Montenegro selling 18.3 % stake in power firm

Montenegro put on sale a smaller-than-planned stake in its power monopoly and gave potential bidders an end of April deadline to submit offers for 18.3 % equity in Elektroprivreda Crne Gore (EPCG).
Of 18.3 % stake on offer, 9.15 % of the equity will be sold out of existing capital and a further 9.15 % will be a new share issue to boost the capital of the power company, the state-run Agency for Restructuring and Foreign Investment said.

The government had initially planned to boost EPCG's capital by 22 % through a new share issue. To qualify, bidders must have produced or distributed at least 1,500 GWh of electricity in the last fiscal year, revenue of at least EUR 250 mm ($ 321.2 mm), assets worth at least EUR 500 mm and credit ratings of at least "BBB-" assigned by Standard & Poor's or Fitch, or "Baa3" by Moody's.
The investor will get a five-year management contract and will be obliged to buy out a stake from small shareholders at the same price it pays to the government.

EPCG, 70.6% owned by the state, posted a EUR 7 mm loss in 2008. The company is estimated to be worth around EUR 1 bn. Without new power-generating facilities for 25 years, Montenegro lacks on average 35 % of its electricity needs a year.
The government expects the sale of EPCG stake to improve its position in the regional market in the future. According to earlier reports, Norwegian Statkraft, Italian Enel, Chinese Des and Czech CEZ have shown interest in partnering with EPCG. The former Yugoslav republic of 650,000 people ended its loose union with Serbia in 2006 and has since enjoyed strong growth, mainly driven by tourism.

The economy is estimated to have grown by 8 % in 2008, but the International Monetary Fund expects Montenegro's economy to grow by up to 2.0 % in 2009.