Several Years of Deals and Contracts

2007
March  -
European Union leaders agree 20–20–20 objectives aimed at reducing emissions of CO2 and fighting climate change. The aim is to reduce gas emissions by 20 per cent, raise energy efficiency by 20 per cent and raise consumption of energy from renewable sources to 20 per cent of the total by 2020.

Italy lags behind other EU countries in “green” power consumption. Prime Minister Romano Prodi announces: “It is really necessary to change the structure of Italian energy production”.

March-May -
Italy signs a series of agreements on laying energy interconnection cables and cooperation in energy sector with neighbours: with Albania in May, and Tunisia in March-May. It considers possibilities of interconnections with Algeria, Libya, and Croatia.

December 19 -  
Economy ministers of Montenegro and Italy, Branimir Gvozdenovic, and Paolo Bersani, sign an agreement to start an Italy-Montenegro working group with representatives of major Italian energy transmission company Terna, and Montenegrin national energy provider, Elektroprivreda Crne Gore, EPCG, to study the possibilities of laying an undersea energy cable.

December -
Montenegro approves National Energy Strategy.

2008
January 1, 2008 -
Italy’s A2A is founded by merging the local waste and energy utilities of the Italian cities of Milan and Brescia. The company remains controlled directly by the two cities, which jointly own 55 per cent of the company  - 27.5 per cent each.

2009
January 2009 -
A group of 60 representatives of Italian companies visit Montenegro to explore investment opportunities. The trip is organized by Simest, the Italian company for promotion of Italian investments abroad, and led by Berlusconi’s foreign affairs advisor Valentino Valentini. Terna, Enel, A2A and Edison are part of the group.

March 16 -
Silvio Berlusconi visits Montenegro, notably without visiting other countries in the region. Some Italian media call this unusual, as Montenegro is “a small country”. Berlusconi announces that he will ask Italian companies to ensure Italy becomes “if not first, then the second largest investor in Montenegro, after Serbia”. At the time, Italy is not amongst the first ten largest investors in Montenegro. A year later, it is number one.

July 30 -
A2A wins the tender for the privatization of Montenegrin national energy provider, Elektroprivreda, EPCG.
A Greek competitor makes a higher offer than A2A but the government declares the Greeks made irregularities in the presentation of their documentation, which the company denies. This moment is a milestone, marking the beginning of corruption accusations related to the Montenegro-Italy energy deals.

September -
A2A makes a down payment for EPCG using Prva Banka, a bank controlled by the Djukanovic family. Opposition parties, NGOs and media complain that the transactions through Prva Banka are part of “secret deals between Italy and Montenegro”.

2010
Over the year, Montenegro approves a series of laws in the energy sector: on energy, on energy efficiency, and a special law on the construction of the undersea cable. This paves the way for Terna’s later entry into the Montenegrin energy transmission company, CGES, without going through a public tender.

February  -
Milo Djukanovic and Silvio Berlusconi sign a strategic partnership agreement in Rome. The then economy ministers of Montenegro and Italy, Claudio Scajola and Branko Vujovic, sign an agreement on laying the underwater cable and on the strategic partnership of Terna with the Montenegrin energy transmission company Crnogorski elektroprenos, CGES, based on the previous Gvozdenovic-Bersani agreement.

February -
The government of Montenegro publishes a pre-qualification tender for the construction of hydropower plants on the Moraca river.

Italy’s government informs Pescara about plans to lay the cable through the town only weeks before the Italy-Montenegro meeting in Rome, leaving little time for complaints. At the time of the first agreements with Montenegro, the idea was for the cable to arrive in the town of Foggia, not Pescara.

A movement against the cable is formed in Pescara, under the leadership of a local centre-right politician, Lorenzo Valloreja.

November 18 –
Government of Montenegro approves the Concession Act for the construction of hydopower plants on Moraca river, setting the minimum concession period at 25 years.

November 23 –
Montenegro and Italy sign the final agreement on the laying of the cable from Tivat to Pescara. The document is signed in Podgorica.  

November 24 –
The Italian daily “La Repubblica” breaks the news about the opening of a corruption investigation related to Terna’s submarine cable, announcing that the probe may lead to the Italy-Montenegro agreements and to Montenegro. Pescara officials till today have not confirmed or denied the existence of this investigation.

December  -
China’s Sinohydro withdraws from the Moraca tender, leaving only Italy’s A2A and Enel as qualified competitors. Earlier, two other qualified competitors also withdrew: Germany’s Strabag, and Norway’s Statcraft – European leaders in renewable energy production that had long expressed interest in this project. According to media reports, these companies withdrew because Montenegro openly favoured Italian companies.

December -
The Italian-Montenegrin management of EPCG files a request to raise the price of electricity by 78 per cent. The request causes months of angry political and media debate. Eventually the regulatory agency denies the request.

December 17 -
Montenegro is admitted as an EU candidate state.

December 21 -
Milo Djukanovic resigns as prime minister, appointing Igor Luksic his successor.

2011
February 15, 2011 -
The Montenegrin opposition Pokret za Promjene, PZP, files criminal charges against former prime minister Djukanovic, Italy’s Berlusconi, and seven other Montenegrin officials who participated in the energy deals with Italy. It accuses them of fraud and of damaging Montenegro to the tune of hundreds of millions of Euros.

Terna reacts to an the article in the Italian newspaper L’Unità, on the PZP charges, saying no fraud has taken place, the energy deals were conducted in public and were the result of an ongoing process of five years. The company vows to “take appropriate steps to protect their image and good name”.

March 2011 -
A2A requests an extension of the deadline to submit tenders for the construction of Moraca river dams for three months beyond the initial deadline of April 15, the Podgorica daily Vijesti reports. Several days later, Montenegro prolongs the tender application submission deadline to September 30.

April 2011 -
The Italian daily Il Giornale, owned by the Berlusconi family, publishes an article describing other Italian media reports on the alleged investigation against Berlusconi in Montenegro as misleading. Il Giornale cites a Montenegrin government dispatch, which states that Montenegrin prosecutors never investigated Berlusconi. The newspaper interprets this as a proof that Montenegrin prosecutors will not take PZP charges seriously.


May 2011 –
A2A seeks revision of the EPCG privatization contract with Montenegro, claiming that it cannot meet the agreed profit requirements because the authorities have not approved the raise in electricity prices that A2A sought in March. Montenegrin Prime Minister Luksic declares A2A’s request for contract revision “reasonable”.

May 27 –
A PZP declaration on energy, presented eight months earlier, fails to gain approval in Montenegro’s parliament, losing by one vote. Thirty-six parliamentarians vote for and 37 against the declaration, which would have required the state to maintain control over Elektroprivreda Crne Gore, EPCG, and scrap the tenders for dams on the Moraca river.

August 4 -
Montenegro’s government signs a Memorandum of understanding with A2A, which sets the ground for changing some articles in the contract they signed in 2009, when A2A entered the newly privatized Elektroprivreda Crne Gore, EPCG. Economy minister Vladimir Kavaric announces the contract should be annexed, based on the memorandum, by the end of the year. In the Memorandum A2A abandons the previously agreed possibility of becoming a majority shareholder in EPCG starting from 2015. The document also mentions that the government may consider assigning the Moraca dams project directly to EPCG, should the tender fail. This clausule draws a some negative public reaction, as A2A had also qualified as a bidder on Moraca tender in consortium with EPCG.

September 30 -
Tender to construct hydroelectric plants on the Moraca river closes unsuccessfully with none of the previously qualified bidders having presented an offer. The Government later tells Balkan Insight the failure of the tender would not influence other projects from the energy field such as Terna’s marine cable, and that new expert analyses were now planned to determine whether the concession could be given directly to EPCG, as announced in the Memorandum of understanding with A2A, which owns 43 of EPCG.