New transmission line for Montenegro

By Axel  Reiserer

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Key investments in the power sector of Montenegro, which are expected to also strengthen regional trade and exchange, will be supported by the EBRD with a loan of up to €60 million. The Bank’s funding will be used to finance a new transmission line, a new substation and the strengthening of the existing high voltage network near the Adriatic Coast.

These investments are a first step in the development of the power transmission corridor between the Italian and Balkan peninsulas which will rely on an undersea cable between Italy and Montenegro. Physical construction of the cca €1 bn project which will connect Villanova in Italy with the Jaz peninsula in Montenegro with a 415 km 1 GW high voltage DC cable is expected to begin in 2014. The interconnection will be a key element in the energy strategy of Montenegro and its neighbouring countries.

The EBRD-funded investments will create the transmission capacity needed for the undersea interconnection. These include the construction of a new 400/100/35kV substation at Lastva on the Adriatic coast, the diversion and strengthening of the existing network around Lastva into the substation and the construction of a new 155km 400kV transmission line from Lastva to Pljevlja in North Montenegro. Total project costs are estimated in excess of €100 million to which Germany’s KfW will contribute €25 million, the remaining portion being financed by the Borrower’s own funds.

In addition to providing the transmission capacity needed for the operation of the undersea cable, the investments will support the connection of neighbouring power systems and increase the capacity for cross-border electricity trade in the region. The project will also significantly improve the security of supply in Montenegro and neighbouring countries and assist the development of renewable energy as it will provided the necessary transmission infrastructure.

Riccardo Puliti, EBRD Managing Director Energy and Natural Resources, said: “This investment represents a major step forward and has the potential to fundamentally transform the power sector of Montenegro and the wider Balkans region. It will support the development of the regional electricity market in South Eastern Europe by creating the required infrastructure for an exchange between the region and Italy”.

Ljubo Knezevic, the CEO of Crnogorski Elektroprenosni Sistem AD, the owner and operator of the Montenegrin electricity transmission system, added: “This is a key project not only for our company and our country, but with potential for the wider region. We are taking a major step towards integration as this link will increase cross-border trade, strengthen competition and stimulate investment, particularly in renewable energy.”

To date the EBRD has invested more than €330 million in Montenegro, generating business of more than €600 million. The Bank’s investments are focused on the private corporate sector, especially to tap the country’s potential in tourism. The EBRD also aims to increase its operations with local private corporate clients and promote their investments in new technology and environmental improvements.

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