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Montenegro Government's response to media statements that CEAC initiates arbitration proceedings for KAP

Published on: Dec 3, 2013 8:48 PM Author: PR Bureau

Podgorica, Montenegro (3 December 2013) – Regarding the Central European Aluminium Company’s (CEAC) announcement that it would initiate arbitration proceedings against the Government of Montenegro, and media statements that the process has already been launched, Montenegro's Finance Ministry in its today's press release pointed at some indisputable facts that refute the CEAC’s claims.

As to the Aluminium Plant Podgorica (KAP), the press release reads, the Government acted according to the law and it has not done anything contrary to national and international legislation in that area, meaning that it strictly adhered to the settlement agreement. The Government published the agreement together with all annexes as soon as it was concluded. Therefore, both professional and lay public can be convinced whether or not there were "numerous violations of conditions" as it is now claimed by the CEAC. 

Disagreement with the CEAC and En + Group was caused by three unpaid electricity biils, as one of the conditions defined by the termination contract. Therefore, the Government initiated proceedings with the aim of breaching the contract in November 2011, but the CEAC and En + Group refused to defer share to the Government of Montenegro. The Government fulfilled its obligations under the settlement agreement, both those concerning subsidies for electricity, and those relating to loans based on government’s guarantees.

The KAP's privatisation process, which was transparent and conducted in line with Montenegro's laws and the KAP's privatisation strategy, denies CEAC’s claim that "while selling the factory, Montenegro’s Government submitted KAP’s non-credible financial reports". Moreover, the entire privatisation process was carried out with technical and financial assistance of the European Bank for Reconstruction and Development. In ddition, a consortium of renowned international companies was established consisting of BNP Paribas from France; CRU from the UK; URS from the UK; IKRP Rokas from Greece and BC EXEL/ERNEST & Yang. Also, before the conclusion, the privatisation contract was submitted to the Parliament of Montenegro and to the State Prosecutor's Office, and published on the Government’s web page. 

As far as the introduction of bankruptcy in the KAP is concerned, the process was carried out in full compliance with Montenegro’s Law on Bankruptcy.

Montenegrin Government’s approach to foreign investors can be illustrated by the existing legislation in that area, which is in line with best international practice. This, however, implies that foreign investors must respect primarily the documents they signed themselves, as well as Montenegro's regulations and laws. 

The Finance Ministry reiterates the restructuring plan for KAP, proposed by the Government to the Parliament of Montenegro, implies, apart from taking over 60% of KAP ownership by the government, the consensual termination of contract with the CEAC and En + Group which would prevent this situation. However, the Parliament refused to support the Government's plan, the Finance Ministry's press release concludes.

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