Tender Failure Leaves Moraca Dam Project Hanging

October 26, 2011
Future of Montenegro’s ambitious project to harvest energy from the Moraca river is in doubt after foreign partners fail to to submit bids.

Drazenka Becirovic, from the Montenegrin Economy Ministry, told Balkan Insight that new expert analyses had been ordered following the failure of the tender to construct hydroelectric power plants on the Moraca river.

  The fresh studies were “the condition of all conditions” in order to decide whether Montenegro’s former state power monopoly, Elektroprivreda Crne Gore, EPCG, could handle the project on its own, she said.

The tender closed unsuccessfully on September 30 after none of the other previously qualified bidders in the end presented an offer.

EPCG had qualified as a bidder for the tender in consortium with Italy’s A2A, which also owns 43 per cent of EPCG.

In July, the government of Montenegro, still a majority shareholder in EPCG, signed a memorandum of understanding with A2A, which stated that if the Moraca tender failed, the government would consider assigning the project directly to EPCG.

Critics say that A2A may have had an interest in not presenting its own bid, as the concession through EPCG would require lower investments owing to the government’s majority stake in EPCG. In the same memorandum of understanding, A2A also withdrew from the previously agreed possibility of acquiring the majority ownership of EPCG after 2015.

Jelena Marojevic, of the Podgorica-based NGO Green Home, said the project to build dams on the Moraca river had not been economically or environmentally sustainable from the beginning. The failure of the tender should represent a “clear sign” for the government to turn to other, more sustainable projects, she said.

Marojevic said adequate environmental impact and cost-benefit studies for the dams project had never been carried out; the civil sector was not surprised by the failure of the tender as they had warned the government about the unprofitability of the project from the beginning.

A former economy minister, Branko Vujovic, told the local media that Montenegro “did not offer a good climate for the Moraca dams project to succeed, which was probably one of the main reasons why the tender failed”. Vujovic said he was sorry that the tender had failed, since “enormous efforts were made”.

Three other bidders made the pre-qualification tender for the Moraca dams project. China’s Sinohydro and Germany’s Strabag withdrew early this year. The Italian energy giant and former state monopoly Enel pulled out just before the deadline to submit proposals expired.

Enel said it was not satisfied with the conditions, but did not want to comment on the government’s agreement with A2A, stating it was against company policy to comment on third-party decisions.

On the occasion of A2A’s revision of the initial agreements with the Montenegrin government, the Italian media said these were “bad times for Italian companies in Montenegro” and that Terna’s undersea cable “could be next” to go.

This was a reference to an 850-million-euro project, which is supposed to export energy from the Moraca dams and other renewable energy plants in the Balkans under the Adriatic seat to Italy by 2015.

But Becirovic said the problems over the Moraca dam project would have no effect on the construction of the marine cable. “These are separate projects,” she said.