Wednesday, April 15, 2009
Montenegro to sell stake in main energy supplier
By Nedjeljko Rudovic for Southeast European Times in Podgorica -- 14/04/09
Hoping to boost the energy sector, Montenegro's government has decided to sell nearly 20% of the state electrical company, Electropriveda. The move, however, came after a row between two parties in the ruling coalition -- Prime Minister Milo Djukanovic's Democratic Party of Socialists (DPS) and the smaller Social Democratic Party (SDP), led by parliament speaker Ranko Krivokapic.
The SDP came out against the sale, arguing that strategic economic sectors should remain in state hands. Djukanovic and his party, by contrast, favour privatisation.
According to the prime minister, the state does not function well in the role of owner and entrepreneur. Krivokapic, however, has said it is too risky to give private companies the opportunity to control the energy sector.
In 2007, the SDP blocked the planned privatisation of a thermal plant and coal mine in Pljevlja, citing other countries in the region that had decided to maintain state control. This time, however, the DPS was able to persuade its partner to accept the Electropriveda sale, thus avoiding a split ahead of the March parliamentary elections. Potential bidders have until the end of April to submit offers for 18.3% of the company shares.
Out of that amount, 9.15% will be sold from existing capital, with the rest representing new capital, the state-run Agency for Restructuring and Foreign Investment reported.
Qualifying bidders should have produced or distributed at least 1,500 GWh of electricity in the last fiscal year. They must have revenue of at least 250m euros, assets worth at least 500m euros and a credit rating of at least BBB assigned by Standard & Poor's, Fitch, or Moody's.
The investor will enter a five-year management contract and must buy out a stake from small shareholders at the same price it pays the government.
Electropriveda -- 70.6% owned by the state -- reported a 7m-euro loss in 2008. The company's worth is estimated at 1 billion euros. Montenegro has not had new power generation facilities built in the last quarter century, and the country has an annual electricity shortfall of 35%.
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