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RAAUZYUW RUEHPOD0094 0940910-UUUU--RHMCSUU.
ZNR UUUUU ZZH
R 040910Z APR 07
FM AMEMBASSY PODGORICA
TO RUEHC/SECSTATE WASHDC
INFO RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
EUROPEAN POLITICAL COLLECTIVE
RUEHPOD/AMEMBASSY PODGORICA
B T

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 
 
PODGORICA 00000094  001.3 OF 002 
 
 
¶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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PODGORICA 00000094  002.3 OF 002 
 
 
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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