IBNA / Interview: Vladimir Kavaric – Economy Minister in the Government of Montenegro

IBNA / Interview: Vladimir Kavaric – Economy Minister in the Government of Montenegro


Time for new strategic projects

By Adnan Prekic – Podgorica

After putting in order the macroeconomic situation in Montenegro, which had deteriorated last year due to the activation of guarantees for the Aluminum Plant, the Government of Montenegro is planning to implement new strategic projects in 2014. The most important parts of this projects are earmarked in the energy sector. Some of these strategic projects include the construction of the second thermal power plant of Pljevlja, the construction of a gas pipeline from Azerbaijan, a submarine power cable to Italy and the concession for oil and gas exploration in the Montenegrin coast.

These were the reasons we decided to talk with the Montenegrin Minister of Economy, Vladimir Kavaric.

Mr. Kavaric, the development of the energy sector is one of the Government’s priorities in the future. What are the most important steps that the Montenegrin state is taking in this direction?

“Energy is recognized a strategic sector of the Montenegrin economy and in 2013 we  had significant activity on both levels – the international and at the national. In August last year we announced a public invitation for the submission of tenders for the allocation contract  concession for the production of hydrocarbons in the waters of Montenegro, in which our state positioned itself as the first country on the Balkans that started such a project. The publication of tenders for oil and gas coincided with the decision to build a branch of the Trans-Adriatic pipeline (TAP), which must pass through Montenegro. The implementation of TAP pipeline creates opportunities for the realization of the Adriatic-Ionian Gas Pipeline (IAP), which is designed as a continuation of the TAP, which will link Fier (Albania) to Split (Croatia)”.

“The good strategic policy in the energy sector can be seen in a large number of investors interested in the project for the construction of TPP Pljevlja; for the project applied nine consortium from around the world. The interest of investors for projects in Montenegro and the region has increased due to the project of establishing interconnection links between Montenegro and Italy”.

The undersea cable between Montenegro and Italy is a project whose implementation has already begun. Where are we with this and what will the benefits of this project be for Montenegro and the countries of the region?

“The Interconnection between Italy and Montenegro is the first energy bridge between the Balkans and the European Union. From a technological standpoint, the submarine power interconnection is the most important and the most advanced connection of its kind in Europe”.

“According to the contract, the project envisages the construction of a new power supply system interconnection between Italy and Montenegro, which includes: the construction of a submarine cable with a capacity of 1,000 MW, which will be constructed by the italian company Terna. With this project Montenegro will be considered an important energy hub in the region”.

A lot is expected from the announced pipeline from Azerbaijan. What can the region and Montenegro expect from this investment?

“The decision of “Sahdeniz group” on route selection TAP-IAP to transport natural gas from the huge gas field in the Caspian Sea to the European market is of great importance for Montenegro, primarily because of the creation of the necessary conditions for the arrival of natural gas as a fuel in our country. The implementation of the IAP project will create the conditions for the gasification of Montenegro, and our industry will have the opportunity to be supplied with cheap energy source that is environmentally clean. IAP is an opportunity for Montenegro to store its own gas which we expect to be discovered in our shores. With no gas infrastructure the proclamation of the undersea gas deposits Montenegro commercial market will be very demanding. implementation of TAP and IAP pipeline Montenegro will gain access to gas as an environmentally friendly and cheaper sources of energy”.

The preparations for the oil and gas exploration in the Montenegrin coast are in progress. Expectations are high, the world’s largest companies have expressed interest. When can we expect the first results from these studies?

“At the request of the interested companies the deadline for the submission of bids has been extended to 15 May. If we bear in mind that in October 2011, when we officially opened the access to information of oil and gas in Montenegro, room data were visited by 24 companies, we are optimistic that on the tender there will be interested bidders. The constant interest and communication that we have with a number of oil companies gives us hope that the procedure for the award of the concession to produce will end successfully and we will be in a position to sign the first concession contracts by the end of this year”.

What is the predicted level of economic development for Montenegro in 2014?

“First of all, there is the encouraging assessment of the Montenegrin Ministry of Finance, according to which, the real GDP growth in 2014 will be 3.6%, compared to 2.6 percent in 2013. The expectations are that this year will be stable, with the growth of foreign direct investment. However, for a small and increasingly open economy such as Montenegro, forecasts of any kind are risky, because just one major investment can drastically affect the change in the level of GDP. This year we expect Montenegro to complete the restructuring of large systems, as well as major investments to take place. I think it is rare that with the global economy is in such a state, a country as small as Montenegro, can boast of such a great interest from investors”.