MONTENEGRO'S NORTHERNMOST CITY - PLJEVLJA: COAL, ELECTRICITY

UNCLAS SECTION 01 OF 02 PODGORICA 000094

SIPDIS

SIPDIS

DEPARTMENT ALSO FOR INR/B

E.O. 12958: N/A
TAGS: ECON EMIN ENRG ETRD SOCI PGOV PINR MW
SUBJECT: MONTENEGRO'S NORTHERNMOST CITY - PLJEVLJA: COAL, ELECTRICITY
AT CENTER OF ECONOMIC DEVELOPMENT

REF: A. A) 07 PODGORICA 24


B. B) 05 BELGRADE 2277

C. C) 04 BELGRADE 2349

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1. SUMMARY: PLJEVLJA IS THE THIRD LARGEST ADMINISTRATIVE
JURISDICTION (MUNICIPALITY) IN MONTENEGRO. IT IS HOME TO MANY OF
THE COUNTRY'S NATURAL RESOURCES AND PRODUCER OF ALMOST HALF OF
THE NATIONS ELECTRICITY. YET A VISIT TO THIS DOWN AT THE HEELS
NORTHERN CITY OFFERS A SHARP CONTRAST TO DEVELOPMENT ON
MONTENEGRO'S ADRIATIC COAST. THE CHARGE VISITED IN FEBRUARY AND
MET WITH MAYOR FILIP VUKOVIC (DPS),THE LEADER OF THE LOCAL
MUSLIM COMMUNITY, VISITED CULTURAL SITES, AN AID FINANCED
ECONOMIC DEVELOPMENT PROJECT AND MET WITH TEENAGERS
PARTICIPATING IN AN EMBASSY FUNDED YOUTH PARLIAMENT. END SUMMARY




2. LOCATED ONLY 110 MILES FROM THE CAPITAL, THE DRIVE OVER
NARROW MOUNTAIN ROADS REQUIRES THREE HOURS, A GOOD VEHICLE AND
DRIVER, AND PASSENGERS WITH STEADY NERVES. THE SCENERY IS
MAGNIFICENT AS ONE PASSES THROUGH A NARROW KARST GORGE AND DOES
HAIRPIN TURNS IN HIGH ALPINE MEADOW, CROSSES A DRAMATIC BRIDGE
OVER THE TARA RIVER AND COVERS A PATCH OF UPLAND MOOR BEFORE
DESCENDING TO BE GREETED BY VAST PLUMES OF SMOKE FROM THE POWER
PLANT AT THE ENTRANCE TO PLJEVLJA, A CITY OF SOME 38,000.




3. THE COAL FIRED POWER PLANT PROVIDES BETWEEN 45-50 PERCENT OF
MONTENEGRO'S ELECTRICITY GENERATION - ABOUT 1,150 GWH OUT OF
2,520 GWH IN 2006, COMPARED TO OVERALL DEMAND OF 4,600 GWH. IT
USES APPROXIMATELY A MILLION TONS OF COAL A YEAR. THE MAYOR,
FORMER MANAGER OF THE COAL COMPANY, PUTS LOCAL RESERVES AT 177
MILLION TONS. THE PLANT HAS BEEN OFFERED FOR PRIVATIZATION AND
IT IS WIDELY EXPECTED TO BE SOLD TO A RUSSIAN INVESTOR, THE
OWNER OF KAP, THE LOCAL ALUMINUM SMELTER (SEE 07 PODGORICA 24,
05 BELGRADE 2277 FOR MORE DETAIL) WHO IS ANXIOUS TO SECURE
ENERGY SUPPLIES FOR THE FUTURE, ESPECIALLY AFTER THE DEAL FOR
SUBSIDIZED POWER TO KAP EXPIRES IN 2009. THE CURRENT POLITICAL
ENVIRONMENT WOULD MAKE AN EXTENSION OF THE SUBSIDY VERY
DIFFICULT. THE ONLY OTHER BID CAME FROM A CZECH COMPANY AND WAS
REPORTEDLY VERY LOW. WESTERN EUROPEAN DIPLOMATS IN PODGORICA
HAVE BEEN CRITICAL OF THE GOVERNMENT'S DECISION TO SELL THE
POWER PLANT ON A STAND ALONE BASIS, RATHER THAN OFFERING THE
PLANT AND GRID AS A LARGER PACKAGE MORE APPEALING TO THEIR
POTENTIAL INVESTORS. THE PRIVATIZATION DEAL ALSO INCLUDES THE
GOVERNMENT OWNED (31 PERCENT) SHARE OF THE COAL MINE. THE MAYOR
IS UPBEAT ABOUT THE PRIVATIZATION SAYING THAT THE CONTRACT WILL
REQUIRE THE NEW OWNER TO INCREASE PRODUCTION IN THE COAL MINE,
EXPAND THE EXISTING POWER PLANT, ALMOST DOUBLING ITS PRODUCTION
AND CAPTURE STEAM AND GASES CURRENTLY EMITTED AND USE THEM FOR
CO-GENERATION. THE POLLUTION WHICH CURRENTLY PLAGUES PLJEVLJA IS
FAR MORE ATTRIBUTABLE, ACCORDING TO THE MAYOR, TO TWO OLD
HEATING PLANTS IN THE CITY THAN TO THE POWER PLANT AND WITH
COGENERATION THE CITY WILL BE FAR BETTER OFF. THE MAYOR CLAIMS
THAT THE BUYER WILL NEED TO MEET EU ENVIRONMENTAL STANDARDS AND
HE IS LOOKING FOR ASSISTANCE IN MONITORING AIR POLLUTION FOR AT
LEAST THE FIRST THREE YEARS AFTER THE SALE IN ORDER TO ENSURE
ADHERENCE TO CONTRACT COMMITMENTS. SINCE THE FEBRUARY VISIT THE
PRIVATIZATION OF THE POWER PLANT HAS STALLED. ACCORDING TO SOME
SOURCES, THE SOCIAL DEMOCRATIC PARTY (SDP),JUNIOR MEMBER OF THE
GOVERNING COALITION HAS THREATENED TO WITHDRAW ITS SUPPORT FROM
THE GOVERNMENT IF THE DEAL GOES THROUGH - TO ANY BUYER. THAT
WOULD LEAVE THE MAIN RULING PARTY, THE DEMOCRATIC PARTY OF
SOCIALISTS (DPS),ISOLATED ON THE QUESTION OF PRIVATIZING THE
ELECTRICITY INDUSTRY, AS THE OPPOSITION PARTIES HAVE LONG BEEN
ANTAGONISTIC TO THE PROPOSAL.




4. THE MAYOR MENTIONED A NUMBER OF OTHER COMPLETED
PRIVATIZATIONS. THE BANKRUPT AND INDEBTED LEAD AND ZINC MINES
WERE SOLD OFF TO SLOVENIAN INVESTOR, GRADIR, AND, IN A BIT OF
HYPERBOLE, HE SAYS THEY ARE EXPECTED TO HAVE A PRODUCTION VALUED
AT 100 MILLION EUROS WITHIN A YEAR. A WOOD PROCESSING COMPANY
SOLD TO A LOCAL INVESTOR, VEKTRA GROUP, WAS IN VISIBLE
OPERATION. THE MAYOR SAYS THE MUNICIPALITY IS HOME TO 65 PERCENT
OF MONTENEGROS USABLE FORESTS AND THE WOOD PROCESSING COMPANY
PLANS TO REINTRODUCE THE MANUFACTURE OF SMALL, PRE-FABRICATED
WOODEN COTTAGES.




5. AFTER ONLY TWO MONTHS IN OFFICE, HAVING WON IN A RUNOFF
ELECTION THAT BROUGHT THE MUNICIPALITY BACK INTO GOVERNMENT FOLD
AFTER YEARS AS AN OPPOSITION STRONGHOLD, THE MAYOR IS OPTIMISTIC
ABOUT THE CITY'S FUTURE. HE WAS PROUD TO INTRODUCE HIS ASSISTANT
AND CAMPAIGN MANAGER AS SOMEONE WHO HAD LEARNED "AMERICAN
METHODS" HAVING WORKED SEVERAL YEARS FOR A USAID PROJECT
IMPLEMENTER. IT TURNED OUT THAT THE CHARGE WAS HIS FIRST
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DIPLOMATIC VISITOR. DURING THE COURSE OF THE DAY IN WHICH HE
INSISTED ON PARTICIPATING IN ALL EVENTS, HE ADMITTED BEING
STUNNED AND PLEASED THAT THE AMERICAN CHARGE HAD COME TO CALL,
CONFIDING THAT HE MIGHT HAVE EXPECTED THE BULGARIAN OR
MACEDONIAN, BUT NOT THE AMERICAN.




6. THE MAYOR WHO HOLDS A DOCTORATE FROM THE UNIVERSITY OF
BELGRADE IN MINING ENGINEERING AND WAS MANAGER OF THE COAL
MINING COMPANY BEFORE BEING ELECTED SPOKE OF HIS PLANS TO
GENERATE ECONOMIC OPPORTUNITIES IN THE MUNICIPALITY. HE IS
LOOKING INTO REOPENING A CEMENT PLANT AND ATTRACTING INVESTORS
TO EXPLOIT KAOLIN DEPOSITS AND DEVELOP HYDRO POWER PRODUCTION
THROUGH A SERIES MID-SIZE PROJECTS DESIGNED TO MINIMIZE
ENVIRONMENTAL IMPACT. NOTE; A PROPOSAL 3 YEARS AGO TO BUILD A
DAM ON THE TARA RIVER, WHICH FLOWS THROUGH A CANYON REPUTED TO
BE THE SECOND DEEPEST AFTER THE GRAND CANYON WAS DEFEATED IN ONE
THE FIRST SUCCESSES FOR MONTENEGRO'S NGO COMMUNITY. (SEE 04
BELGRADE 2349) END NOTE. ALL OF THE MAYOR'S DEVELOPMENT SCHEMES
HAVE ONE GOAL, TO STOP THE MUNICIPALITY'S DECLINE IN POPULATION.
THE MAYOR BELIEVES HE HAS AGREEMENT WITH THE UNIVERSITY OF
PODGORICA TO OPEN AN INFORMATICS BRANCH THIS AUTUMN TO PROVIDE
OPPORTUNITIES IN PARTICULAR FOR HIS YOUNGER POPULATION.




7. THE HUSSEIN PASHA MOSQUE BUILT IN THE 16TH CENTURY IS
CURRENTLY UNDERGOING RESTORATION AT THE CAREFUL DIRECTION OF THE
STATE INSTITUTE FOR THE PROTECTION OF CULTURAL MONUMENTS. THE
MOSQUE WITH ITS SOARING AND EXQUISITELY PAINTED INTERIOR DOME IS
CONSIDERED TO BE THE FINEST IN THE BALKANS. THE ELDERLY LEADER
OF THE MUSLIM COMMUNITY AND THE YOUNG IMAN WERE ON HAND WHEN THE
CHARGE VISITED THE MOSQUE. TODAY ONLY ABOUT 17 PERCENT OF THE
CITY'S POPULATION IS MUSLIM, BUT THE MOSQUE REMAINS A REMINDER
OF THE CITY'S PAST AS AN IMPORTANT TOWN OF THE OTTOMAN EMPIRE
(OF WHICH IT WAS A PART UNTIL 1908). THE MAYOR'S INSISTENCE ON
BALANCE ENSURED A VISIT TO THE RECENTLY COMPLETELY RESTORED
ORTHODOX MONASTERY OF THE HOLY TRINITY WHICH DATES FROM THE SAME
PERIOD AND IS NOTED FOR ITS RICH TREASURY.




8. A LOCAL HONEY PRODUCERS ASSOCIATION, WITH ASSISTANCE FROM
USAID, IS PACKAGING AND MARKETING HONEY. THE ASSOCIATION HAS
ALSO DEVELOPED AN EDUCATION PROGRAM TO IMPROVE THE PRACTICES OF
LOCAL BEE KEEPERS. WHILE THE REGION IS SAID TO PRODUCE ABOUT 124
TONS OF HONEY A YEAR MUCH OF IT SOLD RAW IN LOCAL OPEN AIR
MARKETS. THE COOPERATIVE IS CONCENTRATING ON A HIGHER QUALITY
PRODUCT. WHILE THE ATTRACTIVELY PACKAGED INDIVIDUAL PORTIONS OF
HONEY WOULD APPEAR TO BE A PERFECT PRODUCT FOR TOURIST HOTELS ON
THE COAST, THE CO-OP IS STILL GRAPPLING WITH MARKETING AND
TRANSPORT ISSUES.




9. A LOCAL TECHNICAL HIGH SCHOOL HOSTS A YOUTH PARLIAMENT FUNDED
BY THE EMBASSY'S PUBLIC DIPLOMACY SECTION. THE STUDENTS AGED
16-19 WERE ENTHUSIASTIC AS THEY TOLD THE CHARGE ABOUT THE
PROCESS OF ORGANIZING ELECTIONS AT THEIR SCHOOL AND ABOUT THE
VARIOUS PROJECTS THEY HOPED TO IMPLEMENT. THE PROJECT, DESIGNED
TO HELP THEM LEARN ABOUT POLITICAL PROCESSES AND ACQUAINT THEM
WITH HUMAN AND CIVIC RIGHTS, IS CLEARLY EXPANDING THEIR HORIZONS.




10. COMMENT: THE MAYORS ASSISTANT EXPRESSED THE VIEW THAT
PLJEVLJA HAD MUCH UNTAPPED TOURISM POTENTIAL HIGHLIGHTING A VIEW
COMMON IN MONTENEGRO, TOURISM WILL BE THE COUNTRY'S SALVATION.
THE MOSQUE AND THE MONASTERY ARE ATTRACTIONS, AS IS MUCH OF THE
SURROUNDING COUNTRYSIDE, BUT ABSENT IMPROVED ROADS AND
ACCOMMODATION, THE MUNICIPALITY WILL BE HARD PRESSED TO BECOME A
TOURISM DESTINATION. YET FOR AN AREA LONG A STRONGHOLD OF
SERBIAN NATIONALISM AND IGNORED BY POLITICIANS, DEVELOPMENT IS
IMPORTANT TO A GOVERNMENT WHICH NEEDS TO SHOW ITSELF AS
PROMOTING THE INTERESTS OF ALL THE COUNTRY'S INHABITANTS. THE
MAYOR'S FOCUS ON EDUCATION AND INDUSTRIAL ACTIVITY MAY OFFER THE
MOST PROMISING PATH. END COMMENT.
BARNES
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