Montenegro’s EPCG secures loan for new unit in HPP Perućica

Elektroprivreda Crne Gore has obtained financing to install the A8 unit at its Perućica hydropower plant. The investment would increase the facility’s overall capacity from the current 307 MW to 365.5 MW.

Elektroprivreda Crne Gore (EPCG), owned by the Government of Montenegro, has signed a EUR 40 million loan agreement with Germany’s KfW Development Bank for the A8 unit.

The installation of a 58.5 MW aggregate is phase 3 of a project to overhaul and modernize HPP Perućica.

The loan was facilitated by a new instrument resulting from the cooperation of the European Commission and KfW, together with a guarantee from EFSD+ (European Fund for Sustainable Development Plus). It is a novelty for the region, according to a press release from EPCG.

The loan repayment period is 15 years including a five-year deferment.

It is the first deal with an EFSD+ guarantee

Ivan Bulatović, EPCG’s CEO, said it is the first loan approved with an EFSD+ guarantee instead of one from the government. It demonstrates that the international factor sees the company as a credible partner, according to Bulatović.

The case is a confirmation of the company’s efforts to decarbonize its activities, he said.

The idea to install the A8 unit is very old, and the new circumstances in the energy sector have helped its implementation, said Ivan Mrvaljević, Executive Officer of the Directorate for Development and Engineering of EPCG.

According to Pablo Obrador, KfW’s director for Southeast Europe and Turkey, the overall investment in HPP Perućica within the agreements of the two sides reached EUR 83 million, including the new contract.

Tender for construction in October

The international tender for the selection of contractors for the delivery, assembly, and commissioning of the A8 unit will be launched in October. The new aggregate would be online in 2027.

Minister of Energy and Mining Saša Mujović said success in the energy sector implies vision and strategy. The significance of the project will become evident when water from the Zeta river is diverted into the HPP Perućica’s reservoir, Mujović stressed.

In April, EPCG signed a contract with the Montenegrin transmission system operator Crnogorski Elektroprenosni Sistem (CGES) to connect unit A8 to the grid.