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Hydroelectric Plant Perucica

The hydroelectric power plant “Perućica" has been in operation since 1960 and is the oldest and largest plant in Montenegro.
It is located in the municipality of Niksic, on the northern plains of Bjelopavlici. Other smaller hydroelectric plants are present however, in the municipalities of Danilovgrad, Podgorica, Cetinje and Savnik.
The installed capacity is 307 MW, with an annual power production of approx. 1,300 GWh. For the production of electricity, the "“Perućica” " plant is fed by the catchment area of the Gornja Zeta River, whose waters flow in the fields of Niksic and having a favourable decline in the short distance that separates the Niksic field from the plains of Bjelopavlici. It is a very capacious reservoir with a flow equal to 353 h/m³, while the catchment basin of the "“Perućica” " plant is 850 km².

The engine room of the "“Perućica” " plant consists of seven "Pelton" turbine generators with property horizontal flow rate of 307MW, five units with an installed capacity of 40 MVA and two of 65 MVA. The installation of an eighth generator of 65 MVA is planned.


The average annual production of the Perucica plant since its start-up has been 855,000 MWH, and in 2015 production was about 785,000 MWH, slightly down due to a not particularly rainy season that had a negative impact on the entire hydroelectric production in Montenegro.

Hydroelectric plant Piva

At the hydroelectric power plant "Piva" there is one of the most impressive concrete arch dams in the world. Its main activity consists of the production of electricity in peak mode, as it can be started quickly and can be synchronised to the main grid at 220 kV. The "Piva" plant is located in the mountain range to the northwest of Montenegro. Given the specific topography of the land, the plants were installed downstream.
The hydroelectric power plant "Piva", opened in 1976, serves the power grid of the Republic of Serbia operating under the system of electricity exchange in accordance with the Agreement on long term technical-corporate cooperation of 25 year duration that came into force in 1991.

The average annual production of the Pivaè plant was about 730,000 MWh, and in 2015 production was about 631,000 MWh, slightly down due to a particularly dry season, as previously stated.
In 2004, Phase 1 of the project of reconstruction and modernisation of equipment at the "Piva" plant was set on foot with funds partly from the European Investment Bank and partly by EPCG. To date the work has almost been entirely completed.
In early March 2008 Phase 2 of the project of reconstruction and modernisation of equipment and plant was launched at the "Piva" plant, in order to reconstruct and modernise the facilities, equipment and hydropower plant, to obtain a higher performance in terms of safety and reliability of the plants as well as an increase in the total energy production.

Thermoelectric power plant in Pljevlja

The thermoelectric power plant "Pljevlja" started its activity in 1982; it is the first condensation electricity production plant in Montenegro and contains two units of 210 MW.
It uses coal as fuel coming from "Pljevlja" and has guaranteed calorific power equal to 9211 kj/kg (220 kcal/kg).

It was built at a height of 760m, and has a stack of 250 m high that allows the elimination of emissions to 1000 m above sea level.

The power plant uses cooling water from the "Otilovici" basin, which has a capacity of 18 million m³, located on the banks of the river Cehotina and is about 8 km from the plant which is connected by a paved road. The dam has a concrete arch and is 59m high.

This plant produced over 30,000 GWh of electricity since it went into operation and until 31 December 2015, and specifically in 2015 production was about 1,412 GWh

In 2009 and in 2010 major projects were launched as regards its environmental and technological stabilisation, including:

  • The replacement of the electric filtration system;
  • The replacement of the management and control systems:
  • The replacement of the auxiliary consumption systems of 6 and 0.4 kV;
  • Replacement of the generator stress system and installation of the generator switch.

For Montenegro, whose production depends mainly on the electrical power plant "Pljevlja", this is the main system and has the most significant impact on the load charts.
After the reconstruction of the turbines in 2009, the production of power from the plant has reached 218.5 MW. In addition to the reconstruction of the turbines and boiler, the modernisation activities have created the conditions necessary to raise production to 225 MW. The various initiatives planned include action that will enable the plant to reduce significantly its environmental impact.

Acquisition agreement of the shareholding in EPCG by A2A

Questions and Answers Back

The answers to some commonly asked questions on the operation of A2A in Montenegro.

In 2009 A2A chose to invest in Montenegro on the basis of two fundamental industrial objectives.
To acquire new capacity from renewable sources, in particular hydropower, and to safeguard a geographic area that is becoming more and more integrated into the Italian and European system, thanks to the interconnection between Italy and Montenegro by a 1000 MW undersea cable that Terna is realising. Hydropower has always been one of the main strengths of A2A (about 2 GW installed), and in Italy there are no significant opportunities for new large-scale plants of this kind. Montenegro is already a major hydropower producer (almost 670 MW, equal to ¾ of the installed capacity in the country) and has great potential for further development (estimated at 1.3 hydroelectric GW).


On the basis of the objectives stated at European level furthermore, Italy had to import 12 billion kilowatt-hours of energy from renewable sources. The Italian government stated at the time that 6 would have to be derived from the Balkans.

In January 2009 the Government of Montenegro started the process of opening up the capital of the company to a strategic partner. The Privatisation Council of Montenegro and the Agency for Restructuring and Foreign Investment in Montenegro, along with EPCG, made use of a team of international and local advisors led by UniCredit Markets & Investment Banking.

The tender provided for the sale by the Government of Montenegro of approximately 11.5 million shares and the subscription by the strategic partner of a capital increase of 11.5 million shares. As a result of such operation, the new member would then have a holding of 18.3% of EPCG.
Within the framework of the transaction, there was also an obligation on the part of the buyer to offer a bid for the remaining shares of the company held by minorities on the basis of the same conditions defined by the Government of Montenegro. In the event of complete acceptance by minorities, the new investor could hold a maximum share of 45% of EPCG.
In addition to A2A, the tender saw the participation of other international groups: a Greek consortium consisting of the leader, the Public Power Corporation and the Restis group who, having made a binding purchase bid against the rules of the tender was disqualified from the procedure (despite having offered a higher price), the Norwegian NTE and Russian Inter Rao, were excluded by reason of insufficiencies in the documentation submitted.
A2A was assisted by Mediobanca as financial advisor and by the law studios Cleary, Gottlieb, Steen & Hamilton and Morrison & Associates (along with local law studios) for the legal aspects.
At the conclusion of the tender and the subsequent public bid for purchase, A2A acquired 43.7% of EPCG, assuming the management in their capacity as industrial partner. The contract for the operation was signed by A2A and the State of Montenegro on 3 September 2009. The important parts of the contract were communicated by A2A press releases at the time. The contract, subject to approval by the Government of Montenegro, was then made public and is now contained on the website of the Government of Montenegro - Council for Privatisation.

The transaction involved a total investment of approximately €436 million, comprising the shares purchased from the Government of Montenegro, the capital increase planned for EPCG, the shares acquired from minority shareholders following the tender and the operations performed during the process of the tender itself. On May 26, A2A had collected about 16% of EPCG in various operations on blocks on the Montenegrin stock market.

In July 2014, an operation was completed that, by increasing the capital for the government of Montenegro, its overall effect was to compensate between EPCG's receivables from the largest defaulting energy industry customer in the country and a number of EPCG's tax liabilities for a total amount of about € 45 million. Following this operation, the shares within the company changed slightly, leading the government of Montenegro to hold about 57% and A2A 41.75% of the shares, with A2A’s same management rights retained.

The offer price was determined on the basis of the assessment carried out by the advisor Mediobanca and also taking into account the capital value of EPCG, below which the Government of Montenegro would not have sold the quota especially if you consider that a part of the privatisation was carried out through an increase in capital.

Relations with the Montenegro authorities have always been centred on an open discussion of the topics having priority for EPCG at EPCG Board of Directors’ meetings on the one hand, and during various official meetings on the other. Naturally EPCG and A2A have had confrontations over the past 5 years with several unfavourable framework conditions, considering that between the end of 2009 and the end of 2011 energy tariffs fell by about 30% and that EPCG actually found itself supplying the country's largest industrial customer, the aluminium producer KAP, at an extremely low rate and below production cost, with a heavy impact on EPCG's profitability.

Starting from the end of 2014, close dialogue between the top management of A2A and the government of Montenegro began as the deadline for the shareholders' agreements approached, in an attempt to find a new agreement between shareholders that might meet several clear profitability criteria for A2A and for developing the country for the government. During 2015, some common ground was found and the existing agreements on EPCG's management by A2A were extended until 15 December 2015. In recent months, relations with the government have always been marked by utmost receptiveness and dialogue, in an ongoing attempt made by A2A to reach an agreement that can define EPCG's management according to new-shared criteria in the interest of both parties.

As at 31/12/2015 the investment in EPCG was stated at € 279 million in A2A's separate financial statements.

The flow of funds caused by the operation was performed according to the instructions contained in the bid and in the tender documents. The funds relating to the capital increase of EPCG subscribed by A2A (approx. € 96.2 
million) were deposited into the account of EPCG at Prva Banka. The amount deposited by EPCG at Prva Banka reduced progressively over time, both as regards investments of EPCG in Montenegro, and because the amount deposited was partially redistributed to other banks.

EPCG is the only electricity producer and distributor in Montenegro. Since approximately 3/4 of the installed capacity consist of hydroelectric power plants, actual production depends much on weather conditions. 

Considering the historical averages of the last 30 years, average production is about 3.1 TWh/year, of which 1.7 TWh hydroelectric.

The domestic demand for electricity in Montenegro has historically been about 4 TWh/year.

EPCG's operating results for the last six years are the following:


 Year  2010  2011  2012  2013  2014  2015
 Revenues  293  259  259,6  274  239,6  242
 EBITA   61,5  -3,1  17,5  80  63,5  51 
 Profit  16,5  -66,5  -5,8  25  35  21


The negotiations with the government of Montenegro continue with the shared desire to find a final agreement in the forthcoming weeks, as a basis of preliminary agreement on several fundamental points in the interest of both Parties has already been found.