The Swiss company 8B Capital, which signed a 50-year lease for the Forge and Steelworks at the Niksic EPCG Steel Plant, has so far paid only the rent for October and December. However, no payments have been made for workers’ salaries, which the company was supposed to assume as part of their business operations, according to the response from Elektroprivreda (EPCG).
Dr. Svetozar Golubović, the chairman of the EPCG Steel Plant board, stated that, according to their information, the rent has been paid for a few months, and gross wages for a number of workers have also been covered.
“Whether these funds are operational, as they are paid into the EPCG AD Niksic bank account, is not known to us, so you need to address the parent company,” said Golubović.
Delays
EPCG has stated that 8B Capital justifies the delays in meeting obligations due to the long process of registering their subsidiary in Montenegro. When asked how many workers the leaseholder has taken on, EPCG said that 8B Capital has only provided a list of 25 employees so far, but they have not yet been hired.
The company, represented by Igor Šamis, signed an agreement with the management of the parent company Elektroprivreda Crne Gore (EPCG) at the end of July last year. The agreement includes an investment of €7.75 million and the establishment of production within one year of signing, with an additional €36.85 million to be invested over the next five years. The contract also stipulates the monthly engagement of 25 workers, and the transfer of 150 workers within six months. According to Golubović, the contractual obligations began in October of last year.
Given the delays in rent payments and worker engagement, when asked if this means there are conditions to terminate the contract, EPCG stated that they are following procedures.
“The reasons for terminating the contract are defined in the agreement, and the termination procedure includes, among other things, allowing the non-compliant party a grace period to fulfill its obligations. In this regard, EPCG is proceeding according to the agreement, taking appropriate actions based on an assessment of the procedural conditions,” EPCG told Pobjeda.
Swiss company activities
So far, the Swiss company has focused on checking the functionality of the equipment at the Steelworks to identify any deficiencies that need to be addressed. They have informed EPCG that a contract for the purchase of a new steam boiler has been signed, with delivery expected in mid-April. This company was the only one to submit a bid in response to the last call for leasing, proposing a six-month preparatory period for launching production, during which they would take on 25 workers per month. They offered a monthly rent of €31,000, excluding VAT.
Performance
According to Golubović, most of the employees at EPCG Steelworks have been engaged in recent months, and the workers achieved good business results in December.
“This enabled the payment of gross wages for 280 employees, payment of winter allowances for 2024, VAT payment for December, and the payment of part of the severance for workers who retired,” Golubović said.
In December, the plant produced 1,087 concrete foundation slabs, exceeding the planned volume of 1,261 kWp. They also carried out roofing work over 1,500 square meters and produced substructures and structures for solar power plants (SPP) with a total capacity of 3.438 MWp. A total of 1.129 MWp was installed. Workers also carried out maintenance of electrical installations and substations, as well as prepared areas for laying foundation slabs inside and outside the factory. They also renovated the old administrative building to relocate Solar Construction and OIE EPCG.
Golubović noted that the business and technical cooperation agreement between EPCG Steelworks and 8B Capital was signed in early October last year, and since then, contractual obligations have been ongoing. He claims that the leaseholder, along with its partners, frequently visits the Steelworks.
“They are assessing the condition of the facilities, which are quite damaged, including the hall space and the roofs of the halls. Significant investments are needed. In the coming months, we expect the leaseholder, in accordance with their plans and programs, to prepare the facilities for operation and start production,” Golubović told Pobjeda.
Background
EPCG established EPCG Steelworks in early 2023, after purchasing the assets of the Steelworks from the previous Turkish owner, Toščelik, for €20 million. This transaction was deemed illegal state aid by the Competition Protection Agency (AZK), and a lawsuit is ongoing at the Administrative Court following EPCG’s appeal. EPCG maintains that the purchase was a good deal based on market principles. This purchase followed a months-long workers’ strike that had blocked the factory.
