SARAJEVO Japan's Toshiba Corporation (6502.T) said its Italian unit has won a $243 million engineering, procurement and construction contract for part of an undersea power link between Italy and Montenegro.
The deal includes supply of high voltage and direct current (HVDC) power conversion to Italy's transmission operator Terna (TRN.MI) for some 415 kilometers of 1,000 megawatts undersea cable between the two countries, Toshiba said on Friday.
Toshiba said the deal is worth about 20 billion yen.
The new link to connect the Italian peninsula with the Balkans is set to cost 700 million euros ($909 million) and will take four years to complete. Montenegro is a mountainous country with untapped hydroelectric potential which Italian investors are keen to exploit.
"Parts of Europe suffer energy shortages and long-distance transmission systems allow them to import electricity from neighboring countries," Toshiba said in a statement, adding the project will contribute to the integration of Southeastern Europe and European Union power grids.
Toshiba said it will start construction in September 2013 and deliver equipment in April 2015 while the conversion stations along the route are expected to be on stream in September 2017.
In 2009 Italy's biggest regional utility A2A (A2.MI) became a minority stake holder of Montenegro's power monopoly Elektroprivreda Crne Gore (EPCG) with a 43.7 percent stake.
One of A2A's aims was to import green energy from the Western Balkans once Terna had built an interconnector with Montenegro.
(Reporting By Maja Zuvela and Mari Saito in Tokyo; Editing by Elaine Hardcastle and Mike Nesbit)