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.
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.
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.
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
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
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)
+382 40 204-160
+382 40 214-255
EPCG AD Niksic / Montenegrin Electric Enterprise AD, Vuka Karadzica 2, Niksic, Montenegro
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
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Independent Project Accountability Mechanism (IPAM)
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