Project Description
In 2010, the Bank approved a corporate loan facility to EPCG of up to EUR 35,000,000 to address the high level of losses (up to 23% in 2009) and the low level of collections in the distribution network, as well as to improve energy efficiency and demand side management. As of 2013, the implementation has been ongoing in line with the plan and the achieved results have been very encouraging. As a result, EPCG expressed the intention to expand the scope of the smart-metering roll-out and extend the amount of the EBRD loan. Responding to the Company's request, an extension of the existing loan to the Company was approved in April 2013 by the EBRD Board in the amount of up to EUR 30,000,000. The loan extension will be used to expand the scope of the implementation and install additional 97,000 meters. These measures will support the on-going transition of the Company to an independent commercial entity, and will result in all household consumers in the country switching to smart meters.
Project Objectives
The Project is expected to generate the following outcomes:
- The introduction of modern power consumption meters ("smart" meters) and their relocation to public spaces will inhibit theft through meter tampering. Better information on customer consumption together with remote disconnection facilities will improve EPCG's ability to bill and collect from its customers, and help consumers to improve energy efficiency through better managing their consumption.
- The introduction of smart meters within the distribution network will allow EPCG accurately to identify losses, for example by highlighting areas with abnormal consumption (i.e. where there are unregistered consumers or where consumers are bypassing meters). They will also improve the quality of supply, reducing unplanned outages.
- It is anticipated that the Project (taking the effect of both the original loan and the loan extension) will reduce EPCG's commercial losses by approximately 90% and its bad debts by approximately 40%.
- Financially, the Project will generate attractive and quick returns for EPCG.
Transition Impact
ETI score: 100
The Project will achieve transition impact by:
- More widespread private ownership and support for the commercialisation of EPCG: the Project directly targets improvements in end use energy efficiency, losses and collections to improve EPCG's operational performance and cashflow; EPCG will benefit from the further modernisation of its network.
- Setting standards for business conduct: The Project is estimated to reduce EPCG's losses in its distribution network to 11% (i.e. close to the level of technical losses). It is also expected to increase ollections from 90% to 95%.
- Demonstration of new replicable behaviour and activities: Comparative experience suggests that more accurate metering also encourages greater energy efficiency, as consumers are
better informed about their energy use and are using this information to manage their consumption more efficiently.
Client Information
ELEKTROPRIVREDA CRNE GORE AD NIKSIC
Elektroprivreda Crne Gore AD Nikšic, the vertically integrated electricity company of Montenegro, owned 55% by the Government of Montenegro and 43.7% by A2A SpA, a
municipally owned Italian utility.
EBRD Finance Summary
EUR 64,000,000.00
A corporate loan to EPC (the original loan of EUR 35,000,000 and the extension loan of EUR 30,000,000).
Total Project Cost
EUR 79,000,000.00
Additionality
Additionality on this Project stems from the terms (longer loan tenor than is generally available in Montenegro), EBRD attributes (policy dialogue and active support of sector reform), and conditionalities (implementation of ESAP, procurement in accordance with the EBRD's PP&R).
Environmental and Social Summary
The Project has been categorised B under EBRD's Environmental and Social Policy (2008), requiring an Environmental and Social Due Diligence ("ESDD"). The ESDD was undertaken by an international independent consultant consisted of an Environmental Audit of the existing assets and an Environmental Analysis of the proposed investment programme.
The ESSD has confirmed that the EBRD-funded project will not give rise to material environmental or social impacts and will comply with EBRD's Performance Requirements. Nevertheless, the ESDD identified, among other things, needs to strengthen further EPCG's institutional capacity in terms of its environmental, health and safety ("EHS") management and to develop an investment plan to improve the environmental performance of EPCG's assets. This will be addressed through the implementation of an Environmental and Social Action Plan ("ESAP"). The ESAP will include, amongst other requirements, the need for a formalized EHS management system in line with best international practice as well as development of a stakeholder engagement programme.
EBRD will monitor the project to assess the status of implementation of the ESAP.
Technical Cooperation and Grant Financing
EBRD's technical, environmental and procurement due diligence has been supported by an external consultant under a EUR 95,000 contract funded by the Spanish Government.
Company Contact Information
Mr. Miro Vracar, dipl.ecc (CFO)
miro.vracar@epcg.com
+382 40 204-160
+382 40 214-255
www.epcg.com
EPCG AD Niksic / Montenegrin Electric Enterprise AD,
Vuka Karadzica 2,
Niksic, Montenegro
Implementation summary
The Project introduced the first smart metering in Montenegro in 2010 with a €44 million loan to EPCG (the national energy company, operating in the sectors of electricity generation and supply) to procure and install 175,000 remotely operated meters (smart meters) for domestic consumers. The Bank's financing support was extended in 2013 with another €37 million loan in 2013 for the additional installation of 97,000 smart meters. Furthermore, in 2017 the Bank provided a €39 million loan to the unbundled distribution company CEDIS to support the third phase of the smart metering project. The outcome of these initiatives was the installation of 339,000 smart meters, reaching a coverage of 82% of the consumers, significantly above the EU average of 43%. The reduction in distribution losses from 23% in 2009 to 13% in 2020 has so far resulted in savings of 800 GWh, or more than €60 million in the respective years' prices. From environmental perspective, this translated in CO2 savings in excess of 86,000 tonnes per year i the equivalent of about 19,000 cars taken out of the roads.
The positive transition impact is also reflected in achieving the targeted increase in collection rate of above 95%, the reduction of unpaid consumers by 60% and the implementation of upgraded environmental standards. The anticipated privatisation of the majority stake in the company has not been achieved as a result of changed priorities of the Government of Montenegro.
PSD last updated
30 Mar 2022
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.
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Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com
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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 the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social 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 additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from 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 activities of the Bank 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 Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.
OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both 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. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. 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 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 following its entry into force on 1 January 2020. 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 (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).
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 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; how to submit a Request for review; or contact IPAM via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.
