Montenegro signs loans agreements with KfW and EBRD to improve electricity transmission system

Podgorica, Montenegro (8 May 2013) -- Representatives of the Montenegrin Electric Transmission System signed earlier today a loan agreement with the German State Bank KfW worth EUR 25 million. On behalf of the Government of Montenegro, Finance Minister Radoje Žugić signed the guarantee agreement for the loan arrangement, envisaged by Montenegro’s budget for 2013.

Also, representatives of the Montenegrin Electric Transmission System signed a loan agreement with the European Bank for Reconstruction and Development (EBRD) of EUR 60 million. The effectiveness of the agreement requires the state’s guarantees, which will be issued in the coming period, in tranches, as it will be specified by annual budget laws.

The two loans are aimed at funding the construction and installation of a 150m long, 4000 KW high-voltage cable between the municipalities of Tivat and Pljevlja, as well as the construction of a substation in Lastva Grbaljska and the reconstruction of the substation in the municipality of Pljevlja. These activities will substantially strengthen Montenegro’s distribution network and contribute to more reliable electricity supply of the Montenegrin coast. It will also significantly reduce the impact of neighboured electricity systems in case of major failures. The envisaged additional line will largely reinforce Montenegro's transmission network, which is necessary for using the full capacity of the underwater interconnection between Montenegro and Italy.

The loan agreement with the KfW prescribes a payback period of 9 years, starting with December 2016. The loan is subject to fixed loan rate of 2.4%.

With regards to the loan agreement with the EBR, it defines a twelve-year payback period, starting with September 2016. The loan interest rate is variable, and the standard EBRD rate is equal to the six months EURIBOR +1%.