Montenegro secures EU grant for power grid upgrades

14 July 2016, Week 27 Issue 818

Montenegro has struck a deal to receive a 25 million euro (US$27.6 million) grant from the European Union to fund construction of its section of the Trans-Balkan Electricity Corridor (TBEC).

The agreement was signed by the Montenegrin Economy Ministry, state-owned power utility Crnogorski Elektroprenosni Sistem (CGES) and German development bank KfW last week. At an estimated cost of 127 million euros (US$140.3 million), the project will upgrade the power grid connecting Montenegro with western Serbia. The current 220-kV system has been in use for over 50 years and requires modernisation to continue operating. Under the plan, a new power substation will be fitted in Lastva, Bosnia-Herzegovina and an existing station in the Montenegrin town of Pljevlja will be refurbished. The two units will then be connected via a 400-kV overhead cable.

Another transmission line with the same capacity will be installed between Pljevlja and the Montenegrin-Serbian state border.

TBEC aims to encourage greater trade of electricity in the Balkans region as well as facilitate the importing of power from Italy via an undersea interconnector due for completion next year. Besides the grant, the project is expected to receive two 12-year loans – one worth 60 million euros (US$66.3 million) from the European Bank of Reconstruction and Development (EBRD) and another totalling 25 million euros (US$27.6 million) from KfW.

Construction is scheduled to start in late 2017 and conclude by the end of 2020.

It has been listed as a Project of Energy Community Interest (PECI) by the European Commission and also forms part of the EU’s 2015 Instrument of Pre-Accession (IPA) programme. The programme consists of several infrastructure developments in the Balkans, among them a proposed 400-kV interconnector linking the national grids of Albania and Macedonia. Its estimated cost of 539 million euros (US$596 million) will be funded by a mix of EU grants and loans from the EBRD, KfW and the European Investment Bank (EIB).

KfW also helped bankroll construction of a 400-kV power line between Albania and Kosovo that was completed last month. The 241.1-km cable was included in the 2014 IPA programme.

Edited by

Richard Lockhart

Editor

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