Montenegro’s opposition URA leaves government as parliament adopts deal with Italy’s A2A

By bne IntelliNews July 31, 2016

Montenegro’s opposition United Reform Action (URA) will initiate a procedure to leave the government and cancel its agreement with the ruling Democratic Party of Socialists (DPS) after the parliament approved a new deal with Italy’s A2A on the management of power monopoly EPCG, local media reported on July 30.

URA was among several opposition parties that agreed to join the government earlier this year. The party had previously threatened to leave the government if the deal was signed in its current form, claiming it would go against Montenegro’s interests. However, A2A declined to accept the change and on July 30 the parliament adopted the agreement with the Italian company as originally proposed by the government.

Earlier in July, Deputy Prime Minister Milorad Vujovic from the opposition informed Vujica Lazovic – a deputy prime minister from the DPS - that the opposition ministers demanded an amendment to the draft agreement, according to which A2A must sell its stake in EPCG to Montenegro for €250mn if it decides to exit the company. Montenegro will be allowed to pay the sum over a period of seven years. If A2A declined to accept this change, the opposition ministers wanted the signing of the agreement to be left to the new government that would be appointed after the general elections this October.

Antena M quoted Nedeljko Rudovic, a member of URA’s coordination team, as saying that the party will initiate the procedure to leave the government as the new agreement with A2A will be against the country’s interests.

“As far as we are concerned, this [the adoption of the new deal with A2A by the parliament] means that the agreement [between the opposition and DPS] is breached. We shall very quickly call the central team, this is the sole organ of URA that can take the final decision,” Rudovic told Antena M.

The DPS and three opposition parties have signed an agreement aiming to secure fair and transparent general elections in October this year. As part of the deal, the DPS’s former coalition partner - the Social Democratic Party (SDP), URA and Demos entered the government, getting five ministerial seats. The move was seen as a step towards stabilisation of the political situation in Montenegro ahead of the general election.

Rudovic also said that URA will continue consultations with SDP and Demos, but will leave the government even if they chose to stay.

Another local media outlet, news service CDM, reported that Interior Minister Goran Danilovic, who is also the chairmen of the executive board of Demos, will most likely stay in the government to finish his job, aiming to secure transparent elections.

A2A has managed EPCG since 2009 when the Italian company acquired 43.7% of EPCG following a major privatisation deal. The Italian company paid €435mn. In the meantime, A2A has lost 2pp of its equity capital in EPCG, while the electricity price has been reduced, which resulted in A2A failing to meet pledged targets on issues such as investment.

In April 2015, A2A’s five-year management contract expired and was temporarily extended so that the two owners could agree on the terms of a new management contract. In October, Economy Minister Vladimir Kavaric said that the government and A2A had agreed on new five-year management contract.

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