Positive business results in the past year
1. How did CGES perform in this year (2015)? Was its performance in line with expectations?
CGES finished 2015 with a positive business result, continuing a run of positive business results that began in 2009, when CGES was founded. Achievements are generally better than those defined in the business plan, although in certain segments they differ considerably when compared to the previous year – for instance on the revenue side – which is a consequence of the implementation of binding decisions of the Energy Regulatory Agency, or rather the specifics of the business of an energy entity whose operations are fully regulated. This year, as in all previous years, the main focus of our activities has been on the implementation of a demanding investment plan. In terms of the scale and significance of the investments we are implementing, we have sought to maintain our image as an investment-oriented company which, in addition to the most significant project of international importance – the submarine interconnector with Italy – is realising a number of projects that will make the transmission network in Montenegro stronger, more reliable and secure, which guarantees a higher quality electricity transmission service and better accessibility for current and future users. Such dynamic development of the transmission network is also necessary due to the fact that the transmission network in Montenegro is part of the technically integrated European transmission network, and its reliability affects the security of the power supply to consumers beyond Montenegro's borders.
In addition to the numerous projects currently underway, I would like to highlight those we have completed this year which stand out for their significance. These are, first and foremost: the project for the reconstruction of the electrical protection system, which significantly increases the stability and flexibility of the transmission network, for which 1.8 million euros were spent; the project for the construction of the 'Nikšić 2' substation", which, upon connection to the transmission network, will form the second key power supply point for the Nikšić consumer. A total of 4.2 million euros was allocated for this project. Other notable projects include the relocation of the "Nikšić – Bileća" power line from the Dragova Luka area – a project valued at 0.6 million euros – as well as the expansion of the transformer substation "Mojkovac", by installing another 110/35 kV transformer, thereby ensuring a 100% power reserve for consumers supplied by this substation, who include consumers from the Mojkovac and Kolašin areas. The value of the project is 1.1 million euros.
2What progress has been made on the project to lay a submarine cable between Montenegro and Italy, and what activities are planned in this regard for 2016? (The submarine cable is expected to reach the Montenegrin coast in the second half of next year, according to earlier announcements.
's missing This year, together with our strategic partner, the Italian company Terna, we have continued the implementation of one of the largest transmission network projects in Europe – the subsea connection between Montenegro and Italy. I would like to remind you that CGES's obligation, in accordance with the project coordination agreement, is to build the infrastructure (network reinforcement) in Montenegro, which is necessary for the planned interconnection, as well as to meet the growing demand for electricity on the Montenegrin coast. For organisational, technical and financial reasons, we have divided our part of the project into three sections: the construction of the 'Lastva' substation, the construction of the 'Lastva-Čevo' transmission line and the construction of the 'Čevo-Pljevlja' transmission line.
The contract for the 'Lastva' substation was signed with Siemens of Vienna, and in 2015, earthworks were carried out at the substation site, design documentation was prepared, and part of the equipment was manufactured. Activities under this contract are proceeding largely according to plan. In 2016, the construction of the on-site buildings, the delivery and installation of equipment, and the practical completion of all works on the substation are planned.
The contract for the power lines from Lastva to Čevo, (three power lines, one of which is a double line – two power lines on a single pole), was signed with Iberdrola from Madrid. I don't want this to sound like an alibi, but the fact is that the construction of power lines is a very complex undertaking, primarily due to the large number of locations where construction must take place, where we encounter various expected and unexpected obstacles and conflicts, the resolution of which requires considerable effort and time. In 2015, work was carried out to resolve property rights issues, project documentation was prepared, and in the second half of the year, work began on constructing access roads to the pylon sites. Due to some confusion on the part of the contractor, caused by differences in the standards and regulations applicable in the European Union and Montenegro, we encountered problems with missing deadlines for the finalisation of the project documentation. Together with the consultant on this project, we are in intensive communication with the contractor in order to find an acceptable solution for all parties. In 2016, the production of the piling structure, the finalisation of the main project, the completion of the access roads and the foundations for the piles, as well as the installation of the piles, are planned.
The contract for the transmission line from Čevo to Pljevlja was signed with the regional consortium 'Energoinvest' from Sarajevo and 'Energomontaža' from Belgrade. The most important activities in 2015 were very similar to those on the 'Lastva – Čevo' transmission line construction project, and the plans for 2016 are also similar to those for the construction of the 'Lastva – Čevo' transmission line.
Terna is also working intensively on the implementation of its part of the project, and through the activities of the project coordination committee, we exchange information and experience and coordinate the implementation schedule.
3. How many legal disputes is CGES currently involved in, and what is the status of the disputes with Elektroprivreda (EPCG)?
's missing CGES is currently handling around fifty court cases, mainly in the field of property law. We are currently involved in twelve legal disputes with EPCG, which are at various stages of the court proceedings. CGES is striving to create the conditions to resolve these disputes with EPCG soon, so as not to jeopardise the essential cooperation between the two most important electricity entities in Montenegro.
4. What are the company's most significant planned activities for 2016?
-The most important activity in the coming year, 2016, is without a doubt the implementation of the investment plan worth 52 million euros. Our focus will, of course, be on the implementation of the main project, which is the subsea interconnection with Italy. The plan is for the majority of the construction activities for the necessary facilities to be completed in 2016, for which 42 million euros is to be allocated. Our ambition is to actively work on improving several aspects of our business in 2016, particularly in the areas of information technology and operational efficiency. The coming year is a year for preparing and submitting the application for the approval of regulatory revenue for the next multi-year regulatory period, which is of the utmost importance to the Company. No less important planned activities relate to improving the safety of our employees and strengthening the Company's social responsibility.