Malgosia Krakowska spoke with Dragica Sekulić, Montenegro’s Minister of Economy, on why the government is welcoming Chinese investments and how she envisions the country’s future as a European green energy hub.
China’s New Silk Road project has been welcomed as an opportunity for countries on the Balkan peninsula. Your government also provides support for the New Silk Road project, according to President of the Parliament Mr. Ivan Brajović. Why have you chosen to focus on Chinese investments?
We want to build and improve our infrastructure in order to connect with the markets of the region, the EU, and globally. The goal is to increase our trade exchange, primarily exports.
The project stirs up controversy for many, however. In the report Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective by the Washington-based Centre for Global Development, Montenegro was rated as a country which risks “debt distress”. In Montenegro, China is already financing the construction of the Bar-Boljare highway. What is your position on that?
Contrary to media reports, Montenegro is not at risk of debt distress. Our fiscal strategy for 2017-2020 as well as the Economic Reform Program forecast that that situation is under control. The numbers are significantly lower than those stated in the report you are referring to in your question.
I want to emphasize that our country is not in the category of “debt distress”.
In the Economic Reform Program, which is the most important element in economic dialogue with the European Union, it was clearly pointed out that the state debt in 2019 would amount to 63 percent of GDP, and the public debt would be 66.1 percent of estimated GDP. Even with the low-growth scenario, public debt would reach the highest point in 2019, when it would amount to 69.5 percent of GDP, after which it would move down the path.
And beyond that, reports prepared by international financial institutions and agencies indicate that our economic outlook (including debt-to-GDP ratio) is well balanced. Fiscal consolidation is expected to bring down Montenegro’s deficit.
At the 4th meeting of the Consultative Council on the ‘Southern Corridor’ in Baku [ed: held in February of 2018], Ministers from Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Greece, Italy, Montenegro, Serbia and Turkey, all confirmed the need to complete the ‘Southern Corridor’. What activities is Azerbaijan carrying out in Montenegro?
Montenegro’s interest in SOCAR [ed: The State Oil Company of Azerbaijan Republic] is focused around our activities in the field of gasification, and the implementation of Ionian-Adriatic Gas Projection (IAP). Those two investments, which are part of the Southern Gas Corridor, are crucial to Montenegro’s economic security. Our aim is to diversify as well as improve the security and reliability of our energy supply.[ed: In 2012, the Montenegrin government announced that it was concluding a deal with SOCAR on the 90-year lease of a 241,695 sq. metre military barracks site near Herceg Novi, located on the picturesque Bay of Kotor].
Your government plans to call an offshore oil and gas exploration tender. Russian companies in particular have expressed interest in investing in Montenegro. Why did you call this tender and how are you going to carry out the project?
We want to attract companies that want to invest in oil and gas exploration in Montenegro. With a well-thought out legal and fiscal framework, our ministry believes that this project will successfully contribute to the gasification of Montenegro.
The first tender was signed in 2014. The Italian Eni and Russian Novatek each signed agreements for four oil and gas blocks offshore of Montenegro. The Greek oil and gas group Energean also signed an agreement for two bocks.
Our sector is currently preparing a new tender which has been planned for this year or early 2020. In this respect, a geophysical company will carry a geophysical company in order to gather as much information about the hydrocarbon reservoir of the seabed.
Let’s talk about renewables. Montenegro is one of the leaders in green energy production in Europe. Are you planning to construct any additional green energy hubs in Montenegro?
In Montenegro, we are very serious about transitioning to renewable energies.
In 2017, Montenegro installed its first offshore wind power plant (VE) on Krnov with a power of 72 MW. The construction of a VE on Mozuri (46 MW power), is also underway.
The total value of investments for VE Krnovo, VE Mozura will amount to almost EUR 280 million.
We are also working on the preparation of a tender for the construction of a solar power plant on land. The idea to launch an initiative to build a solar power plant of between 200 MW and 300 MW is a result of quite intense contact with more foreign investors.
All aforementioned and future energy projects will have the added value of starting work on the submarine power cable between Montenegro and Italy, which will be operational next year. It is this project, worth more than one billion euros, that will make Montenegro an “energy hub” and give new significance to all domestic and regional projects.
Cover photo: Bar-Boljare highway linking Montenegro and Serbia. Credit: azconsulting.me