The government of Montenegro is set to enforce stricter regulations on pellet prices following inspections that revealed producers and distributors were inflating consumer costs by adding packaging and transport fees beyond the limits established by the government. Current regulations cap retail prices at €250 per tonne for A2 pellets and €270 per tonne for A1 pellets.
To address identified loopholes, the Ministry of Economic Development is preparing amendments that would prohibit businesses from using mandatory charges to increase the effective selling price beyond these ceilings. Additionally, the proposed rules will mandate that pellet producers and distributors maintain deliveries to the domestic market at levels no lower than their average volumes over the prior year.
This requirement could significantly impact the commercial landscape, as a considerable portion of Montenegro’s pellet output is exported. Domestic production rose from approximately 107,040 tonnes in 2024 to 118,685 tonnes in 2025, highlighting the importance of exports as a revenue stream for local producers.
Since the introduction of price controls, inspections have uncovered eight irregularities, leading to 16 penalty notices totaling €6,500. The government’s aim is to shield households from steep heating cost increases while ensuring sufficient domestic supply during winter months.
However, tighter regulations pose challenges for pellet manufacturers concerning profit margins. Producers face rising costs associated with timber, electricity, transport, packaging, and labor. Furthermore, export markets often offer higher prices than those permitted domestically.
The stipulation for mandatory domestic supply may compel businesses to divert part of their production to a lower-margin domestic market. Questions also arise regarding how transport costs will be managed under these new rules. Given that pellets are bulky products, delivery expenses can vary widely based on factors like distance and order size.
If companies are restricted from charging extra for legitimate logistics services, they may need to absorb those costs or push for adjustments in regulated pricing. This situation reflects broader challenges within energy policy; while price controls can protect consumers in the short term, prolonged regulation below sustainable production costs can deter investment and diminish supply.
The pellet market holds particular significance in northern municipalities where biomass is a common heating source, often more affordable than alternatives. The proposed regulatory changes are not yet enacted, and their potential effects will largely depend on how authorities define final retail pricing, manage transport considerations, and enforce domestic supply obligations against producers with existing export contracts.
For stakeholders in the industry, a critical question remains: can Montenegro ensure affordable heating throughout winter without compromising the economic viability of its wood-processing sector, which has notable export potential?
