Provision of a sovereign loan of up to EUR 14 million to Passenger Trains Company of Montenegro (the "Borrower" or the "Company") guaranteed by the state of Montenegro. The loan proceeds will be used to finance the purchase of two new electric passenger trains to replace the existing 50-year old ones that are still in operation on the rail network (the "Project").
The Project will support the development of the Montenegrin railway sector through the modernisation of the passenger rail fleet. With the delivery of new, modern and safer passenger trains, the Project will contribute to enhancement of the quality of rail passenger services, lifespan of the railway fleet and, ultimately, to the growth of rail passenger transportation in the country.
By supporting a modal shift from road transport to passenger rail transport and by replacing old and inefficient trains with new and efficient ones, the Project will have a significant impact on the reduction of carbon emissions.
The Project will also help reduce the Company's operational and maintenance cost and increase its fare revenues through increased capacity, frequency, and level of service), contributing to the enhancement of the Borrower's financial sustainability.
ETI score: 63
Primary quality: Well-governed.
The Project will contribute to introducing a five-year public service contract between the government and the Company in line with international best practice. The Project will also covenant the adoption of a new law on passenger safety and rights, developed as part of the Rail Action Plan agreed between the Transport Community supported by the EU and the Western Balkan countries. Furthermore, the Project will include the development of a corporate governance action plan ("CGAP") in order to assist the Company to address issues to be identified and improve its corporate governance.
Secondary quality: Green.
The Project will result in lower carbon emissions by enabling a modal shift from road to rail passenger transportation and by replacing old and energy inefficient trains with new modern ones.
RAILWAYS PASSENGER COMPANY OF THE REPUBLIC OF MONTENEGRO
Railways Transport Company of Montenegro - PCG
The Company is the only railway passenger transport company in Montenegro. It was established in 2008, supported by the EBRD, following the unbundling of the then Railways of Montenegro Company ("CG") that was founded in 1908. The Company operates three local routes and one international route to Belgrade, Serbia.
The state owns 94.52% of the Company's shares, while the remainder is held by investment funds (2.79%), individual investors (2.53%) and others (0.15%). The Company has 380 employees.
EBRD Finance Summary
Up to EUR 14 million to finance acquisition of two new electric passenger trains.
Total Project Cost
The total project cost of up to EUR 14 million will be financed entirely by the EBRD loan backed by the sovereign guarantee provided by Montenegro.
Financing structure: The EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions.
Standard setting: The client will make use of the EBRD's expertise on best international procurement standards and higher environmental standards above "business as usual".
Knowledge innovation and capacity building: The EBRD will provides expertise, innovation and capabilities that are material to the timely implementation of the Project's objectives, including support to strengthen the capacity of the client.
Environmental and Social Summary
The Project has been categorised B according to the Bank's Environmental and Social Policy ("ESP") and Low-Medium risk. Key Environmental & Social ("E&S") risks and impacts to consider include occupational and public health and safety, accident risks and pollution prevention / waste management related to the disposal of the redundant passenger trains. E&S due diligence ("ESDD") has been carried out by the Bank through E&S questionnaires. As this is an existing client of the Bank, ESDD included a review of the previous environmental and social action plan ("ESAP") implementation performance and annual E&S reports. Any required E&S actions will be agreed with the Company to structure the Project in line with EBRD's requirements. The PSD will be updated once the ESDD has been completed.
Technical Cooperation and Grant Financing
Capacity building TC to support establishment of a project implementation unit ("PIU") at the Company and support it with the preparation of tender documentation, tendering process, monitoring of the use of proceeds and the project implementation.
Following detailed due diligence, detailed assessment of TC needs will be available and additional postsigning TCs may be included at a later stage.
Company Contact Information
Dorde Kaluderovic, Jovana Jovanovic
+382 63 228 089
Trg Golootockih zrtava 13, 81000 Podgorica, Montenegro
PSD last updated
04 Oct 2021
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
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