Fifteen firms vie for Montenegro hydro plants

PODGORICA (Reuters) - Montenegro has lined up 15 European companies keen to build hydro power plants to ease shortages and cut electricity imports, its deputy economics minister told Reuters on Wednesday.

It plans to award concessions for up to 30 years for the construction of plants on the Cehotina river with an estimated annual output of 463 gigawatt-hours, Miodrag Canovic said in a telephone interview.

He said that Austria's Allgemeine Baugesellschaft - A.Porr AG, Germany's Stadtwerke Buhl GmbH, Netherland's HydroBV and Italy's Societa Italiana per Condotte d'Acqua S.p.a sent letters of intent to bid for the project.

Other firms include Spain's Assignia, Czech CKD Blansko Holding and nine companies from the region.

"On basis of the letters of intent and preliminary technical designs, the ministry will decide on how to award the concessions," Canovic said, adding that the investors will be given the right to design, build and operate the new facilities.

The need for new power sources is acute across the Balkans, a region that has lacked investment in capacity for nearly two decades due to wars and political turmoil.

Montenegro imported more than 800,000 MWh of electricity in 2010, accounting for about one third of its power needs, mainly from Bosnia and some from Serbia.

The Adriatic country has the potential to produce 10,000 GWh of hydro power, but now only utilizes 17 percent of that capacity due to a lack of hydro plants. It produces the rest of its power in aging coal-fired power plants.

In 2009, Italian regional utility A2A bought a 43.7 percent stake in Montenegrin power monopoly EPCG and announced plans to build a series of small hydro power plants there with a total capacity of 240 MW.

Italian grid operator Terna agreed last November to pay 30 million euros ($40.51 million) for a 22 percent stake in Montenegro's grid, Prenos, paving the way for the construction of a high-voltage underwater cable between the two countries.

The construction of the 700 million euro interconnector is part of a wider plan by Italian investors to inject up to 5 billion euros in energy projects and infrastructure in Montenegro and help alleviate shortages in both countries.

The project also includes the construction of 400 KV interconnectors with neighboring Bosnia and Serbia.