France’s development agency Agence Française de Développement (AFD) and Montenegrin transmission system operator CGES have signed a EUR 25 million loan agreement for the modernization of strategic substations Perućica and Pljevlja 2 and support to Montenegro’s energy transition.
The reconstruction of the Perućica substation will enable the integration of up to 350 MW of hydropower capacity into the transmission network, according to transmission system operator (TSO) CGES.
The modernization of the Pljevlja 2 substation will strengthen connections with the trans-Balkan network and support Montenegro’s gradual transition from coal-fired power generation to more sustainable sources, the company added.
The EUR 25 million loan agreement envisages a government guarantee. The financing plan also includes a EUR 8.5 million grant from the European Union through the Western Balkans Investment Framework (WBIF).
The contract builds on the technical assistance provided since 2024 by RTE International
The agreement was signed by CGES CEO Ivan Asanović and AFD Director of the Regional Office for the Western Balkans Arnaud Dauphin. The guarantee agreement was signed by Minister of Finance Novica Vuković and Dauphin.
The loan agreement builds on the technical assistance provided by RTE International (RTEi), a subsidiary of the French TSO, RTE, since 2024.
RTEi supported the preparation of the project, contributing to the strengthening of CGES’s technical capacity and aligning the modernization of Montenegro’s transmission network with European standards, CGES pointed out.
The contract represents a continuation of the cooperation between Montenegrin and French state-owned energy companies. In early June, Montenegrin electricity distribution system operator (DSO) CEDIS signed a tripartite partnership agreement with AFD and EDF International Networks.
Back in November 2024, Montenegro and France signed agreements on a EUR 50 million loan to support environmental protection policies and a EUR 950,000 grant for CGES.
Šahmanović: A foundation for a safer, more stable, and sustainable energy future for Montenegro
Ivan Asanović stressed the strategic importance of the project for Montenegro’s energy security, regional connectivity, and the resilience and security of the national power system.
By modernizing key electricity infrastructure, this project will strengthen the resilience of the transmission network, enable greater integration of renewable energy sources, and contribute to further alignment with European energy standards, minister Vuković explained.
Dauphin: AFD is committed to providing support to Montenegro on its path to EU membership
Minister Admir Šahmanović said Montenegro has started an investment cycle in energy that can no longer be stopped.
Projects like these lay the foundation for a safer, more stable, and more sustainable energy future for Montenegro, he pointed out.
According to Arnaud Douphin, the investment reflects AFD’s broader commitment to supporting Montenegro on its path to EU membership through financing, technical expertise, and long-term partnerships in key sectors, including energy.
