Serbia and Italy Sign Energy Deal

The partnership agreement signed in Rome on Tuesday by Italy's economy minister, Paolo Romani, and Serbia's energy minister, Milutin Mrkonjic, lays the ground for 800 million euro worth of Italian investments in hydroelectric power plants on the Ibar and Drina rivers.

The document is a continuation of preliminary agreements signed in 2009 between Italian Seci Energia and Serbian state monopoly Elektroprivreda Srbije, EPS, for the construction of 10 hydroelectric power plants on the Ibar river with a total installed capacity of 103MW.

Following the preliminary agreement from 2009, Seci Energia and EPS started a joint venture, Ibarske Hidrocentrale d.o.o. Krusevac, in July 2010 as the company in charge of the project.

Serbian energy monopoly EPS owns 49 per cent of Ibarske hidrocentrale shares, while Seci Energia is its majority owner, with 51 per cent of the shares. Media previously reported that Seci Energia would cover the entire sum necessary for the construction of 10 hydro plants – a total of 283 million euro.

In September, Seci Energia and EPS also signed an agreement with Bosnia's Serb-run entity, Republika Srpska, to construct three hydro power plants on the Drina river near the border between Serbia and Bosnia, with total capacity of 450MW.

The overall cost of this project alone is 870 million euro, part of which will be covered by the Italian company.

The energy produced both on Drina and Ibar rivers will then be transferred to Italy via Montenegro through the 760 million euro underwater energy interconnection - a project by Italian grid operator Terna, which is supposed to be ready by 2015.

"Two reciprocal interests are converging in these projects: Italy's interest in investing in joint projects to contribute to reaching the EU objective of reaching 17 per cent energy [consumption] from renewable sources by 2020, and the interest of the countries of the Balkan region to develop their internal [energy] sources," Romani said.

He recalled that in the Action plan focused on reaching EU renewable energy goals, which Italy submitted to the European Comission in July 2010, Italy stated that it would import 6TWh per year of electric energy from the Balkans, via Montenegro through the marine energy cable that is to connect Montenegro with Italy as of 2015.