The draft loan agreement between Montenegrin Transmission System (CGES) and the European Bank for Reconstruction and Development (EBRD), proposing a state guarantee of 28 million euros to finance the construction of the 400/110 kV Brezna substation, is affirmed not to constitute state aid. This determination, per paragraph 375 of the Guidelines on State Aid for Climate, Environmental Protection and Energy (2022/C 80/01), incorporated in Montenegro’s State Aid Rules, has been clarified by the Competition Protection Agency (AZZK), paving the way for finalizing the arrangement with the EBRD.
In compliance, the Montenegrin Government has legislated within the Budget Law for a guarantee provision of up to 30 million euros for CGES’s loan.
The Ministry of Energy and Mining (MEiR) formally approached the Competition Protection Agency in late April for a compliance assessment regarding the aforementioned loan agreement, specifically for funding the 400/110 kV Brezna substation.
The deadline for completing the substation is set for December 31, 2028.
Detailed costs outlined in Appendix 2 of the draft agreement include construction expenses totaling 25 million euros for the Brezna 400/110 kV substation, alongside consultancy fees amounting to 2.88 million euros for JIP support and consulting services, with an additional 120,000 euros earmarked for technical advisor consultancy costs to the lender. The total project cost amounts to 28 million euros (excluding taxes), as specified in the application.
The initial submission included Form 1 State Aid Notification, affirming that the measure does not fall under state aid as defined by Article 2 of the State Aid Control Act, focusing on the energy sector and the Montenegro Power Transmission Operator, CGES. The application highlights CGES as a large enterprise with 334 employees, an annual turnover of 108.36 million euros in 2023, and a total annual balance of 35.72 million euros during the same period. It underscores that CGES does not meet the criteria for being in financial difficulty under the State Aid Rules list. The guarantee of 28 million euros is specified for regional development purposes, ensuring no accumulation with other aids targeting identical justified costs.
The ministry’s initial submission under Saša Mujović’s leadership underscores CGES’s proactive approach in engaging the ministry to facilitate these activities, all aimed at securing the state guarantee, as outlined in Montenegro’s Budget Law for 2024. Ultimately, the issuance of this guarantee aims to facilitate the construction of the second phase of the Brezna substation, a critical project for enhancing energy infrastructure and promoting green transition goals in Montenegro.
