AFD grants a loan to Montenegro’s Transmission System Operator CGES to support grid modernization and energy transition

jacquetg@afd.fr

Published

29 Jul 2026

AFD grants a loan to Montenegro’s Transmission System Operator CGES to support grid modernization and energy transitionjacquetg@afd.frWed, 29 Jul, 2026 - 08:51 In the field July 29, 2026 1 Montenegro Agence Française de Développement (AFD) and Crnogorski elektroprenosni sistem (CGES), Montenegro’s electricity transmission system operator, signed today a €25 million sovereign-guaranteed loan to modernize the strategic substations of Perućica and Pljevlja 2 and support the country’s energy transition. The financing plan also includes a planned €8.5 million grant from the European Union Western Balkans Investment Framework (WBIF). The agreements were signed at the Ministry of Finance in the presence of Minister of Energy and Mining, Admir Šahmanović. The loan agreement was signed by Ivan Asanović, General Director of CGES, and Arnaud Dauphin, Director of AFD’s Western Balkans Office, while the Guarantee Agreement was signed by Minister of Finance, Novica Vuković and Arnaud Dauphin.This financing represents AFD’s first investment operation in Montenegro’s energy sector reflecting the shared commitment of France and Montenegro to accelerate the country’s energy transition and strengthen the resilience of its electricity grid.The operation builds on technical assistance provided since 2024 by RTE International (RTEi), the French transmission system operator. Through this peer-to-peer cooperation, RTEi has supported project preparation, helping enhance CGES’s technical capacities and align the modernization of Montenegro’s grid with European standards.The project will modernize two key substations that are essential to the country's electricity system. The upgrade of the Perućica substation will enable the integration of up to 350 MW of hydropower into the grid, while the rehabilitation of Pljevlja 2 will reinforce connections with the trans-Balkan network and support Montenegro’s gradual transition away from coal-based electricity generation.This investment marks the beginning of a long-term partnership between AFD and Montenegro, aiming at a more sustainable development for the country.” said Minister Vuković. “By modernizing critical electricity infrastructure, this project will strengthen grid resilience, support renewable energy integration, and advance alignment with European energy standards.”Admir Šahmanović, Minister of Energy and Mining, underlined that Montenegro has embarked on an irreversible investment cycle in the energy sector. “We are pleased to pursue this path together with strong European partners such as AFD, whose support is a strong vote of confidence in our vision. Projects like this lay the foundations for a safer, more secure and sustainable energy future for Montenegro,” said minister Šahmanović.Ivan Asanović, General Director of CGES, underlined the project’s strategic importance for Montenegro’s energy security, regional interconnections, and the resilience and reliability of the country’s electricity system. Arnaud Dauphin, Director of AFD’s Western Balkans Regional Office, noted that the operation reflects AFD’s broader commitment to supporting Montenegro’s EU accession path through financing, technical expertise, and long-term partnerships in key sectors such as energy.