The state-owned Czech Export Bank (CEB) has pulled out of a CZK9bn (€333mn) deal to finance the construction of a new unit at the Pljevlja coal-fired power plant in Montenegro by Skoda Praha, a unit of state-controlled giant CEZ, local media claimed on October 26.
Unnamed sources told Czech daily Hospodarske noviny that CEB sees the project ordered by Montenegrin power monopoly EPCG as too risky. The newspaper claims to have seen a letter from the state lender to CEZ reporting the refusal to participate.
In addition, CEZ is reported to be well behind in preparing the documentation on the project needed by CEB, as well as the state Export Guarantee and Insurance Corporation (EGAP), which CEZ hoped would provide credit insurance. HN also reports that Montenegro has declined to offer a state guarantee.
CEZ insists that although a deal with CEB and EGAP would be its first choice, it is not concerned about the future of the project. EPCG is already looking for alternative financing, a spokeswoman claimed.
However, HN notes that cheap government export financing is an important part of the project. European companies struggle to compete with cheaper Chinese contractors without its benefit.
The refusal by the CEB likely reflects the hot water in which it has been in recent years, with critics claiming it has been inept in dealing with large projects. The export bank has been bitten by recent investments in the energy sector in particular.
It lost close to CZK6bn lent to PSG to build the Poljarnaja plant in Siberia, and is mulling its next move on the Adularya coal power plant in Turkey, which looks likely to bring Czech contractor Vitkovice Power Engineering to its knees. CEB is reportedly thinking of handing the project to Skoda Praha.
A member of CEB’s supervisory board told HN "it would be suicide, the project would never have gone through us”.
EPCG said on September 29 that it had signed a long-expected deal with Skoda Praha. The unit will be the first large capacity block to be built in the Adriatic country for 35 years. Montenegro is relying on the project to achieve independence and become an energy exporter.
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