Project Description

The EBRD considers providing a sovereign-guaranteed loan of up to €18 million to Crnogorski Elektroprenosni Sistem AD ("CGES", or "the Company"). The proceeds of the EBRD loan will be used to finance the development a new overhead transmission line (OHL) between Vilusi and Herceg Novi with associated substations. This will include: 1) Construction of a new 110 kV OHL Herceg Novi i Vilusi of ca. 38.5 km, 2) Extension of a 110 kV switchyard in Sub Station (SS) Herceg Novi by one 110 kV OHL bay, and 3) Refurbishment of SS Vilusi (including the extension to accommodate the proposed new 110kV OHL).

Project Objectives

The main objective of the project is to increase the high voltage transmission network capacity, which is pivotal to the integration of a considerable array of Renewable Energy (RE) power plants with substations Vilusi and Herceg Novi, presently in the preliminary stages of development by private entities. Additionally, the project will significantly contribute to enhancing the stability, safety and security of power supply and at the same time reducing energy losses.

Transition Impact

ETI score: 65
The Project targets the "Resilient" and "Green" Transition Impact qualities, by allowing the integration of new large-scale renewable energy power plants, by increasing safety and security of supply and by reducing the energy losses.

Client Information

CRNOGORSKI ELEKTROPRENOSNI SISTEM AD (CGES)

CGES is the Montenegrin transmission system operator that owns and operates substations and transmission lines at 400kV, 220kV, and 110kV voltage level. It has a transmission network that consists of 59 lines that are about 1,512 km long. Total transformation capacity comprises 4,166 MVA (with a total of 55 transformer units). The interconnectivity with neighbouring electric power systems includes Serbia, Kosovo, Bosnia-Herzegovina, Albania, and Italy (via the undersea cable).

EBRD Finance Summary

EUR 13,000,000.00

EUR 13 million

Total Project Cost

EUR 13,000,000.00

EUR 18 million

Additionality

The Bank is additional due to its ability to offer tenor and funding amount that are currently not available to the Borrower on the market under reasonable terms. The EBRD is also additional due to (i) setting high E&S standards and (ii) application of the best international procurement standards in line with the EBRD PP&Rs.

Environmental and Social Summary

Categorised A (ESP 2019). The construction and operation of a high voltage line is partly in an area which is a candidate Emerald site, therefore may be associated with potentially significant Environmental and Social ("E&S") impacts and requires a full Environmental and Social Impact Assessment ("ESIA") in line with the EBRD Environmental and Social Policy ("ESP") as well as National and EU legislation. The Project has undergone a comprehensive ESIA preparation process, including several public consultations. The ESIA package was reviewed by an independent consultant and was updated as a result to meet international standards and ensure full compliance with EBRD PRs during project's implementation. The ESIA package, inclusive of Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP), Resettlement Framework (RF) and Appropriate Assessment (AA) in line with the principles of the EU Habitat Directive have been disclosed (including ESAP) on the Bank and Client's website in July 2024 for a 120-day consultation period in line with the Bank's Access to Information Policy, prior to Board considerations.
The Feasibility Study was initiated by CGES in 2015. The initial corridor has been subject to several rerouting following extensive consultation with the municipalities of Vilusi and Herceg Novi, the environmental authorities and the neighbouring communities. The final route minimizes the impact of the project on the Candidate Emerald site Orjen, as demonstrated by the Appropriate Assessment carried out by a third-party, as well as on the affected population, and received endorsements from various local and competent Authorities including the Agency for protection and development of Orjen itself. The project will undergo a national EIA process when the detailed design is completed. Relevant permits will be issued prior to construction and operation as applicable.
CGES is an existing client to EBRD and is successfully implementing the previous ESAP under a previous exposure. Company has required E&S procedures in place, including ISO-certified Environmental and Health & Safety Management systems. Such systems will be cascaded to the project. Management plans will be developed by the Contractor and cascaded as appropriate to sub-contractors. CGES has comprehensive labour policy and procedures in place, including worker grievance mechanism and Code of Conduct for suppliers. Health and Safety Management plans will be prepared to address both occupational and community risks, including traffic, noise, exposure to electromagnetic field, and emergency response. Company will further review risks of Gender-based Violence and Harassment (GBVH) arising from project construction and influx of workers. CGES will be required to develop a robust monitoring framework of the management plans, including relevant trainings, to ensure appropriate cascading of the procedures to the workforce and overall compliance with EBRD PR2 and PR4. Any worker accommodation needed for the project will comply with the IFC-EBRD worker accommodation standards (2008).
The project will have limited impacts on physical environment, and a limited amount of non-hazardous waste is anticipated during construction. Specific management plans for dust, noise and waste will be prepared by the Contractor. Erosion control and site restoration measures will be developed and implemented during construction, and closely monitored by the Client.
Based on the Geodetic Expropriation Studies for the route developed by CGES, the construction of towers will necessitate the acquisition of 190 land plots, 61% of which are privately owned. These plots are predominantly located in uninhabited or sparsely populated areas and are primarily classified as forest or barren land. The Project will only have marginal impacts on these numerous plots (none of the private plots will be affected more than 10% of the entire plot area). There are no residential or commercial structures on these plots, so no physical displacement is required. The local population in some of the areas along the route engages only in small-scale subsistence farming, animal husbandry and beekeeping. The Project will impact a take-off site for paragliding in Herceg-Novi, and arrangements will need to be made to set-up an alternative location which has already been identified by the non-profit paragliding club managing the take-off site. A Land Acquisition and Resettlement framework has been developed part of the ESIA process to ensure adequate consultation and compensations of the affected persons. CGES will be required to develop and implement the corresponding plan.
The Park of nature Orjen has been avoided by the alignment of the route. However, the project area intersects the Candidate Emerald site, which is also an Important Plant Area (IPA) and Important Bird Area (IBA). Extensive plant, mammals and retiles surveys according to Good International Practices have demonstrated that the project will only have a limited impact on these habitats and associated priority conservation species, and Appropriate Assessment screening of the project confirmed that the integrity of the site will not be affected. A combination of desk studies and vantage points observations have confirmed that several Bird Priority Biodiversity Features (PBF) are triggered by the Project, but not impacted. The observations already undertaken in Spring and early summer will be supplemented by autumn surveys, on a precautionary basis, prior to board considerations. Habitat clearance and construction will be undertaken outside of breeding season, and mitigations measures including insulators and divertors will be added to the design of the power line wherever bird activity needs it. The project will occur very limited permanent loss of three Critical Habitat (CH) due to the footprint of the towers, pseudo steppe with Thero-Brachypodietea, endemic black pines and the Candidate site itself, as well as two PBF habitats: Ilyrian Fabus Sylvatica and Ilyrian Oak-Hornbeam Forests. Both habitats are already degraded on the route of the transmission line due to agricultural pressure, a Biodiversity Management plan will be developed with the support of relevant third-party experts and include replantation activities of the habitats and appropriate support for conservation activities of the Emerald site from CGES, ensuring CH Net Gain and PDF Not Net Loss as per EBRD PR6. Implementation of avifauna monitoring program for operation phase, will inform the development of further mitigation, and offsets, if necessary, to ensure EBRD PR6 No Net Loss requirement should any bird PBF be affected by the project.
Although no cultural heritage item is anticipated on the final route, a chance finds procedure will be developed by the Contractor on a precautionary basis. Any finds are expected to be avoidable or managed in accordance with national legislation, EBRD PR8 and GIP.
The final route of the Project has not been associated with negative comments or objections and no issues have been raised to date. Additional ESIA disclosure activities to be carried out in the open House format in strategic locations on the route in October 2024, and will include inter alia further engagement with relevant experts on the section of the route within the candidate Emerald site.
The detailed summary of the consultation meetings conducted so far, as well as upcoming engagement activities, project information disclosure, grievance mechanism and contact points are provided in the SEP developed for the project. All comments and feedback received from the stakeholders regarding the Project ESIA will be summarised and presented in the Public Consultation Report (PCR). These may lead to ESIA package update prior to board considerations.
A comprehensive Environmental and Social Action Plan ("ESAP") for the Project has been developed and agreed with the Client to ensure that the Project is structured to meet EBRD PRs. Lender's Environmental and Social advisor (LESA) will be hired to oversee Project delivery in line with the Bank's requirements, as well as agreed ESAP and ESMP. The Bank will closely monitor implementation of the Project through E&S reporting from Client and LESA, monitoring visits to the Project, if necessary.

Technical Cooperation and Grant Financing

TC1: Feasibility Study, ESIA and Preliminary Design for both SS Brezna and OHL Vilusi-Herceg Novi was completed in 2018. Update of Environmental and Social Impact Assessment and Preliminary Design of SS Brezna and OHL Vilusi-Herceg Novi, completed in December 2022.
TC2: Environmental and Social Impact Assessment - gap analysis
TC3: Biodiversity Study & Biodiversity Action Plan (BAP)
TC4: Preparation of a Land Acquisition and Resettlement Framework
TC5: ESD monitoring (post-signing)

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.