity supply – which is KAP’s most pressing issue. However, no such solution has been found yet and if the situation remains as it is, the electrolytic cells of the aluminium smelter will have to be shut down, Dozic has told AntenaM earlier.

The company’s trade union, on the other hand, has warned it will respond with protests to a shut-down decision.

KAP’s power supply issue is already threatening the stability of the country’s electricity system. The company has over EUR 60mn in unpaid electricity bills and continues to generate more debt every day, which is very likely to be eventually paid by the state, the IMF warned the government earlier this week when it called for an orderly liquidation at KAP.

The aluminium firm has been left without an electricity supplier since the beginning of the year and, as the market regulator has said, has been receiving power illegally. Disconnecting it, however, bears too much risk for the production process and for the environment. Power grid operator CGES and energy producer EPCG have been also under threat to lose their licences because of KAP.

CGES warned more recently that the situation in the power grid has become alarming as the illegitimate electricity supply for KAP creates unbalances in the system and asked the company to urgently sign a supply contract or face a power cut off.

TEMPORARILY RELIEF

Power producer EPCG said on Thursday, May 23, it is ready to provide CGES with an additional 84 MWh/h in order to balance the system and help secure the grid operator’s normal functioning, state radio and TV station RTCG reported. 

EPCG explained its decision comes after a day earlier it received a letter from CGES, which said the electricity system of the country is under risk of unbalancing because of KAP’s illegal (without a legal supplier) consumption. CGES also warned that because of the system failures the Montenegrin grid would be unable to receive energy from the European interconnections, which would result in a serious sock to all consumers in the country. 

EPCG, therefore, decided to provide the additional megawatt hours and help prevent this situation. The decision will be valid for three weeks as of May 23.

During this period all parties affected by KAP’s power supply issue will be responsible for determining and signing all needed executive agreements, which shall find a final and long-term solution for KAP’s electricity supply without endangering EPCG’s operations and stability, the power producer said.

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