Montenegrin Railways Passenger Trains

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

The provision of a senior loan of up to € 30 million to Zeljezniiki Prevoz Crne Gore a.d. (ZPCG), the passenger train operator in Montenegro. The loan will be fully guaranteed by the State of Montenegro (the Guarantor) and used to finance the purchase 4-car Electro-motor unit (EMU) sets to be used for operations across the railway network of Montenegro. The new rolling stock will replace the old, energy inefficient loco-hauled train sets currently in operation.

Project ID 55258

Status Disbursing

Location

Montenegro

Business Sector

Transport

Notice Type

State

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Djordje Kaludjerovic
djordje.kaludjerovic@zpcg.me
+382 63 228 089
zpcg.me
Trg Golootockih zrtava br.13 81 000 Podgorica Montenegro

Project ID 55258

Status Disbursing

Location

Montenegro

Business Sector

Transport

Notice Type

State

Environmental Category

Approval Date

25 Jun 2024

Disclosure date

17 Apr 2024

Project description

Project objectives

ZPCG needs to acquire 4-car EMUs to improve the quality and regularity of services. The acquisition of new rolling stock has been identified by the Government of Montenegro as the key priority for the developement of the railway services in the country. The new rolling stock will replace the old, energy inefficient locomotive-hauled train sets currently in operation.

Transition impact

ETI Score:66

>Well Governed (primary) through the Company's and the Guarantor's (where applicable) undertaking to: (i) implement a corporate governance action plan and (ii) sign a public service contract based on the international best market practices;

Green (secondary) through the renewal of the rolling stock fleet resulting in estimated average savings of 18,145 tonnes of CO2 over the evaluation period from 2026 to 2037, which represents emission savings at the level of 53 per cent. The Project will be 100 per cent GET eligible.

Client information

RAILWAYS PASSENGER COMPANY OF THE REPUBLIC OF MONTENEGRO

Zeljezniiki Prevoz Crne Gore a.d. Podgorica, or Railways Passenger Company of Montenegro, is a majority state-owned company and is the sole passenger train operator in Montenegro. The state owns 90.79 per cent of the company shares, while the remainder is owned by individual investors (4.58 per cent), investment funds (4.55 per cent) and other (0.08 per cent). In 2022, the Company reported € 10.3 million of revenues and EBITDA of € 3.4 million.

EBRD Finance Summary

EUR 30,000,000.00

A senior loan of up to € 30 million will finance the purchase of 4-car EMU sets to be used for operations throughout the whole railway network of Montenegro.

Total project cost

EUR 30,000,000.00

The loan will be accompanied by the technical assistance deployed for (i) project implementation support, (ii) revisions of the Public Service Contract and (iii) enhancement of the Company's corporate governance standards and practies.

Additionality

The EBRD loan offers a tenor that is above the market average, ensures that the company complies with the Bank's environmental and social policies and Procurement Policies and Rules.

Environmental & Social Summary

Categorised B (ESP 2019). The Environmental and Social Due Diligence ("ESDD") for the Project has been undertaken internally and included an environmental and social ("E&S") assessment of the Project, review of the current operations, as well as the E&S management systems and the capacity of ZPCG as it relates to rail operations.

ESDD was carried out by means of questionnaires and a review of previous annual E&S reports submitted to the Bank over the past several years. Other relevant documents were also reviewed including the ISO certifications, the recent annual report on railway transport safety and other labour related documentation. Due to the time that had elapsed since the initial ESDD, further information was requested to confirm any E&S related updates within ZPCG operations. It is estimated that the Project will generate average savings of 18,145 tonnes of CO2 over the evaluation period from 2026 to 2037.

Previous annual E&S reporting by ZPCG has been satisfactory and ZPCG has well established Human Resources policies. A new collective agreement has been effective from August 2023 . ZPCG complies with national legislation related to labour and working conditions which are aligned with PR2. Some updates to existing labour arrangements are needed which includes the preparation of an updated retrenchment plan and further development of the worker grievance mechanism. The Bank will require both these documents to be submitted for review prior to any future retrenchment.

ZPCG has a certified integrated management system (IMS) including ISO 14001 Environmental Management and ISO 45001 Occupational Health and Safety ("OHS") which has been certified since 2016. The last independent audit was carried out in 2020 and included the migration from the OHSAS 18001 to ISO 45001. Annual E&S reports confirmed regular inspections take place annually by the relevant labour and environmental authorities, with no significant issues raised. The existing policy document for the IMS is available on ZPCG website and starting from September 2021 includes also ISO 45001:2018. ZPCG evaluates contractors E&S arrangements prior to selection and appointment although further development on contractor monitoring is needed to confirm implementation. ZPCG has an employee OHS rulebook which is also made available on their website and for operational safety, an formal safety management system ("SMS") has been implemented and is audited annually.

ZPCG has an existing Stakeholder Engagement Plan ("SEP") developed under the previous EBRD project and this requires a review and update to reflect changes since its original development. ZPCG will also develop arrangements on Energy Efficiency ("EE"), which include establishing an EE team, establish performance indicators and objectives and produce annual report on energy consumption.

The above requirements have been included in the Environmental and Social Action Plan ("ESAP") which has been developed and has been agreed with the ZPCG. The Bank will continue to monitor ZPCG activities through annual E&S monitoring reports and site visits if necessary.

Technical Cooperation and Grant Financing

Pre-signing

TC 1: Technical Due Diligence, with aprimary objective to establish the overall technical assessment of the project according to recognised international standards (note: this assignment also supported the Railways Maintenance Equipment Renewal Project (OPID 51806)).
TC 2: Economic Due Diligence, with aprimary objective to establish the overall economic assessment of the project according to recognised international standards (note: this assignment also supported the Railways Maintenance Equipment Renewal Project (OPID 51806)).

Post-signing

TC 3: Project Implementation Support, in particular, project preparation, preparation of the tender documents (including technical specifications), contract administration, financial control, project management and reporting.
TC 4: Procurement Support, to assist the Client with the procurement of the PIU support consultant, on-the-job training for the preparation of the procurement documents, workshops on the Bank's PP&R and best procurement practices.
TC 5: Revisions of the Public Service Contract, to assist in amendment of the PSC aligning it with the EU regulations and best international practice while enabling the implementation of the new Law on Railway Transport that is to be adopted in 2024 in the field of public service obligation.
TC 6: Enhancements of the Company's corporate governance standards and practices through the adoption of the corporate governance action plan ("CGAP").

Company Contact Information

Djordje Kaludjerovic
djordje.kaludjerovic@zpcg.me
+382 63 228 089
zpcg.me
Trg Golootockih zrtava br.13 81 000 Podgorica Montenegro

PSD last updated

07 Oct 2024

Understanding transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD also requires its clients to disclose information, as appropriate, about the risks and impacts of projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all of the Bank's activities in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (for example, 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).

IPAM independently reviews project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or the project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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Montenegrin Railways Passenger Trains

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)