Representatives from Elektroprivreda Crne Gore (EPCG) and the German Development Bank (KfW) have signed a €40 million loan agreement to finance the installation of an eighth generator at the Perućica Hydroelectric Plant in Montenegro. This initiative forms part of the third phase of the ongoing reconstruction and expansion project at the country’s oldest large power plant.
The financing has been secured through a new instrument developed from the collaboration between the European Commission and KfW, known as the EFSD+ guarantee (European Fund for Sustainable Development Plus). The loan comes with a 15-year repayment period and a five-year grace period.
The addition of the eighth generator is a key component in EPCG’s strategy to make its production portfolio more environmentally friendly, supporting Montenegro’s broader efforts to decarbonize its energy sector. EPCG’s CEO, Ivan Bulatović, expressed his satisfaction with the agreement, highlighting its significance in advancing the company’s green transformation goals.
“We are pleased that by signing this agreement, we have made a serious contribution to the development of this facility. It is a very favourable arrangement, and the first of its kind that has not been issued with a state guarantee but with the EFSD+ guarantee, which speaks volumes about the fact that the international community perceives us as a credible partner. This is important in a broader sense, as it confirms our efforts to move towards decarbonisation,” said Bulatović.
Pablo Obrador, KfW Director for Southeast Europe and Turkey, underscored the success of the longstanding partnership between EPCG and KfW.
“This is the last of three loans that the KfW has provided for the modernisation of Perućica, and the investments within the framework of joint arrangements for this plant, including this contract, exceed €83 million, which indicates a serious level of cooperation, especially considering the progress in terms of the EFSD+ guarantees,” Obrador emphasised.
Montenegro’s Minister of Energy, Prof. Dr. Saša Mujović, emphasized the importance of strategic vision and planning in energy projects, noting that facilities like Perućica and Piva were built by a strong state with clear development goals.
“Energy doesn’t allow for improvisation, and plants like Perućica and Piva could only have been built by a strong state with clear developmental goals. Our generation has the honour of continuing the work of our predecessors, modernising and improving their efforts. The modernisation of Perućica is especially important in the context of the need for a stable energy source, and the full significance of this project will become apparent after the waters of the Zeta River are diverted into the reservoirs,” Mujović stated.
The planned installation of the new 58.5 MW A8 generator will boost the total installed capacity of the Perućica Hydroelectric Plant from 307 MW to 365.5 MW. The new generator will be connected to the third pressure pipeline, which is designed to handle a full flow of 3 x 12.75 m³/s, alongside existing generators A6 and A7.
Beyond financial backing, EPCG will receive technical support as it transforms into a greener, market-oriented company. An international tender for the contractor responsible for the production, delivery, installation, and commissioning of the A8 generator will be announced in October, with commissioning planned for 2027. In April, EPCG signed a contract with CGES for connection to the transmission system, marking another milestone in this major infrastructure upgrade.
