State-owned power utility EPCG and the German Development Bank (KfW) have finalized a €40 million loan agreement to finance the installation of unit A8 at the Perucica hydropower plant. This funding is part of the third phase of the facility’s reconstruction and expansion project.
The loan, secured through a new financial instrument developed by the European Commission and KfW, is backed by the EFSD+ guarantee (European Fund for Sustainable Development Plus). It features a 15-year repayment period, including a five-year grace period.
The addition of unit A8 is a key component in EPCG’s efforts to green its production portfolio and support Montenegro’s energy sector decarbonization. The project aligns with modern environmental protection standards and aims to enhance competitiveness, reflecting EPCG’s commitment to sustainable energy.
EPCG CEO Ivan Bulatovic praised the agreement as a favorable arrangement, noting that it is the first loan of its kind backed not by a state guarantee but by the EFSD+ guarantee, highlighting EPCG’s credibility as an international partner.
Pablo Obrador, KfW’s Director for southeastern Europe and Turkey, emphasized that the agreement underscores the successful collaboration between EPCG and KfW over the past 20 years. This loan represents the final tranche of three loans provided by KfW for the modernization of HPP Perucica, bringing total investments in the facility to over €83 million.
The expansion will include the installation of unit A8, which has an installed capacity of 58.5 MW, increasing Perucica’s total nominal capacity from 307 MW to 365.5 MW. The existing intake system, machine hall, and 110kV switchyard are sufficient to support this final construction phase.
In addition to the loan, EPCG will receive technical support to aid its transition to a green, market-oriented company. An international tender for selecting contractors for the A8 unit’s manufacture, delivery, installation, and commissioning will be announced in October, with the unit’s commissioning scheduled for 2027. EPCG has already signed a network connection agreement with the electricity transmission system operator CGES.
