Montenegro

Montenegro has significant potential for renewable energy, above all biomass and water. Hydropower today already generates up to 70 % of the electricity supply. However, the current capacity is not sufficient to meet the growing demand for power. As a result, Montenegro has to import electricity at high prices. The government wants to expand the electricity supply. To boost energy efficiency, it passed the Energy Efficiency Act in 2010. KfW is providing support for this process on behalf of the German Federal Government.

The Development Bank, for example, promotes the energy-saving rehabilitation of public buildings. Under the Energy Efficiency Programme, Montenegro will be able to modernise an estimated 24 of 233 schools and day care centres to lower energy consumption by 2016. KfW invested 14.5 million EUR in this project. The German Federal Government will contribute another 20 million EUR for public buildings to this successful programme starting in 2015.

KfW is also funding modernisation of two hydropower plants in Perucica (307 MW nominal capacity) and Piva (342 MW) that play a key role in Montenegro's energy supply. The machines, control and measuring devices and safety equipment are obsolete in both plants. The KfW investments aim to extend the service life of the power plants and ensure their capacity.

Project information - Energy efficiency

After the Balkan War, tourism in Montenegro plummeted. The Adriatic Coast with its ancient cities and nature reserves no longer attracted a sufficient number of tourists to fill hotels and guest houses. Many hotels were run-down and, in summer, guests complained about not having enough water. In some places, the smell of sewage was extremely unpleasant as a result of the ailing sewage system. A functioning water supply and sewage disposal system on Montenegro's coast is a basic requirement for the country's sustainable development. Since 2001, KfW Development Bank has therefore been providing support to improve the water supply in the coastal communities of Herceg Novi, Kotor, Tivat, Bar and Ulcinj as well as in Cetinje. Montenegro has reduced its water losses, increased the security of supply and improved the water quality through these projects. Since 2008, KfW has also invested in improving the sewage system. KfW Development Bank funds the construction of new sewage treatment plants and sewer systems. The funds from Germany are also used to remediate the existing sewer system.

Many small enterprises are not eligible for loans from the privately organised banks in Montenegro because they operate in the informal sector, do not have financial data or cannot provide collateral. If a tailor needs new material or a baker wants a new kneading machine, they are both dependent on micro-finance institutions. To support these customers with the necessary financial resources, KfW works with the micro-finance institution "Alter Modus". For 15 years, this institution has been supplying micro and small enterprises – a total of more than 9,000 customers per year – with credit and loans.

Because micro-finance institutions in Montenegro are not allowed to engage in the deposit business, they rely on short- and long-term refinancing options. KfW makes long-term refinancing possible for its partner institution, Alter Modus. The Development Bank thus plays a role in giving many micro-entrepreneurs access to financial services.