The Ministry of Energy and Mining has submitted to the Government's procedure the Draft Law on the Security of Supply of Oil Derivatives, which, due to the delay in fulfilling the obligations for the opening and closing of the negotiated Chapter 15 - Energy, will be sent to the Assembly under an urgent procedure for adoption, and at the beginning of 2024, a tender will be issued for the execution and supervision of the works of adaptation and modernization of the storage tanks at the terminal in Bar, which should be completed in six months.
This was said by the Minister of Mining and Energy in an interview with "Vijesta". Saša Mujović adding that Montenegro committed itself in negotiations with European partners to create legal prerequisites and form oil reserves by January 1, 2023, which has not been fulfilled.
"In order to overcome the financial challenges surrounding the formation of mandatory reserves of oil derivatives, part of the money of direct budget support to Montenegro by the European Commission (EC) for overcoming the energy crisis is intended for the provision of mandatory reserves. More precisely, 7,5 million euros are earmarked for this purpose, of which 1,5 million euros are for the adaptation and modernization of storage tanks, while the rest of the money will be spent on the acquisition of reserves of oil derivatives, which will be enough to fulfill part of the obligation, more precisely 15 - 20 percent of the mandatory reserves that we must have stored in the finished product", said Mujović, adding that the issue of oil reserves is a key benchmark for Chapter 15 - energy.
He said that in the Government's plans for the energy sector, the state oil company Montenegro bonus (MNB) will play an active role, which under the new management managed to restore liquidity, which will, among other things, build a gas filling station for LPG bottles and a gas station.
The minister pointed out that the newly formed state companies Željezara and Solar gradnja operate at a loss and that a mistake was made in the order of moves in both companies.
"Especially in the area of employment, but also the primary activities of companies. Of course, it is completely clear that the problem of unemployment should be solved, but not in a way that makes losses through unplanned employment. This is the least in the interest of the workers, because companies that could operate with the optimal number of employees will find themselves in a situation where they do not employ anyone," Mujović pointed out.
The Ministry of Energy with the EU Delegation should define a new deadline in which 13 million will be available to households, the tourism sector and small and medium-sized enterprises from the processing industry from the direct budget support of the EC to Montenegro for the improvement of energy efficiency, and soon they will select a list with the state energy companies projects with which they will apply for money from European funds within the "Growth Plan for the Balkans"
What are the key projects that you will apply for money from European funds as part of the "Growth Plan for the Balkans", what is the value of those projects and is all the documentation complete?
In cooperation with the Ministry of European Affairs and the Delegation of the European Union (EU) in Montenegro, the Ministry of Energy and Mining submitted a series of reform measures for the preparation of the Reform Agenda. The aforementioned measures rely on the improvement of the electricity market, decarbonization, digitalization of the distribution system and innovation. We tried to make the proposed measures realistically achievable, but also ambitious enough to be in line with the recommendations from the European Commission (EC) Report on enlargement and the Program of Economic Reforms, as foreseen in this program. In addition to reform measures, infrastructure projects will be applied for through the WBIF, which will also be financed from the Growth Plan. We plan to use this mechanism to accelerate the development of projects for the construction of large production facilities in the field of hydro potential, as well as for the strengthening of the transmission and distribution network, which will enable further integration of renewable sources of electricity and energy stability. The total value of the proposed infrastructure projects reaches a value of up to 500 million euros, from which, in consultation with energy entities, projects with the highest degree of maturity will be selected.
Within the plan of direct budgetary support of the EC to Montenegro for overcoming the energy crisis, 13 million euros are earmarked for the implementation of three programs aimed at improving energy efficiency. When will this money be available to end users - households, the tourism sector and small and medium-sized enterprises from the processing industry?
The Ministry is in intensive communication with the Delegation of the EU in Montenegro precisely on the issue of defining new deadlines for the realization of the allocated money. After agreeing on the new time plan, we will start concrete implementation, so immediately at the beginning of 2024.
A budget of 13 million euros is allocated for the implementation of measures related to the improvement of energy efficiency, within which the realization of three programs intended for citizens/legal entities, the tourism sector and industry is planned. Preference was given to these projects because energy efficiency is recognized as an economical and fast way to increase the security of energy supply and to reduce greenhouse gas emissions responsible for climate change.
Unfortunately, since the mentioned funds were not planned in the budget for 2023, it was not possible to spend them, but the necessary preparatory activities were carried out in order to wait for the implementation of the mentioned programs in 2024 as ready as possible. It is planned that programs intended for citizens and the tourism sector will be implemented in cooperation with the Eco Fund with the support of UNDP. For the program in the industry sector, the implementing body is the Innovation Fund, which in 2023 announced a call for the Program to encourage innovation in the function of energy efficiency in industry based on certain funds from the budget of Montenegro in the amount of one million euros. The plan is to use an additional 1,5 million euros from direct budget support to continue the implementation of this program.
The chance of Željezara is its advantages, which are the production of quality steel, the possibility of placing that steel on the market in a very short period of time, and this is where the future of the company should be sought. We have interests from different addresses and we are talking to everyone, because we will not allow the sequence of steps to be skipped due to anyone's lack of promptness
At what stage is the proposal for the Law on Security of Supply of Oil Derivatives in the Case of Supply Disruptions? When will it take effect?
I have said more than once that we have to start fulfilling the obligations we have accepted ourselves. I will remind you that Montenegro committed itself back in 2012 with the decision of the Ministerial Council of the Energy Community from October 2012 to apply the EU Council Directive by January 1, 2023 at the latest, which regulates the issue of maintaining mandatory reserves of crude oil and/or oil derivatives and establishing necessary procedures for solving disruptions in the supply of oil and/or oil derivatives. In addition, the issue of mandatory reserves was assessed, within the negotiations on the accession of Montenegro to the EU, as a key criterion for the opening and closing of the accession negotiations in Chapter 15 - energy. The proposal for the Law on Security of Supply of Petroleum Derivatives represents the transposition of the aforementioned EU Council Directive and aims to ensure a high level of security of supply of petroleum derivatives in a reliable and transparent manner, by maintaining minimum stocks of petroleum derivatives and establishing the necessary procedural conditions for solving serious shortages and/or disruptions in supply. . Now we can finally announce its imminent adoption. Namely, the draft law is in the procedure that precedes its approval by the Government, after which it will be sent to the Parliament of Montenegro under an urgent procedure, due to the delay in the implementation of this obligation, which should have been implemented years ago.
When will the adaptation and modernization of the state-owned oil tanks in Bar for the storage of mandatory reserves of oil derivatives begin, and when is it realistic that this work will be completed? How much money will there be for putting the reservoir into operation and where will this money come from?
In order to overcome the financial challenges surrounding the formation of mandatory reserves of oil derivatives, part of the funds of direct budget support to Montenegro from the EC for overcoming the energy crisis is intended for the provision of mandatory reserves. Specifically, EUR 7,5 million has been earmarked for this purpose, part of which (EUR 1,5 million) is for the adaptation and modernization of storage tanks, while the rest of the funds will be spent on the acquisition of reserves of oil derivatives. For the needs of adaptation and modernization of the mentioned tanks, the Ministry of Energy and Mining will, at the beginning of 2024, announce an open public procurement procedure for the execution of works and supervision of the works of adaptation and modernization of the storage tanks at the terminal in Bar. I expect the works to be completed within half a year. The rest of the funds will be spent on the purchase of fuel stocks, which will be enough to fulfill part of the obligation, more precisely 15-20 percent of the mandatory reserves that we must have stored in the finished product.
How far have we come with solving the accumulated problems in the state oil company Montenegro bonus (MNB) and how do you see the role of that company in further government projects related to the energy sector?
You correctly detected that this state-owned company inherited problems from the previous period, such as the payment of obligations from the period when the company managed KAP in the amount of 1,2 million, which now burdens the company in the amount of 30.000 euros on a monthly basis. What threatens the survival of the company are liabilities incurred during the period of management of KAP, in the amount of about 3,34 million and debt to EPCG in the amount of 13,4 million.
Nevertheless, a dose of optimism is infused by the responsible attitude of the company's new management, which managed to restore liquidity, to initiate and complete the assessment process of assets owned by the company and assets given to it for management and use by the Government.
As for further Government projects related to the energy sector, we see the active role of the MNB in the gas sector. The MNB continuously cooperates with operators of gas transmission systems from the region in the direction of the establishment of the regional company IAP, with the aim of promoting the joint project, while each of the company's members will take responsibility for the further development of the IAP project in their country. Of the other projects, it is worth mentioning that the MNB is planning the implementation of the construction project for the gas installation of the LPG bottle filling station and the gas station.
What do the financial reports on the operations of Željezara and Solar gradnja show and what are the key problems burdening these two companies?
The deadline for submitting the financial reports of these two companies is March 2024, and then we will have precise information about the business in the past period. However, to be completely frank, it is clear that those two companies are operating at a loss, and in the case of Željezara, the position of the Agency for the Protection of Competition is still awaited. This is the state of affairs I found myself in, and I say quite frankly, albeit unpopularly, that a mistake was made in the order of moves in both companies. Especially in the area of employment, but also the primary activities of companies. Of course, it is completely clear that the problem of unemployment should be solved, but not in a way that makes losses through unplanned employment. This is the least in the interest of the workers, because companies that could operate with the optimal number of employees will find themselves in a situation where they do not employ anyone.
What do you plan to do together with the management of EPCG so that these two companies stand on the green branch?
In Željezara, a public call for leasing the Forge and Steelworks is already underway, and we expect interest from foreign companies. We had intensive diplomatic activity and informed foreign embassies about the competition. Of course, we are aware that outdated equipment and production, along with a lack of investment, is also a question of the number of employees. The chance of Željezara is its advantages, which are the production of quality steel, the possibility of placing that steel on the market in a very short period of time, and this is where the future of the company should be sought. We have interests from different addresses and we are talking to everyone, because we will not allow the sequence of steps to be skipped due to anyone's lack of promptness.
Solar construction is an initially well-designed project whose implementation does not follow the dynamics of development. It is clear that the idea of installing solar panels on the roofs of houses is a positive step with multiple positive sides, because in the simplest terms you are creating production at the point of consumption. The business plan envisages the employment of 477 workers, and we know that there are currently many more. In addition, we have an objective problem, the Law on Public Procurement - procurement of solar panels followed an extremely slow and dysfunctional procedure and the company was at some points condemned to wait for the delivery of solar panels. If you don't have the basic means to work, then you are in trouble. It is the government's job to react to certain issues that we have detected as business barriers and obstacles to the development of companies and create a good business environment. But if that company does not know how to use the stimulating environment and preconditions that we have created for it, then the problem is in the management. We will certainly deal with this and change things, because the issue of self-sustainability and profitability of the company must be a priority.
The attitude of the Environmental Protection Agency is awaited for HPP "Komarnica".
What is in the plans of the Ministry of Energy in 2024 regarding the construction of the Komarnica hydroelectric power plant?
The previous Government signed a concession contract for the use of natural resources for the construction, maintenance and use of the energy facility of the Komarnica hydroelectric plant for the production of electricity with Elektroprivreda, and the evaluation process of the Elaboration on Environmental Impact Assessment is underway, and the further future of this project depends on its evaluation. . Without consent to the Elaborate, it is not possible to implement this project because a building permit cannot be obtained. Therefore, we are waiting for the position of the competent institution for the field of environmental protection, and this is the sequence of moves on which the future of the project depends. There is no skipping steps, no bypassing procedures that are clear and unambiguous. We have obligations in the process of accession to the EU, to which we have committed ourselves, both from the point of view of energy and in the field of environmental protection. It depends on us how we will implement them and how quickly the state authorities will do the work. The goal of Montenegro being a completely energy-independent country has its challenges, and the way to overcome them is to adhere to the legislation with a broad consensus of all actors involved in the process.
Poor communication of institutions in the monitoring of contracts on the construction of MHP
What problems have you recorded in the monitoring and implementation of the contract on the construction of small hydropower plants (mHP) and what are your suggestions to solve these problems?
There are currently 29 active concession contracts for the construction of small hydroelectric power plants and two energy permits for the reconstruction of MHPs, which enable the construction and exploitation of a total of 42 MHP facilities, of which the construction of 33 MHPs that are currently in operation has been completed, four MHPs are in the design phase and five mHE is under construction. The total installed capacity of the constructed mHE is 52,6 MW, with a production plan of 182,4 GWh. As a result of non-fulfillment of obligations, the Government has so far terminated ten cooperation agreements, with three mutual terminations.
During the monitoring of the implementation of the concession contract for the construction of MHP in the previous work, the ministry encountered the problem of reviewing the entire procedure related to each individual contract, bearing in mind the competences of other departments, and my impression is also the absence of mutual communication. Namely, the Ministry of Energy monitors the implementation of deadlines and obligations from concluded contracts, which are directly related to the decisions of other competent authorities, which in many cases do not provide the possibility of a complete review of all activities. In this way, the department that I am at the head of in many cases does not have all the information related to the decisions of other authorities, which affect the monitoring of the implementation of the contract itself. Thus, the effective involvement of all authorities in the institutional resolution of certain issues.
It is known that on certain watercourses the local population expressed their disagreement with the projects. This should not happen anymore, because the local community must be involved in order to prevent such situations.
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