Capital Increase of Electricity Company of Montenegro (EPCG) Vujica Lazovic, PhD Investment Conference Podgorica, January 13, 2009 The Government of Montenegro Deputy Prime Minister for Economic Policy

The aim of the Conference and aims of the Government of Montenegro Investment Environment Economic policy in 2009 Energy potential in Montenegro

Strategic aims of the Government of Montenegro Basic resources: -people, -natural wealth and -institutional framework. Quality and sustainable increase of national wealth.

The aim of the project: Strategic partnership aimed at establishment of long term basis for profitable operation of biggest energy company in Montenegro and safe electricity supply of citizens and economy. The aim of the Investment Conference Exchange of information between potential partners that will contribute to the quality of the Capital Increase of EPCG project.

Stimulating institutional environment: Euro, Equal treatment of local and foreign investors, Free flow of goods and capital, Eliminating the business barriers.

Stimulating tax policy: Corporate tax: 9% Proportional wage tax: 15% Real estate trade tax: 3%, Value Added Tax: 17% Gradual decrease of contribution and wage tax rates by 2010 which will create conditions to pay 51 cents of contributions and taxes for each Euro of income.

2008-the year of application for status of candidate for membership in EU and the year of economic growth in Montenegro: Real GDP growth: 8%, Inflation: 7%, Unemployment: 10.9%, Foreign debt 17% of GDP, Foreign Direct Investment €434mil (January-September 2008). Projection of economic growth in 2009: 5%

The Global crises!? Two crucial fields of activities are: Construction of infrastructure facilities, Improvement of country’s competitiveness. Economic policy in 2009 puts stress on commenced and prepared investments, as reply to global financial crisis.

Activities of Tender Committee and the Government regarding the capital increase Previous steps: Tender Committee worked on improvement of transaction quality through solution of open issues. Future steps: Defining of final parameters related to transaction and announcement of tender by the end of January 2009.

Strategy of Energy Sector of Montenegro Development by 2025 aimed at achievement of energy independence and safe system for electricity supply. Action plan : mid-term plan of activities referring to implementation of Strategy Development of regional energy market in the context of EU regulations: Montenegro is the member of Energy Community and signatory of Kyoto protocol Basis for development of energy sector!

Energy sector in Montenegro is the business with the future: Energy potential of Montenegro are significant and not utilized, Long term growth of electricity value due to increase of demand. We expect the strategic partner in Capital Increase of EPCG project to have clear vision and development aims for the company, efficient and innovative management, and investment resulting in optimal level of energy responsibility, productivity and sustainability. These are the issues the strategic partner will have full support of the state of Montenegro.

Thank you for your attention! Tel: +382 (0) The Government of Montenegro Deputy Prime Minister for Economic Policy