Serbian power monopoly EPS is looking to expand regionally by acquiring shares in neighboring Montenegro’s state-owned utility, its general manager said.
“Our team of experts is in Montenegro doing a due diligence study and we shall make an offer,” said Dragomir Markovic, general manager of EPS. Montenegro in February put on sale an 18.3% stake in its power monopoly Elektroprivreda Crne Gore (EPCG), aiming to boost the company’s capital and improve its position in the regional market.
EPCG, 70.6% state-owned, posted a €7 million ($9.2 million) loss in 2008. The company is estimated to be worth around €1 billion. “We are especially interested in EPCG because of the existing project to build a power transmission grid between Montenegro and Italy under the Adriatic,” Markovic told reporters.
Montenegro declared independence from Serbia in 2006. Prior to that, the two power companies had been part of the same distribution system set up before Yugoslavia’s disintegration. Markovic said EPS was seeking to expand its client base to 320,000 consumers in Montenegro.
“We are also interested in exploiting the hydropower potential in Montenegro, especially on the River Drina,” Markovic said. EPS has already agreed to build hydropower plants with Bosnia’s Serb Republic on the River Drina that is part of the border between Serbia and Bosnia.
The planned combined output of the four hydropower plants is 800 million kilowatt-hours. “We expect the construction of these power plants to begin in the second half of 2010,” Markovic said.
Markovic said EPS plans to invest €9 billion in new projects and the reconstruction of existing capacity by 2015 to be competitive when the Serbian market is fully liberalized. “Part of the money for our projects will be provided through loans while another part will come from our income,” he said.
In 2008 EPS posted a loss of around €100 million. The estimated value of the company is €6.7 billion. Serbia’s power production and transmission facilities were badly damaged during the 1990s, a decade of sanctions Serbia faced over its wars in neighboring Croatia and Bosnia.
The units were also damaged by NATO bombs in 1999 designed to halt the killing of civilians in Kosovo. Since 2000 the European Union has provided more than €400 million ($530.3 million) to assist Serbia’s energy sector. (Reuters)