The European Bank for Reconstruction and Development (EBRD) said it intends to lend a total of €25mn to Montenegro to buy passenger trains and railway maintenance equipment.

Of the total sum, €14mn would be provided as sovereign loan to Passenger Trains Company of Montenegro that will be guaranteed by the Montenegrin government. The sum will be used for the purchase of two new electric passenger trains to replace the existing 50-year-old ones that are still in operation on the rail network.

“The project will support the development of the Montenegrin railway sector through the modernisation of the passenger rail fleet. With the delivery of new, modern and safer passenger trains, the Project will contribute to enhancement of the quality of rail passenger services, lifespan of the railway fleet and, ultimately, to the growth of rail passenger transportation in the country,” the EBRD said in the project description.

The remaining €11mn would be provided as a sovereign loan, also guaranteed by the Montenegrin state, to the Railways Infrastructure Company of Montenegro. The funds will be used to finance the purchase of machinery for the maintenance of civil engineering and electrical railway infrastructure to ensure appropriate railway safety standards.

“The project will support the development of the Montenegrin railway infrastructure sector through financing of key maintenance equipment required for proper functioning of the railway infrastructure,” the EBRD noted.

It added that currently the company has ageing maintenance equipment and vehicles acquired in the mid-1970s that are fully amortised and obsolete.