We have audited the accompanying financial statements of the Montenegrin Electric Transmission System Inc. Podgorica (hereinafter the "Company"), which comprise the balance sheet as at 31.12.2013, income statement, statement of changes in equity and cash flow statement for the year ended on that date, and a summary of significant accounting policies and other explanatory notes.
Company management is responsible for the preparation and true and fair presentation of financial statements in accordance with the Accounting and Auditing Act in Montenegro, as well as in establishing such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error in the work.
Our responsibility is that based on our audit we express an opinion on these financial statements. We conducted our audit in accordance with the Law on Accounting and Auditing of Montenegro and International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit in a way that allows us to obtain reasonable assurance that the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In assessing risk, we consider internal control relevant to the preparation and true and fair presentation of the financial statements in order to design audit procedures but not for the purpose of expressing an opinion on the effectiveness of internal controls applied. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the assessment, made by management, as well as evaluating the overall presentation of the financial statements.
In our opinion, the financial statement present fairly the financial condition of the Company as of 31.12.2013., Business results and cash flows for the year ended on that date and have been prepared in accordance with the Law on Accounting and Auditing of Montenegro.
Without qualifying our opinion, we draw attention to the following display in Note 21 to the financial testimonies:
1. In respect to the claims of the Montenegrin Electric Inc. (EPCG) invoices for use of the transmission network in the period from 1.1. to 06.15.2013. in the amount of € 8,177,520 are the subject of discussion between the Company and EPCG. The basis for invoicing EPCG by the Company for the use of the transmission network in the above mentioned period, the application of the methodology for determining regulatory allowed revenue and prices for use of the electricity transmission system (Official Gazette of RM no. 2/12, 12/12, 61 / 13) and the Decision on approval of regulatory allowed revenue and prices for use of the electricity transmission system to the Company for the period from 1.8.2012. to 31.7.2015. (12/695-53 of 02.07.2012), in accordance with the Energy Law adopted by the Parliament of Montenegro and is not subject to negotiations for download energy. For now, the outcome cannot be determined, and accordingly, no additional correction in the financial statements of the Company.
2. The company has not recorded a liability under EPCG relating to the engagement of reserves for receivables from EPCG in the period from 1.1. to 01.10.2013. in the amount of € 8,133,148, as there is no legal or contractual basis for these obligations. For now, the outcome cannot be determined and consequently no additional adjustments in the Company's financial statements.
KPMG Ltd. Podgorica
Other relevant information
In accordance with the Law on energy and energy policy, planned activities to improve the regulatory process and the professional independence of the Energy Regulatory Agency. The agency, in order to clear and predictable regulatory framework and to encourage the region to invest in the energy sector of Montenegro 05/16/2013. Decision No. 13 / 1506-2 adopted Rules to amend the Electricity Tariff. The document is one of the key determinants in establishing the correction regulatory allowed revenue Montenegrin operator of electricity transmission during the second regulatory year, or for the period of 01/08/2013. to 07.31.2014. continues.
Rules governing the manner, conditions and procedure:
- Determination of interim tariffs by the Energy Regulatory Agency
- Edit the regulatory allowed income, prices and tariffs during regulatory, on-demand energy operator or by the Agency or at the end of the year on the initiative of the regulatory agencies.
Also, the mentioned Rules provided that, due to changes in certain parameters such as investment in the energy sector, followed by significant changes in the costs that operators cannot or partially can be affected, regulatory allowed income to energy companies, prices and tariffs can be changed during the term. In this connection, the Board of the Agency, at its session held on 02.07.2013. adopted the Decision on determining the amount of correction regulatory allowed revenue and cost for the transmission system operator, No. 13 / 1713-19, the corrections made in the first regulatory year.
The Agency is 14.11.2013. adopted the Decision establishing a regulatory chart of energy entities with the ,obligation of its application by 01.01.2014. That document is a supplement to the Rulebook on the contents of the account in the Chart of Accounts for companies and other entities. The aim of adoption of the act is that the process of approval of regulatory allowed revenue by the Agency to be more efficient and easier to conduct, with the existence of the necessary data on the costs and revenues of the subject in one place and to simultaneously support the energy operators in determining the regulatory allowed income and price accordance with established methodologies for energy traders. Identified regulatory Chart of Accounts consists of separate accounts, which are a necessary framework for calculation of the total eligible costs, depreciation and return on assets, as well as differences in relation to revenues and expenses prepared on the basis of the current regulatory accounting practices of the Agency.
In addition to the rules and regulatory Chart of Accounts, the Agency has adopted the methodology on amendments to the methodology for determining regulatory revenue and prices for the use of the electricity transmission system. In this regard, the Board shall, at its session held on 31.12.2013. Decision No 13/3629 has on determining the fees and charges paid by producers of electrical energy to CGES for the period from 01.01.2014. to 31.07.2015. This Decision shall be determined by the annual fee to cover part of the costs for the engagement of the transmission capacity of electricity producers that are connected to the transmission system. The price the producer should pay is determined in accordance with the quantities of electricity produced in a monthly billing period, when the billing provider engagement transmission capacity producers of electrical energy connected to the downloads system.
Upon approval of the application of this documentation by the Energy Regulatory Agency completed the process of creating a clear and stable regulatory framework in the energy sector.
New investment projects
The report describes the activities on the realization of investment projects which were conducted in 2013. It is important to note that the implementation of the plan significantly affect public procurement procedures according to the Law on Public Procurement. Law on Public Procurement has left a big choice of submitting complaints at every stage of the procurement procedure, making the process very complex and time consuming, and ultimately affect the implementation of the Public Procurement Plan, and therefore the implementation of the Investment Plan. The difficulties are reflected in the fact that the bidders often make formal failures.
First 400/110 kV Lastva, 400 kV line "Lastva-Čevo" and "Čevo-Pljevlja" TS "Lastva", 400 kV line "Lastva-Čevo" and 400 kV "Čevo-Pljevlja" means the liability under the Contract on the coordination of the project in terms of realization of the high-way undersea cable between Montenegro and Italy.
- TS 400/110/35 kV "Lastva" implies construction of substation and power 2x300 MVA.
Construction of 400 kV line "Lastva-Čevo" means input-output Lastve to DV "Podgorica-Trebinje" and part of the 400 kV line "Lastva-Pljevlja". 400 kV line from Lastva to Čevo is about 35 km, with a parallel one single system and a single two-way with water.
400 kV "Čevo - Pljevlja" is performed as a single in the length of 115 km and a double line, a distance of 40 km Brezana to Kosanica. This project will close the internal Montenegrin ring and improve the reliability of the power system.
In 2013, for part of the project relating to TS "Lastva", the process of expropriation, conducted a tender procedure for the project based on the principle “turnkey” and signed a contract with the best bidder.
For part of the project relating to DV "Lastva-Čevo" in 2013 has completed the preliminary design were obtained UTU, expropriation process implemented to the extent of 90% and a tender was launched for the project on a "turnkey".
For part of the project relating to DV "Čevo-Pljevlja", in 2013 he completed the preliminary design were obtained UTU, intensified activities on expropriation and prepared the tender for the project on a "turnkey".
- Construction of 110/35/10 kV "Kotor" (Škaljari) and 110 kV line "Tivat-Kotor" (IP 001)
Construction of 110/35/10 kV "Kotor" (Škaljari) and 110 kV line "Tivat- Kotor" is a project of joining one of the most important tourist centres of Montenegro to the transmission network, which would significantly reduce the problem of supply to consumers of Kotor electricity.
Realization of the project involves: - construction of 110/35 kV "Kotor" (Škaljari) 2 × 20 MVA in GIS, - construction of 110 kV "Tivat - Kotor" and - installation of a new transformer 110/35 kV, 20 MVA.
During 2013, obtained a building permit for the construction of 110/35 kV "Kotor". Completed provided for works on construction of 110/35 kV "Kotor", except for the connection of 110 kV cable line which is part of part of the project 110 kV "Tivat - Kotor".
Construction of 110 kV "Tivat - Kotor" is planned in 2014. Were selected best bidder for the project on a "turnkey".
- Construction of 110/10 kV "Kličevo" and connecting lines (IPI 012)
This project involves the construction of 110/10 kV "Kličevo" the location of the existing TS 35 / 10kV "Kličevo" and connect to 110 kV network construction cable line up existing TS 110 / 35kV "Nikšić".
During 2013, determined the route of the 110 kV cable line Kličevo-Nikšić, the compilation of studies on expropriation of land along the cable line and the resulting urban requirements for TS and cable line. Tender for selection of best bidder for the development of a 35/10 kV "Kličevo" and 110 kV cable line on a "turnkey".
- Reconstruction of the system of protection throughout the network (IPR 006b)
In order to modernize the system of protection and management in all TS is planned installation of microprocessor equipment protection and management of the power plant.
For 2013, it is planned to prepare the technical specifications required for the tender and tendering, selection of the best bidder, signing contracts and advance payments (for TS "Podgorica 2" TS "Podgorica 2" and TS "Pljevlja").
In 2013, prepared the tender documents and published a tender for the selection of the successful bidder for the work of reconstruction of protection and management in the 400/110 kV "Podgorica 2" (110 kV switchyard), 400/220/110 kV "Podgorica 2" (220 and 110 kV switchyard) and 220/110/35 kV "Pljevlja". Were selected best bidder and paid in advance. Realization of the project goes planned schedule.
- Extending the TS 220/110 / 35kV "Pljevlja" and connection to the 220kV OHL "Podgorica1-Pljevlja2" the principle ,,input-output'' (IPI 002)
Realization of the project involves:
- Reconstruction of the SS "Pljevlja" - the formation of the bus system and equipping of two transmission line, one transformer, and one of two measuring dissection of 220 kV, - building a line of 220 kV, - the construction of 110 kV transmission line unraveling "Bijelo Polje - Pljevlja" and "Kolašin - Pljevlja" and
- installation of 110/35 kV transformers.
In 2013, work was completed on the expansion of 220/110/35 kV and construction of a new 220 kV transmission line. The plant was put into trial operation, performed technical acceptance and obtained the Certificate of Occupancy.
In TS "Pljevlja" is also planned installation of a new transformer bay of 110/35 kV, 20 MVA. In 2013, made a preliminary project.
- Project construction of telecommunication system - extension (IPI 005)
In 2013, completed the following works:
- Setting the OPGW cable to DV "Ribarevine-Peja 3", to the border; - Setting OPGW on 110 kV "Bar-Ulcinj";
- Setting OPGW on 110 kV "Podgorica 1-Crikvenica";
- Setting OPGW on 110 kV "Podgorica 1-Podgorica 3";
- Delivery of tow brake machines;
- Probation telecommunication equipment for five new nodes and software reconfiguration of the existing transmission network;
- SAT spare OPGW drums supplied by Annex 1, AFL Telecommunications; - Final testing of OPGW links;
- Technical acceptance of works;
- Consultancy services
- reports on the review of test protocols and built documentation for implemented OPGW links, presence final test OPGW links and preparing the final report for the World Bank;
Setting OPGW on 110 kV "Podgorica 1 - Podgorica 3", was completed in January 2014.
- SCADA for National Dispatch Centre with the EMS system (including the assessment of the N-1 criterion of safety in real time)
NDC 005b project involves improving the current SCADA system in NDC in adding new EMS functions. Improving enables the automatic calculation of the N-1 criterion in real time, thus information about the security of the system and possible distortions N-1 criterion will be available to the operator of the system. The accounts will be made to the model, and all available data in real time from the system CGES parts of neighbouring systems in the observable area and the rest of the external system will be equivalent. Other required information will be assessed using the state estimator, which will also check the validity of available data exchanged in real-time. The new system will be able to perform the analysis in the simulation model and calculation of load flow automatically in a predetermined interval, or on demand.
In 2013, contracts were signed for the delivery of EMS and WAMS system with a consortium DMS Schneider - ECC (EMS) and ELPROS-ECC (for WAMS). In October the delivered equipment and has been part of the training to work with EMS. In December it is installed and functional testing systems WAMS. Installed are four PMU devices in fields DV 400 kV Trebinje and Tirana 2 in TS "Podgorica 2", OHL field 400 kV "Peja 3" in TS Ribarevine and OHL field 220 kV Bajina Bašta in TS Pljevlja 2.
- Construction of 110 / 10kV "Podgorica 5" and the connection of the 110 kV network (IPI 004)
Construction of 110/10 kV "Podgorica 5" Fit to 110 kV network, the first project implemented in order to address the problem of radial feeding TS "Podgorica 3" and provide the conditions for the fast growing power consumption of the Capital City.
The project is in the final phase and involves:
- Construction of a new 110/10 (20) kV "Podgorica 5", 2x31.5 MVA,
- construction of a new 110 kV double-Al-Fe 2x240 / 40 mm² "Podgorica 5 - DROP AND", 4 km in length and
- the construction of 110 kV XLPE cable-A 1 000 mm2 TS "Podgorica 5-TS Podgorica 3", 3 km long with the expansion of 110/35 kV "Podgorica 3".
Construction work on the new 110/10 (20) KVP "Podgorica 5", 2x31.5 MVA, were completed and obtained a use permit.
Construction work on the new double 110 kV Al-Fe 2x240 / 40 mm² "Podgorica 5 - DROP AND", the length of four kilometres were completed and obtained a use permit.
Work on the construction of 110 kV XLPE cable-A 1 000 mm2 TS "Podgorica 5-TS Podgorica 3", three kilometres in length, with the expansion of 110/35 kV "Podgorica 3" have been completed and the cable was put into trial operation.
- Replace 110/10 kV "Podgorica 3" (40 MVA) (IPR 011)
Realization of the project includes:
- The purchase of 110/10 kV, 40 MVA,
- preparation of project documentation, and - installation of transformers.
In 2013, completed the acquisition and installation of power transformer 110/10 kV, 40 MVA. The transformer was put into trial operation.
- Supply and implementation of hardware and software for the FMIS (NDC 002)
During the reporting period ended activities are planned:
- Implemented the program modules "General Ledger", "Customers", "Suppliers", "Material accounting", "Fixed assets", "Personnel", "Overtime employee involvement" and software modules for financial reporting "Data Report".
- Today was the integration of existing software modules FMIS with software module "Personnel".
- The tender procedure for purchase of server, storage and backup system is completed.
- Prepared the tender documents for the procurement of program module "Financial monitoring of investments" and upgrading program module "Data Report" software ERP4ME.
- Integration of existing software modules FMIS with software module "Personnel".
- Start the implementation of upgrades for a list of basic resources bar-code technology.
- Reconstruction of the plant (TS "Podgorica 2" TS "Nikšić" TS "Podgorica 1") (IPR 002a)
In order to improve the operational availability of transmission facilities necessary to constantly invest in the replacement of equipment in substations.
Realization of the project includes the purchase of equipment, preparation of project documentation and installation of equipment in:
- TS "Podgorica 2" (replacement of switches 400 kV) - TS "Nikšić" (replacement of disconnectors 110 kV) and - TS "Podgorica 1" (replacement of disconnectors 110 and 220 kV).
- In TS "Podgorica 2" completed all the planned works.
- In 2013, the 110/35 kV "Nikšić" completed all the planned work on the replacement of 110 kV circuit breaker. In 220/110/35 kV "Podgorica 1" to begin the work on the replacement of 110 and 220 kV disconnectors and realized about 20% of this part of the project.
- Reconstruction of the plant (TS "Bar" TS "Herceg Novi" TS "Podgorica 4" TS "Pljevlja") (IPR 002b)
Project of reconstruction of 110/35 kV "Bar", 110/35 kV "Herceg Novi "110/35 kV" Podgorica 4 "and 220/110/35 kV "Pljevlja" is necessary due to deterioration of switching equipment to enhance operational safety facilities.
- Realization of the project includes the purchase of equipment, preparation of project documentation and execution of electric and construction work in:
- 110/35 kV "Bar" (DV field Virpazar and transformer bays T1 and T2); - 110/35 kV "Herceg Novi" (DV field Tivat, coupler GSS 110 kV transformer bay T1); - 110/10 kV "Podgorica 4" (110 kV fields "Podgorica 2" and reserve and transformer bays T1 and T2) and - 220/110/35 kV "Pljevlja" (transformer bay T1).
- Previously completed work on the replacement of equipment in 110/35 kV "Bar" and 110/35 kV "Herceg Novi".
- In 2013, work was completed on the replacement of equipment in 110/10 kV "Podgorica 4" and 220/110/35 kV "Pljevlja".
- Other projects In addition to the above projects, in 2013 the intensive work on other investment projects as:
- Reconstruction of the 110 kV "Budva-Lastva" (IPR 009)
- ESS software and hardware (the first and second phase) (NDC 003)
- Reconstruction of the 110 kV "Lastva Tivat" (IPR 010)
- Construction of 110/35 kV "Zabljak" (IPI 013)
- Construction of 110 kV "Virpazar - Ulcinj" (IPI 015)
- 110/10 kV "Podgorica 4" (IPI 021)
- Construction of 110/35 kV "Kolašin" and commissioning of 110 kV line "Mojkovac- Kolasin" (IPI 014)
- Construction of 110 kV line "Lastva Kotor" (IP0 17)
- Improvement of hardware and software in the NDC SCADA system (NDC 006)
- Revitalization of 110/35 kV "Nikšić" (rehabilitation concrete portals) (IPR 001)
- Reconstruction of 110/35 kV "Pljevlja1" (IPI 018)
- Preparatory work for the dispatching centre in the building CGES (NDC 005a)
- Expansion and improvement of automatic meter reading (AMR) - NDC 008 - TS 400/110/35 kV "Brezna" (IPI 019)
- Construction of 110/35/10 kV "Zeta" and 110 kV "Podgorica 5-Niksic" (IPI 011)
- Installation of a new 30 MVA transformers in TS "Nikšić" (IPR017)
- Supply of batteries for objects CGES (NDC 007)
- Purchase of digitalizacione synoptic table (NDC 004)
- Relocation of 110 kV "Nikšić-Bileća" from Dragove Luke (IPI 010)
- Revitalization of the 110 kV transmission line (replacement of equipment and reconstruction) (IPR 004)
- Development, reconstruction, metering and protection in TS (IPR 012)
- Other investments (SPD 003)
- reconstruction of 400 kV facilities in TS "Podgorica 2" and TS "Ribarevine" (IPR 013 )
400 kV "Podgorica 2-Višegrad" and 400 kV "Podgorica 2-Bajina Bašta" (IPI009).
Property, plant and equipment
Property, plant and equipment are tangible assets that is held for use in the production or supply of goods or services or for administrative purposes, which is the life of the long- than one year.
Initial measurement of property, plant and equipment that meet practitioner services for the recognition of an asset is carried at cost. Property, plant and equipment are stated at cost model of property, plant and equipment. Investments that have the character of current maintenance of property and plant and equipment represent expenses in the period in which they are incurred.
Depreciation of these assets is calculated at the straight-line method at a rate calculated based on the estimated useful life of the asset.
The estimated useful lives by groups of property, facilities and equipment is:
Annual depreciation rate
Means of transport
Board of directors:
- Dragan Laketić
- Luigi De Francisci
- Francesco Beccali
- Nusret Ećo
- Igor Noveljić
- Vesna Bracanović
- Lazar Janinović
- Ivan Bulatović
- Branko Stojković
- Branko Knežević
- Dušan Vukasović
- Leda Minić
- Žesljka Hidić
- Valerio Mastragostin
The fiscal position has weakened considerably over the past year. Weak growth and the activation of sizeable state guarantees for the aluminium company, Kombinat Aluminijuma Podgorica (KAP), have taken a significant toll on public finances in 2013.
European Union (EU) accession negotiations are advancing. Montenegro opened accession negotiations in 2012 and has so far provisionally closed two of the 35 EU acquis chapters over the past year. Under the new enlargement rules Montenegro will have to begin work on the more difficult chapters related to the judiciary and justice early in the accession process.
Generation capacity in the energy sector is expanding. A number of small hydropower plants are currently under construction, and there has been considerable investor interest in the construction of a second unit in the Plevlja thermal power plant. Plans for commencing the construction of the Italy-Montenegro underwater cable are advancing.
Key priorities for 2014.
The fate of KAP should be resolved as soon as possible. The financial difficulties of the company have spilled over to the public sector. A sustainable solution to the widening fiscal gap will not be possible unless KAP’s liabilities are resolved. Efforts should be stepped up to address the high level of non-performing loans (NPLs) in the banking sector. NPLs represent nearly 20 per cent of total loans, and provisions are below 40 per cent. Regulatory barriers to the enforcement, restructuring or write-off of NPLs need to be removed. Further reforms are needed in infrastructure, especially in roads and certain municipal and environmental sectors. These sectors could benefit from greater commercialisation, especially through public-private partnership (PPP) projects.
Economic performance remains weak. A strong tourism season provided Montenegro’s struggling economy with a major boost in 2011, but the contribution of external demand to economic growth decreased significantly in 2012. Domestic demand did not pick up the slack, as consumption and investment remained weak and credit growth continued to decline. As a result, overall GDP contracted by 0.5 per cent in 2012. Economic activity picked up in the first half of this year, especially on the back of recovering exports. The current account deficit – at close to 20 per cent of GDP – remains the highest in the region. Inflation has been moderating throughout 2013, standing at 2.2 per cent year-on-year in August 2013.
The fiscal position has been weakened by the payment of KAP guarantees and weaker than expected growth. On the fiscal side, policies have become more prudent in the past couple of years, but the deteriorating economic situation, and the activation of state loan guarantees related to aluminium producer, KAP, has necessitated revisions of the 2013 budget. However, tax revenues increased by 9 per cent in the first nine months of 2013, aided by several austerity measures, including a rise in income tax rates. The government is considering the introduction of further measures to boost fiscal sustainability.
Negligible growth is expected in the short term. Only a modest recovery from the 2012 recession is expected in 2013. Diversification of the economy remains a challenge for building sustainable growth in the medium term, but the visible progress in the EU approximation process should help to attract further foreign direct investment and ultimately boost the country’s growth prospects.
Major structural reform developments
EU accession negotiations are progressing. Montenegro has been in the process of EU accession negotiations since June 2012. In accordance with the new approach for front-loading the most difficult areas in the accession negotiations, Montenegro is subject to additional scrutiny with regard to the functioning of its judiciary and the rule of law. In its latest progress report on Montenegro, published in October 2013, the European Commission noted that two negotiating chapters had been opened and provisionally closed, and that Montenegro had adopted detailed action plans for the two chapters relating to the judiciary and fundamental rights (chapter 23), and justice, freedom and security (chapter 24).
Privatisation plans include the sale of key transport and tourism assets. In addition to the completion of ongoing tenders, the country’s privatisation council plans to prepare tenders for the privatisation of the rail cargo operator, Montecargo, the national airline, Montenegro Airlines, the Igalo Health Institute, and hotel and tourism operators, Budvanska Rivijera and Ulcinjska Rivijera, among other targets. The council has also stated that it would seek to sign PPP contracts for 32 companies, including the postal operator, Posta Crne Gore, and a number of tourism companies and locations, such as Ada Bojana and Velika Plaža. A number of these state-owned enterprises have been put up for sale over the past few years, but the privatisations failed, mainly due to lack of investor interest.
The government is seeking to restructure KAP. Montenegro’s largest industrial producer and exporter has been in considerable financial distress in recent years, and its problems have major implications for public finances because of substantial state guarantees on its debt. In the first half of 2013 concerns have also arisen about how to ensure a sustainable power supply to the struggling company in light of the growing size of its unpaid electricity bills. The company entered a bankruptcy procedure in July 2013, but it is unclear whether, in the longer term, this will lead to restructuring or closure.
Montenegro performs well on most indicators of the quality of the business environment, but many important challenges persist. Montenegro ranks higher than most regional peers in both the World Bank Doing Business report (forty-fourth of 189 countries) and the World Economic Forum’s Global Competitiveness Index (sixty-seventh of 148 countries). Over the past three years Montenegrin authorities implemented a number of reforms to ease the regulatory burden on businesses, including by reducing taxes and social contributions and simplifying tax procedures, improving the legal framework for bankruptcy procedures, reducing the cost and procedures for obtaining construction permits, and making property registration easier through the introduction of a notary system. Nevertheless, according to the World Bank 2014 Doing Business report, dealing with construction permits, registering property and enforcing contracts remain major challenges for businesses in Montenegro.
Construction of the main road transport corridor is expected to begin at the end of the year. The contract to construct a 44 km section of the 169 km Bar-Boljare motorway was won – through an unsolicited tender – by the China Communications Construction Company (CCCC), whose bid of €810 million was supported by a loan from the Chinese state-owned Export-Import Bank, which will finance 85 per cent of the project. The road will be constructed through challenging terrain, with 24 km of the 44 km length comprising bridges and tunnels. The Bar-Boljare motorway is Montenegro’s largest ever infrastructure project, running between the Adriatic port city of Bar in the south, and the Serbian border in the north.
The energy sector is assuming a more strategic role in Montenegro. The upcoming construction of the underwater cable linking Montenegro’s and Italy’s power networks is attracting further investor interest in this sector. Ten companies submitted bids for the construction of a second 220 MW unit of Montenegro’s only thermal power plant, TE Plevlja. This plant currently supplies about half of Montenegro’s total electricity supply, with the remainder coming from hydropower. Several small hydropower plant projects are currently being implemented.
The financial sector is burdened by low profitability and a high, and rising, level of NPLs. The Montenegrin banking sector has been reporting negative annual return on equity and negative return on assets since 2008. This weak performance reflects more than four years of continuously declining credit growth. The downward trend in lending to the private sector has only recently reversed, while credit growth has picked up quite strongly in 2013, growing at nearly 4 per cent year-on-year in May 2013. At the same time, the high level of NPLs – just under 20 per cent of total loans as at May 2013 – continues to weigh heavily on banks’ balance sheets, and provisioning is also quite low, at below 40 per cent. In February 2013 the Central Bank of Montenegro and the World Bank (FinSAC) organised a brainstorming workshop aimed at defining concrete steps for the restructuring of NPL portfolios. This pilot initiative has also been supported by the EBRD, which has completed a feasibility study to further support the efforts of the Montenegrin authorities and the World Bank.
Source: European Bank for Reconstruction and Development
This publication is issued Antea Brokers Ltd., Zagreb, 55 Ljudevita Gaja Street and aimed at Antea Brokers clients. This publication is made for information purposes only and do not in any way constitute an offer or invitation to purchase property or rights mentioned in it. The information, opinions, conclusions, forecasts and projections contained herein are based on publicly available statistical and other information from resources, the completeness and accuracy of Antea brokers, but that is not guaranteed.
The informative nature of this publication may serve as a substitute for your own judgment and assessment of any reader or recipient of this publication. Accordingly, all views, opinions, conclusions, forecasts and projections presented in this publication are subject to change data as published by the source. Before any financial decisions you should definitely consider all the arguments listed here individually, inspecting financial reports and other sources. Investing in stocks and specific stocks, should be done in the context of the overall portfolio.
Antea brokers allows further use of the data in this publication, with the obligatory reference to this publication as a source. Any assets that are mentioned in this publication and whose movement comment may from time to time be the subject of trade or positions taken by Antea Brokers and does not accept responsibility for any harm resulting from the use of information and prices from this material nor guarantee their completeness or accuracy.
The author of the publication is not an authorized financial adviser and their views concerning the capital market and forecast amounts in good faith for the purpose of exchanging opinions and general information. Author publication is a recommendation to sell or purchase securities or implementation of various investment strategies.