Project number:


Business sector:

Manufacturing and Services

Notice type:


Environmental category:


Approval date:

16 Sep 2003



PSD disclosed:

14 Jul 2003

Project Description

The proposed project would enable the Government of Montenegro to initiate a successful and transparent privatisation of Kombinat Aluminijuma Podgorica (KAP). For this purpose, the Government of Montenegro would appoint a privatisation advisor who would:
1. Determine strategic investor interest in purchasing KAP
2. Identify the best strategy to privatise KAP.

Transition Impact

The proposed project will facilitate the privatisation of KAP and as such lay the basis for the transition impact that would be achieved by such a privatisation. The privatisation would have the following elements of transition impact:
  • Increase in private ownership: The privatisation of KAP would lead to the largest part of the Montenegrin economy being in private hands;
  • Demonstration effect: A successful privatisation and restructuring of KAP will demonstrate to investors that large, dominant industrial complexes can successfully be restructured;
  • More competition in the economy: KAP interacts with about 400 companies in the Montenegrin economy. The privatisation of KAP would introduce competitive practices also to those enterprises.

The Client

Kombinat Aluminijuma Podgorica, an integrated aluminium producer and the largest industrial company in Montenegro. It is currently 65% owned by the Government of Montenegro. KAP includes an aluminium smelter and an alumina refinery. The plant was built during 1968-71 using Pechiney technology. It has a nameplate capacity of 280,000 tons of alumina and 103,000 tons of aluminium.
The procurement and contracting of the advisor would be done by the Government of Montenegro.

EBRD Finance

Up to €3 million loan.

Project Cost

Up to €3 million.

Environmental Impact

The project involves funding of privatisation advisory services and it has been screened C/1. The Environmental Audit, carried out by independent consultants, revealed a series of significant environmental and health and safety issues and the fact that basic maintenance of EHS equipment has been inadequate. Further environmental and health and safety consultancy will be carried out on KAP as part of the privatisation advisory project. The detailed Phase II environmental audit will be complemented by an energy efficiency audit which may reveal energy reduction opportunities reducing operating costs. When considering future activity of KAP, the following aspects have to be taken into consideration:
  • Environmental, health and safety issues are numerous, and the performance of environmental control equipment is very poor. At present, KAP does not meet the environmental standards of Montenegro and European Union. The Montenegrin environmental standards are to a very large and increasing extent compatible with EU standards.
  • Energy consumption is high and at least partially wasteful. Here as well, performance can be improved and considerable energy saving can be achieved.
  • The structures and processes used are partially outdated and do not represent state of the art technology. Modernisation is required, and this will also have positive effects on energy consumption and on the environment.
  • The refurbishment of the plant - which is anticipated after privatisation - offers an opportunity to introduce resource efficient technologies and effective environmental controls and improved safety.
  • Because of the environmental and public health and safety issues associated with the current operations active public information and consultation will be encouraged. The development of a Public Consultation and Disclosure Plan will be part of the proposed second phase of environmental due diligence. Part of the loan proceeds will be spent on an environmental study and development of environmental and health and safety management which will be covenanted in the loan agreement.

Technical Cooperation

The Dutch Ministry of Foreign Affairs, through the Netherlands Framework Programme for Environmental Due Diligence, Serbia and Montenegro, will fund the Environmental and Energy Efficiency Audit.
The team will seek Donor funding for the first two phases of the assignment of the privatisation adviser.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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