DRAGICA SEKULIĆ, Economy Minister in the Montenegrin government: FURTHER REFORMS AND MORE INVESTMENTS

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Through regional economic and infrastructural networking we contribute to bigger trade, investments, and the mobility of the workforce, thus bringing Montenegro closer to the European Union

Foreign direct investments are an important driving force behind the development of the Montenegrin economy, considering that, with the undertaken measures of fiscal consolidation, they significantly contribute to the stability of public finances. In addition to tourism, which is certainly the most developed branch of Montenegro’s economy, energy, infrastructure and agriculture are also sectors with a significant investment potential.

What are your expectations from the Western Balkan Summit in Vienna? What will be Montenegro’s position in terms of the the economic topics to be discussed at the Summit?

  • Our expectations from the summit, and generally from the Berlin Initiative, are big, hence we are planning joint activities and projects, just like our neighbours are doing so. Each meeting is a sign of the readiness of the Western Balkan region to work consciously and expeditiously on the better networking agenda. Also, each meeting additionally raises the awareness that, above all, our networking and subsequently, our connecting with the EU, will lead to an increase in the competitiveness of each of the regional countries, while facilitating the growth of our economies and employment. The meeting in Vienna is an opportunity to discuss development of small and medium enterprises, the multi-annual Action Plan for Regional Economic Space in the Western Balkans, as well as digitization. Our position, when this process is in question, is well-known – through regional economic and infrastructural networking we contribute to bigger trade, investments, and the mobility of the workforce, thus bringing Montenegro closer to the European Union. Accordingly, Montenegro will continue with its activities on implementing economic reforms and increasing investments in the field of energy and transport.

  • To what extent is it possible to see the influence of the Berlin Process on infrastructural integration in the region? What are the tangible results of this process from Montenegro’s perspective?

  • Montenegro can proudly say that the first infrastructure project, supported under the framework of the Berlin Process, is a project that is implemented on its territory – the Transbalkan Electric Power Corridor – section Montenegro, for which the EU allocated EUR 25 million in grants in 2015 through the Western Balkan Investment Framework. The total value of the project is EUR 127 million. In addition to energy, last year Montenegro received a EUR 16 million grant under the Agreement on the Transport Community for four transport projects. So, the results of this process are already tangible, but we should not stop there. This is just the beginning of the economic and infrastructural revival of our region, and we expect the European Union’s full support for our initiatives in the future.

How beneficial are large-scale infrastructure projects for Montenegro’s macroeconomic stability? How long will it take to implement the fiscal consolidation measures?

The total FDI influx in 2017 stood at around EUR 650 million. We are currently implementing important infrastructure projects in the segments of energy, transport and tourism, and each investment means a positive impact on our economic growth, higher employment, higher quality of service and higher living standard. Additionally, for the better part, the direction of the further economic development of Montenegro is determined by the ongoing implementation of fiscal consolidation measures, according to which Montenegro should generate the budget surplus in 2020, which is the deadline by which the measures should be implemented. The results of the implemented measures are visible – Montenegro has managed to maintain a competitive tax environment, and our results are recognized by the most important international institutions that assess progress in bolstering the country’s macroeconomic stability, better credit rating and competitiveness, and GDP growth. Last year, this growth was 4.4%, while the growth in the first quarter of this year stood at 4.5% and represents the third biggest growth rate in Europe for the observed period.

How appealing is Montenegro to foreign investors who do not invest in tourism? What are the sectors in which you want to see bigger FDI?

In addition to tourism, which is certainly the most developed branch of Montenegro’s economy, energy, infrastructure and agriculture are also sectors with a significant investment potential. The mentioned sectors are important for our economy precisely because it was the domestic business people who recognized these sectors as providing opportunities for a successful business, but also because tourism, energy and infrastructure are the most attractive areas to foreign investors. We are currently implementing several large-scale tourism projects such as the projects in Luštica and Kumobir. In terms of transport, we are implementing the most important infrastructure project which is the motorway, while in the energy sector, there are a few important projects that are nearly completed such as the submarine cable between Montenegro and Italy and the wind farm on Možura. We also have an ongoing tender for the construction of a large solar power plant on land. Furthermore, the Ministry of Economy has been continuously implementing support programmes for both domestic and foreign companies considering that foreign investors in our country have the same treatment as the Montenegrin ones. This year alone, we are implementing a total of 10 programmes for which we launch periodical public. Through these calls we offer companies grants such as allocation of incentive funds for new jobs, exemption from payment of certain taxes, or covering between 50% and 70% of the eligible costs in procurement of equipment, implementation of innovative activities and so on, depending on the programme itself.

What kind of help does Montenegro need with digital transformation?

You have to understand that digital transformation is a multi-dimensional process that must be harmonized and performed continuously. The prerequisite for digital transformation is clearly set strategic goals that must be the priority of every modern government, and we must work together and on a daily basis on its implementation. Help in all segments of digitization is more than welcome. Priorities have already been recognized and identified, and as projects of fundamental importance for social and economic development, they have earned their place in the recently published Digital Agenda for the Western Balkans. The most important segments that the European Commission will support are – development of broadband Internet access, development of e-government, e-procurement and e-healthcare, online safety and digital skills. This assistance will be realized initially through technical assistance for drafting of projects and feasibility studies, and then through financial support for the implementation of selected projects. We also expect the support for the regional start-up community in terms of its inclusion in the Startup Europe ecosystem which will improve their visibility and provide additional promotion, while at the same time, the start-up community will gain access to all relevant information, platforms and events. The plans is also to support research and innovation programmes, as well as involve our regulatory authorities in the work done by the European regulatory associations. Given that the Government has management rights, and now a significant share in Elektroprivreda Crne Gore (EPCG), what development priorities are you going to set for company?

In the upcoming period, we will focus on the additional elaboration and implementation of the EPCG’s three-year investment plan, with a special focus on the implementation of projects in Pljevlja that is ecological restoration of the existing block and heating, with a special emphasis on and renewed interest in construction of large hydroelectric power plants. In addition to the ongoing reconstruction and modernization projects in the three existing plants, EPCG is working hard on creating the conditions for boosting its production capacities and new power facilities, with the goal of better positioning in the regional electricity market. Also, EPCG will focus on the significant investments in the power distribution network, in order to ensure a safer and more stable supply for end users. How much is the ecological restoration of the first block of the Plevlja thermal plant in line with the obligations that Montenegro has under Chapter 27?

The ecological restoration of the thermal plant in Pljevlja is fully in line with the obligations and directives concerning industrial emissions, as stated in Chapter 27 – Environment and Climate Change. EPCG has already embarked onto this process by choosing the German company Steag Energy Services GmbH for the elaboration of the preliminary project for the ecological restoration of the Pljevlja Thermal Plant. Having such a renowned German company in Montenegro is a serious guarantee that the planned restoration of the first block of in TP Pljevlja will be carried out in accordance with the latest standards and technologies, which, in turn, will ensure the stable and safe operation of the thermal power plant in the next few decades. The plan is to complete the restoration no later than 2022, after which this plant will operate in accordance with the requirements stated in the Directive on Industrial Emissions 2010/75 EU.

Why did you decide to merge the Pljevlja coal mine (RUP) with Elektroprivreda Crne Gore (EPCG)? How is this merger going to affect the profitability of EPCG and its attractiveness to potential new partners?

  • The decision for EPCG to take over the shares of Coal Mine Pljevlja is, first and foremost, a responsible one that is in the best interest of both companies and its employees, as well as the state. Merging two companies is the most logical solution, not only from a technological but also from a financial aspect. The economic rationale of the entire process is more than clear – it is sufficient to mention that the value of just one annual invoice that EPCG pays to RUP is EUR 35 million euros, which is bigger than the entire amount of EUR 30 million which EPCG spent on purchasing a stake in RUP. The merger of two companies significantly reduces the production cost that EPCG had to bear when purchasing coal, and thus it will increas its profitability. In addition, EPCG has much higher investment capital than RUP, which is why it is also possible to invest in RUP when it operates under EPCG, which further leads production growth and creation of new jobs. Having RUP under its roof, EPCG is now a more stable and independent company with a comprehensive operational range – from coal exploitation to producing electricity. Foreign companies have expressed interest in EPCG and this interest was very high from the moment A2A decided to sell its share in EPCG. I am confident that this interest can only grow in the future.

DIGITAL

THE PREREQUISITE FOR DIGITAL TRANSFORMATION IS CLEARLY SET STRATEGIC GOALS THAT MUST BE THE PRIORITY OF EVERY MODERN GOVERNMENT THE MINISTRY OF ECONOMY HAS BEEN CONTINUOUSLY IMPLEMENTING SUPPORT PROGRAMME FOR DOMESTIC BUT FOREIGN COMPANIES

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