analysis 05 Nov 11

The Italy-Montenegro Cable

The planned undersea connection, running between Tivat and Pescara, is at the centre of the two countries’ power deals.

Nela Lazarevic

The Tivat-Pescara cable is a high-voltage electric interconnection, which is supposed to connect Montenegro with Italy by 2015 with the aim of exporting energy from renewable sources produced in Montenegro and in the Balkans to Italy.

The 760-million-euro cable is at the centre of the Montenegro-Italy power deals, which form part of a broader Italian strategy to make Italy the “energy hub of Europe” and meet EU requirements for higher consumption of energy from renewable sources.

In light of this, Italy plans other interconnections with neighbouring countries, including Albania, Croatia, Serbia, Bosnia and Tunisia.

The project will represent the “first energy bridge with the Balkans”, according to the major Italian grid network operator, Terna, which is responsible for laying the cable.

The governments of Montenegro and Italy are enthusiastic about the projected financial benefits of Terna’s project. Civil sector groups and political opposition parties in both countries, on the other hand, complain of a lack of transparency and of possible corruption.

They also voice fears about the potentially negative impact of magnetic radiation from the cable on health – complaints that Terna has dismissed.

According to official plans, the 1,000MW cable will run for 390km under the Adriatic Sea while an additional 25km will be on shore. The terrestrial part, 10km in Montenegro’s Tivat area and 15km in Italy’s Pescara area, will run two metres underground.

The total cost of the cable, estimated at 760 million euro, will be covered mostly by Terna. Montenegro is expected to contribute about 100 million euro.

Terna estimates that Italy will save 225 million euro a year by importing cheaper energy from Montenegro and its neighbouring countries through the cable.

On the other hand, Montenegro hopes to earn 10 to 40 million euro per year from energy transited through the cable, depending on the intensity of its use. It believes that

Montenegro will become “the energy hub of the Balkans” thanks to the cable, by cashing in on significant revenues from energy transited from neighbouring countries to Italy and by earning a direct profit from energy exported from Montenegro’s hydropower plants.

Some NGOs and opposition parties are not convinced about Terna’s optimistic projections concerning its positive impact on the local community.

They fear that the negative effects will outweigh the positive, claiming amongst other things that local energy prices may rise due to Italian domination of the energy sector in tiny Montenegro.

They say also that the project will not solve Montenegro’s electricity deficit because the Italians are interested only in exporting energy to Italy, especially because they can sell energy in Italy for significantly higher prices than they can in Montenegro.

The Montenegrin government maintains that these fears are unfounded, partly because by 2015 the country’s new hydropower plants should be ready, though the future of the project for hydropower plants on the Moraca is now in question following the failure of Moraca dams tender in September.

Other worries include the potentially negative impact of magnetic radiation on human health and the negative impact of the cable on the surroundings of Tivat and Pescara. In Italy, a special movement has been formed to fight the cable.

Italy first started negotiating with Montenegro about the project in 2007. Terna begun authorization procedures for the Italian segment of the cable project in December 2009.

The official intergovernmental agreement between Italy and Montenegro was signed in February 2010 in the presence of the two prime ministers, Silvio Berlusconi, and the then prime minister of Montenegro, Milo Djukanovic.

The final agreement was signed in November 2010 by the governments of Italy and Montenegro. But Terna does not have approval from the town of Pescara. The local authority there initially approved the project but then the local assembly annulled the decision, calling for more transparency and more consultation.

In the meantime, also in November 2010, the strategic partnership between Terna and Crnogorski elektroprenos, CGES, was agreed in Podgorica in the presence of the economy ministers of the two countries, Paolo Romani and Branimir Gvozdenovic.

As a result, in January 2011, Terna obtained a 22 per cent stake in the Montenegrin energy transmission company in exchange for 34 million euro, without a public tender. The authorities defended this on the grounds that Terna was the chosen “strategic partner in the project”. Montenegrin opposition group claim this was not regular.

According to the intergovernmental agreements, CGES will be in charge of providing the necessary infrastructure in Montenegro, such as the energy conversion central, planned near the town of Tivat, and the power lines connecting Tivat with the north of Montenegro.     

Terna’s partnership with the state-controlled CGES means that Montenegro will get 20 per cent of the cable’s 1,000MW potential.

According to an article in the Italian daily La Repubblica, published last November, public procurement officials in Pescara are investigating the Terna project for possible corruption.

To date, the procurement office has not denied or confirmed the existence of such an investigation.

Terna’s project for the underwater cable, together with the Italian A2A company, has drawn criminal charges of “fraud” and “secret deals” from the Montenegrin opposition Pokret za Promjene, [Movement for Changes], PZP. In February, it filed charges against government officials of Montenegro and Italy involved in the official agreements.
The PZP filed charges specifically against Italian Prime Minister Berlusconi, former

Montenegrin prime minister Djukanovic, and nine other officials involved in signing the strategic agreements between the two countries. Montenegro’s public prosecutor has not reacted to these charges so far.

Terna’s management has written to the Italian media on more than one occasion to complain about a “negative campaign” being waged against the marine connection with Montenegro and the Montenegro-Italy energy deals in general.

In February Terna reacted to the news about PZP’s charges. The Italian left-wing daily L’Unità, reported Terna as warning that it would “use all adequate means to protect its good name”.

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