DSO smart metering completion project

Location:

Montenegro

Project number:

48402

Business sector:

Power and energy

Notice type:

Public

Environmental category:

B

Target board date:

05 Apr 2017

Status:

Disbursing

PSD disclosed:

03 Jan 2017

Translated version of this PSD: Montenegrin

Project Description

The provision of a senior A/B unsecured loan of up to EUR 32 million to the functionally and legally unbundled distribution system operator Crnogorski elektrodistributivni sistem DOO Podgorica
(CEDIS) in Montenegro envisages the (i) reconstruction and modernization of low-voltage infrastructure and substations, (ii) modernization of software, and (iii) installation of 60,000 smart electricity meters in Montenegro.

Project Objectives

Support CEDIS to complete the modernisation of the distribution network with the aim to further reduce the distribution network losses, improve collections and also to allow CEDIS to provide more reliable and stable power to its customers. The Bank already approved a corporate loan facility to EPCG (OpID: 40219) of up to EUR 65 million, in two consecutive tranches (in 2010 and 2013).The installation of the additional 60,000 meters places Montenegro in a leadership role in Europe towards meeting the EU's Electricity Directive which sets the target for 80% of consumers in EU member states to install smart metering systems by 2020.

Transition Impact

The project would improve reliability of power supply, reduce operational costs and technical and commercial losses. The financing of the remaining meters as well as the new investment component covering the modernisation of the grid will contribute to improving operation of the distribution network and reduction of technical and commercial losses. Through this engagement the Bank has the opportunity to engage with the Montenegrin Energy Regulatory Agency (ERA) to contribute towards the successful implementation of sector reforms. Moreover, the Bank has engaged with CEDIS to perform a thorough corporate governance review to provide recommendation how to bring the company to best international standards in compliance with international norms and codes.

The Client

Crnogorski elektrodistributivni sistem DOO Podgorica (CEDIS) is a distribution system operator, functionally and legally unbundled from Elektroprivreda Crne Gore AD Nikšii (EPCG) as of July 2016. CEDIS has over 1,300 employees and provides the power to approximately 360,000 consumers in Montenegro. The company owns 4,887 transformer stations and 19,110 km of the distribution network.
The company is established and 100 per cent owned by EPCG, the largest electricity utility company in Montenegro that generates approximately 99 per cent of the national electricity output. EPCG is 57.02 per cent owned by the Government of Montenegro and 41.75 per cent by A2A S.p.A, a municipal-owned Italian utility company.

EBRD Finance

EUR 16,000,000.00
The Bank intends to syndicate a portion of the loan to commercial banks ("Participants") as follows:

A-Loan for EBRD's own account in an amount of up to EUR 16,000,000; and

B-Loan for the account of commercial banks in an amount of up to EUR 16,000,000.

Project Cost

EUR 39,000,000.00
The loan proceeds of EUR 32,000,000.00 are provisioned to be allocated to CAPEX for the project,
while EUR 7,000,000.00, provided by CEDIS, are to cover project implementation costs, VAT, customs duties and fees.

Environmental and Social Summary

Categorised B (2014 ESP). The environmental and social risks associated with the upgrade of existing distribution networks and smart metering are site specific and of limited extent. The Project does not require land acquisition or works in sensitive areas. An Environmental and Social Due Diligence ("ESDD") was carried out by ESD, with a focus on social issues (quality of service, increase of tariffs), biodiversity (birds protection), work conditions and occupational health and safety. The Bank prepared with the Company a stakeholder engagement plan. An Environmental and Social Action Plan (ESAP) was prepared and agreed with the Company. The ESAP includes in particular (i) the development of a certified environmental and social management plan (ISO 14001 and OHSAS 18001), (ii) the integration of bird protection in the ISO14001 system, (iii) the implementation of a stakeholder engagement plan.
The project does not require a greenhouse gas assessment.
A Non Technical Summary is being prepared and will be disclosed when available.

Technical Cooperation

The EBRD in consultation with the Energy Community Secretariat prepared a Technical Cooperation support to the Montenegrin Energy Regulatory Agency (ERA) which focuses on building the capacity of the Regulator on following fronts: (i) assisting the Regulator during the transition period towards implementation of the market liberalisation process, (ii) providing training on the application of competition rules, (iii) providing practical support to enhance the Regulator's analytical and monitoring ability, with a particular emphasis on economic and financial analysis, and (iv)
supporting the Regulator to improve regulation of the distribution network by reviewing the price control process, network operation, and/or by preparing the transition to incentive regulation.

Company Contact

Magdalena Vukcevic
magdalena.vukcevic@cedis.me
0038220408400
http://www.cedis.me/

Business opportunities

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