€15 million to improve track safety and efficiency

London, United Kingdom – TThe EBRD is lending €15 million to the Montenegrin national rail infrastructure company to help implement an emergency rehabilitation programme and to improve the efficiency of the country’s rail system. The railway is a key regional link, providing not only the shortest route from Serbia to the Adriatic Sea, but is also the cheapest overland route linking Albania with the rest of the European network.

The funds will be used to improve the safety standards of the tracks on the section between Krusevo and Mojkovac, part of the main rail network between the Serbian border and the Montenegrin coastal town Bar. The rehabilitation will include four major bridges, several viaducts and four tunnels.

The loan programme carries a sovereign guarantee from the Montenegrin government. It is being disbursed in three loans over three years so that the country’s annual sovereign guarantee limits are not exceeded. The first loan of €6 million will become effective in 2007, the second of €5 million will become effective in 2008 and the third loan of €4 million will be effective in 2009.

The EBRD financing to the national rail holding company of Montenegro, ZCG Holding will be on-lent to ZCG Infrastruktura, the fully-owned subsidiary of ZCG Holding, in charge of rail infrastructure management.

Rehabilitation of the rail infrastructure is an investment priority for the country because of serious safety concerns. Carrying out these improvements is a particularly demanding undertaking given the very challenging physical environment: the main railway line, which connects Montenegro with Trans-European Transport Corridor X, part of the European rail and road network, traverses mountainous terrain, includes 120 bridges and viaducts and 121 tunnels and covers a total distance of 52 km.

Marek Lorinc, Head of the EBRD office in Podgorica, said the project will help implement a major programme of rail sector restructuring and support essential improvement of track safety. With this programme the Bank is supporting the modernisation of the Montenegrin railway system, which opens up good prospects for the integration of Montenegrin railways into the overall European railway network, Mr Lorinc said.

Additional consultancy grant funding support for this programme is expected to be provided by the Western Balkan Fund*. The grant funds will be used to assist with the development and implementation of an infrastructure asset management programme.

The modernisation and expansion of the railway sector in Montenegro is expected to continue in 2008 with the support of funding from the European Investment Bank, both for the infrastructure and railway operations