INTERVIEW – Montenegro Sees Energy, Tourism, Motorways Boosting Economy Next Year

The government plans to build a 500-megawatt thermal power plant and a 240-megawatt hydropower plant in the next five years and make the country a net electricity exporter.

“In December we will open the prequalification procedure for the hydro power plant. These two projects will be enough to ensure electricity surplus,” Vujovic told SeeNews during an official visit to Bulgarian capital Sofia earlier this month.

Montenegro has an installed electricity generation capacity of 868 megawatts (MW) and imports a third of the electricity it needs. Hydro power plants Perucica and Piva generate nearly two-thirds of the Adriatic country's electricity output, and around one third is contributed by its sole thermal power plant Pljevlja.

Last week Montenegro opened a prequalification tender for awarding a coal exploration concession and for subsequent construction of the 500-megawatt thermal power plant. The deadline for filing prequalification bids is February 6, 2010.

Vujovic added foreign investors are interested in the country's energy sector regardless of the global economic downturn. Eight candidates out of 14 have qualified to continue in the government tender for awarding concessions on small hydro power plants. The concessions will be granted for the design, construction, operation and maintenance of hydro power plants with an installed capacity of up to 10 MW each in 10 locations across the country.

Montenegro, a mountainous country of abundant but little harnessed hydro energy resources, now has seven small hydro plants with a combined installed capacity of 8.92 MW and an output of some 21.4 gigawatthours per year.

Vujovic said that by the end of the year the government will adopt legislation that will open the way for the construction of a gas-fired power plant.

“I think a tender [for gas exploration] will be opened early next year.”

Although 2009 has been a year of economic slowdown, Montenegro sees net foreign direct investment in the country at last year’s level of almost 570 million euro ($851 million) thanks to the sale of 18.3% of its power utility EPCG to Italy’s A2A  for over 192 million euro earlier this year. A2A has pledged to overhaul the company, raise its generation capacity by 90 megawatts, cut distribution losses and generate 300 million euro in profit in the next five years.

“The energy sector will continue to be a catalyst for the economy next year. All these energy projects are and will be very relevant,” Vujovic said.

TOURISM, MOTORWAYS

Vujovic said the government expects the launch of several large-scale tourism projects will draw big investor interest. However, the tenders for construction, management and long-term lease of tourism facilities in the country's Adriatic seaside resorts of Ada Bojana, Velika Plaza and Ulcinjska Rivijera have failed to attract any bidders by last month’s deadline.

“Now we don’t have the strong interest we had a year ago,” he said, adding that the tenders will be relaunched soon.

Yet, the government and Egyptian-owned Orascom Development signed last month a deal for the construction and lease of an upscale resort on the Adriatic peninsula of Lustica which could absorb up to 1.1 billion euro in investment in the next 10 years.

Vujovic said the agreed investments in the energy and tourism sectors, as well as the construction of a major motorway crossing the country will have a lasting favourable effect on the economy.

In June, Montenegro signed a 2.77 billion euro concession deal with a consortium of Croatian companies for the design, construction, operation and maintenance of a 169 kilometre motorway that will connect the country's Adriatic port of Bar, in the south, with the Montenegrin-Serbian border, in the north. It will provide the fastest approach to the Adriatic Sea to Montenegro's landlocked neighbour Serbia and will link Montenegro, via Belgrade, with the EU-defined transport Corridor X which connects western Europe with the Greek Aegean port of Thessaloniki.

Vujovic said the government expects Montenegro's economy to contract by a real 4.0% this year after growing by preliminary 8.1% last year.

“We haven’t made projections yet but we will probably start with a modest one percent economic growth [next year]. All these projects give us a chance – we will see how it will develop, not all of it depends on us.”

($=0.6684 euro)