The Montenegrin Government has taken significant steps to bolster the financial stability and operational capacity of the state-owned utility, EPCG. The approved financing package integrates investments aimed at modernizing hydropower facilities with a strategic approach to restructuring existing debts. This dual initiative is crucial for enhancing the country’s energy infrastructure and ensuring sustainable electricity production.
A key component of this financing strategy is a 40 million euros credit line from KfW, designated for the ongoing upgrades at the Perućica hydropower plant. This phase of modernization will include the installation of a new generating unit (A8), alongside refurbishments to water channels and turbine modernization. These enhancements are anticipated to significantly improve operational efficiency and prolong the plant’s lifespan, thereby contributing to a more robust energy supply.
The loan agreement is structured over a period of ten and a half years, featuring a five-year grace period. The interest rate will be determined based on a fixed margin plus the applicable swap rate. This financial arrangement aligns with broader governmental objectives aimed at strengthening generation capacity and securing long-term reliability in electricity output. Additionally, it is expected to enhance system flexibility, which is essential for integrating renewable energy sources into Montenegro’s national grid.
In conjunction with this investment, the government has also sanctioned an additional 30 million euros financing arrangement. This funding is intended to address short-term obligations that EPCG accrued in 2025, primarily due to electricity imports necessitated by outages at the Pljevlja thermal power plant and reduced hydropower generation during dry spells.
Officials have clarified that this second financing initiative does not equate to new net debt. Instead, it represents a restructuring of existing financial commitments, maintaining EPCG’s overall financial exposure while improving its liquidity position in the short term. This careful management of finances underscores Montenegro’s commitment to stabilizing its energy sector while pursuing modernization efforts that align with contemporary energy demands.
