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• |Montenegro
• |Energy Policy

In line with the economic development of the Republic of Montenegro, and also with the energy practices and relevant standards for candidate countries for EU accession, Energy Policy particularly outlines the need to establish adequate legal, institutional, financial and regulatory frameworks required for sustainable development of the energy sector. Together with the national energy strategy document (Energy Development Strategy of the Republic of Montenegro), the Energy Policy defines the role of energy undertakings in the reform process of the energy sector and encourages both domestic and international investors to invest in new energy facilities.

This Energy Policy identifies the goals and objectives, as well as the instruments to be used by the Government of the Republic of Montenegro, aimed to develop the energy sector with respect to:

• Secure and reliable power supply,
• Environmental protection,
• Ownership,
• Market operation,
• Investments,
• Energy efficiency,
• New renewable resources,
• Regional and broader integrations,
• Social protection measures
• Other

Energy Sector

Current Situation

Initial activities and incentives in the energy sector reform process have been started:

• Integration into the Athens Memorandum process has been started;
• Energy Regulatory Agency was established on January 22, 2004. The establishment arose upon Energy Law of the Republic of Montenegro, adopted by the Montenegrin Assembly in June, 2003.
• Electric Power Company of Montenegro (EPCG) was functionally unbundled;
• The Decision to establish the Energy Efficiency Unit was made
• Energy Efficiency Strategy is designed, together with the Action Plan for 2005-2006
• Republic of Montenegro has declared in its Constitution to be an Ecological State

• A lack of national energy strategy that would define medium-term and long-term objectives, priorities and conditions for development of Montenegrin energy sector
• An extremely high dependence on power import (total needs for liquid and gaseous fuels and around 1/3 of the electric power), resulting from the fact that no new energy facility has been constructed for many years now
• Huge good quality potentials, but unfortunately unused (especially hydro potentials)
• Great possibilities for usage of renewables, which would create a good position for the republic to participate in trade for carbon dioxide emissions
• Predominant share of electricity in Energy Balance
• Inherited industrial structure substantially relying on high energy consumption
• Extremely high consumption by the two biggest consumers in the field of ferrous and nonferrous metallurgy, as well as high demand and consumption by the households
• Energy inefficiency present in the field of consumption (particularly with respect to consumption of electricity for heating purposes) and high energy intensity
• Insufficiently explored oil and gas resources, and renewables as well highly depreciated energy infrastructure and the need for its fast rehabilitation and technological improvements
• Lack of funds for researches and technological development in the field of energy
• Incomplete legal regulation of the energy sector
• Partially non-regulated energy sector and privatized in the field of procurement and trade of oil products.

Legislative Background

Reform Obligations Arise from the Following Documents

• Energy law
• Agenda for economic reforms in Montenegro
• Athens memorandum of understanding
• Montenegrin strategy for development and reduction of poverty
• General policy of the government of the Republic of Montenegro regarding creation of relevant conditions for EU accession
• Laws and documents regulating the area of environmental protection, urban planning and other relevant legislation

Consequent Endeavours

• To provide available, accessible and affordable energy
• To secure the preconditions for establishment of an open energy market and fast integration into regional energy markets

Goals and Objectives of Energy Policy

1. Secure, high quality, reliable, and diversified power supply aimed to comply the supply with the demand in all forms of energy
2. Maintenance, rehabilitation and modernization of the existing infrastructure and the construction of reliable new infrastructure required for generation and utilization of energy
3. Reduction of import dependence, primarily through creation of stable conditions for investments in research /exploration and construction of new power facilities (especially on the basis of already explored resources related to unused hydro potentials), as well as investments in other energy infrastructure
4. Design of relevant legislative, institutional, financial and regulatory framework to encourage private sector involvement and investments in all aspects of the energy infrastructure
5. Creation of conditions for higher utilization of renewable energy resources, combined power and heat generation (CHP) and for the usage of fossil fuels based on clean technologies
6. Establishment of a competitive market in order to provide energy in the fields where there is a possibility to do so (generation and supply) in accordance with the concept of regional energy market, and with regulated monopoly network activities
7. Provision of institutional and financial incentives with the purpose to improve energy efficiency and reduce energy intensity in all sectors, from generation to consumption of energy
8. Sustainable production and utilization of energy in relation with environmental protection , and international cooperation in this field, especially with respect to the reduction of GHG emissions,
9. Supporting research, development and promotion of new, clean and efficient energy technologies, as well as implementation of energy policy based on expert and scientific grounds.

Instruments for the Implementation of the Montenegrin Energy Policy Objectives

Within the System:

• Design Energy Development Strategy of the Republic of Montenegro for the period until 2025 (with sector studies)
• Establish and implement data monitoring system in line with the EUROSTAT system for the presentation of the national energy data
• Adopt encouraging measures for scientific-technological development in energy sector
• Cooperation in international programmes in the field of energy
• Establish and implement transparent and clear procedures regarding proper operations of all segments of the energy sector, aimed to prevent corruption
• Provide fostering measures for the implementation of Energy Efficiency Programmes, new renewable resources and clean technologies, including the utilization of energy efficient devices acceptable for the environment
• Create preconditions required for the construction of a new generation capacity in order to provide permanent energy supply
• Diversify energy sources and fuels, taking into account specific regional characteristics
• Promote technological achievements and develop infrastructure in order to reduce the GHG impact

Legislative:

• Develop relevant secondary legislation required for proper implementation of the Energy Law and Energy Development Strategy of the Republic of Montenegro, as well as harmonize domestic and international legislation in this filed, including UN Declarations, EU Directives, Kyoto Protocol, Athens Memorandum of Understanding, etc.
• Review the existing and develop/adopt new legal documents, technical standards and regulations in the filed of construction of power and other facilities, particularly with the aim to increase energy efficiency
• Set out rules and regulations defining simplified procedures for obtaining concessions and authorizations for construction of small hydro power plants and other renewable energy facilities, and for issuance of permits for network access and licences for power generation and sale

Institutional and organizational:

• Build the capacities of Government administration to be capable to monitor the implementation of the Energy Development Strategy of the Republic of Montenegro
• Design the Energy Balance
• Strengthen the Energy Efficiency Unit in order to enable it to promote and implement the Government's Energy Efficiency Programme in a good manner, including its capability to make the proposals for the design of the appropriate regulation framework aimed to encourage proper implementation of this Programme
• Restructure EPCG and other energy undertakings into financially sustainable companies being capable for operation/participation in a competitive market, and to finance the development
• Improve inspection control

Economic and social:

• Establish tariff and pricing policy for fuels, taking into account market based costs (including environmental protection costs) and profit, which would encourage efficient energy utilization and protect the interests of consumers / customers with respect to security and quality of energy services, and which would also respect the component of affordability for the energy bills payment
• Develop a subsidy programme for vulnerable groups of citizens in order to enable them to satisfy their minimum needs for electricity and heating

Relevant documents can be downloaded from the official Government site of the Republic of Montenegro:

• Energy Law [pdf]
• Energy Policy