The Government has adopted the Information on the negotiation framework for concluding a guarantee agreement for a loan contract between the company Railway Transport of Montenegro (ŽPCG) and EUROFIMA, a specialized financial institution for financing the purchase and repair of rolling stock, in the amount of up to 6.5 million euros. The loan will be used for the investment overhaul of ŽPCG’s existing fleet.
The conclusion of the loan arrangement between EUROFIMA and ŽPCG, with the issuance of a state guarantee, represents a continuation of cooperation in the field of investment activities aimed at improving ŽPCG’s rolling stock and rail infrastructure, according to the government document.
It is stated that, in line with the Law on the Budget and the borrowing decision for this year, the issuance of a state guarantee is planned for ŽPCG’s loan of up to 6.5 million euros for the investment overhaul of its existing fleet.
The loan funds would be intended for the investment repair of three CAF electric multiple units and two series 461 electric locomotives. This would ensure that ŽPCG’s operational fleet meets the needs of public interest and timetables in both local and international traffic. It would also enable the introduction of new routes in line with infrastructure capacity, as well as the implementation of additional requests for special trains aimed at promoting and developing tourism in Montenegro, the document states.
The negotiation framework with EUROFIMA for the mentioned loan arrangement, with the issuance of a state guarantee, includes the loan agreement between ŽPCG and EUROFIMA, the equipment transfer agreement between ŽPCG and EUROFIMA, and the guarantee agreement between Montenegro and EUROFIMA.
The withdrawal of loan funds is planned in three tranches: two million euros on December 1 this year, 2.5 million euros on April 1 next year, and two million euros on December 1 next year, according to the government document.
Based on indicative information provided by the Ministry of Transport and ŽPCG, the planned loan repayment period is 12 years, with monthly repayment of principal and interest starting on January 1 next year.
Considering the proposed interest costs, ŽPCG initially suggested borrowing with a variable interest rate, which would consist of the six-month Euribor plus a fixed margin of 0.6 percentage points. Since the process of harmonizing conditions and finalizing the contractual documentation is still ongoing, the borrowing terms remain subject to changes and further adjustments during negotiations.
In addition to the interest rate, EUROFIMA also charges an administrative fee, which under the current indicative loan conditions amounts to approximately 2.823 percent and includes several components such as the base commission, capital fee, and funding procurement fee.
