EU funded study for the improvement of the digital infrastructure in Montenegro
The development of Digital Infrastructure in Western Balkan beneficiaries constitutes a Flagship for European Union’s Economic and Investment Plan for the Western Balkans. The European Union, through the Western Balkans Investment Framework (WBIF) in cooperation with the European Investment Bank (EIB), funds the project to investigate the feasibility of the improvement and expansion of broadband infrastructure in Montenegro with €550,000. The results of the study for the effective deployment of Next Generation Networks in Montenegro were presented during the closing meeting held remotely on Wednesday 19 January 2022.
As part of the project, which began in July 2020, an assessment of the existing situation in Montenegro and the plans of the telecom operators to deploy infrastructure in the next three years were investigated. The settlements in the country have been classified into white, grey and black zones based on the number of operators (none, one or at least two operators respectively) that currently or in the next three years will provide speeds over 30Mb/s. The majority of settlements have been found to be in white zones, which are the most challenging to invest in terms of costs and benefits.
A technoeconomic model was developed allowing the estimation of the cost of network deployment. Legal, regulatory and organizational framework in Montenegro was also investigated and recommendations were made for its improvement in order to facilitate the deployment of broadband networks throughout the country. A financial and economic Cost Benefit Analysis was prepared and procurement plan was proposed.
The scenario selected from the Government concerned a broadband network that will offer Very High Capacity (VHC) internet services to the white areas and to the grey areas which have at least one facility that is characterized as socio-economic driver (health, educational or public administration institution).
The planned investment value is estimated to €56 million while the operating expenses are estimated to €44.5 million during 20 years of operation. While the financial Internal rate of return (IRR) is negative, the economic IRR is estimated to almost 7% rendering the investment socioeconomically feasible. This will enable mobilization of grants provided by the European Union for up to 30% of the investment budget as foreseen in the Economic and Investment Plan for Western Balkans. The European Bank for Reconstruction and Development (EBRD) is the lead International Financing Institution and potential lender of the project providing up to 70% of the remaining budget for its implementation.
The Government of Montenegro will for this purpose apply in February 2022 to WBIF for further grants for the preparation of the next stages of the project including the necessary Tender Documents for works and supervision of works, for which it has the sustained support of EBRD.
Yngve Engstroem, Head of Cooperation from the EU Delegation to Montenegro highlights: “Investing in a digital future is one of the ambitious objectives of the EU’s Economic Investment Plan. The EU stands ready to support Montenegro’s digital connectivity and increase the access to digital infrastructures for citizens, business and education institutions. The expansion of the country broadband infrastructures is expected to improve digitalisation opportunities for many and to boost the economy during a time when everyone is increasingly relying on remote connections, smart working and delivery of efficient online public services. We welcome the conclusion of this first study and we are looking forward to the future project in this area. We encourage the Government of Montenegro to do the necessary steps for the realisation of the project by improving the regulatory framework, institutional set up and resources planning within the coming year."
Selma Demirović, EBRD Associate Banker, Podgorica: "It is a great pleasure to successfully complete the first WBIF technical assistance project in digital sector in Montenegro in an excellent cooperation with the Government of Montenegro, the project team and all participating stakeholders. For EBRD, the rollout and upgrade of broadband infrastructure is considered to be a key enabler of transition progress across all sectors in its countries of operations. High-speed internet will enhance connectivity and integration, enable firms to be more resilient and competitive, support green transition and contribute to the improvement of the governance and transparency, especially in the public sector. The broadband coverage of rural areas with socio-economic impact will advance inclusion for disadvantaged groups as they will have access to digital skills-building opportunities and new digital solutions in education, health and public administration. Based on project results and together with the EU, the Bank is ready to support necessary investments in regional broadband infrastructure in order for Montenegro to achieve sustainable economic growth with balanced regional development and diversified economy."
Marijeta Barjaktarović Lanzardi, Acting Director General in the Directorate for Digital Economy and Technological Development of the Ministry of Economic Development of Montenegro: "The development of digital infrastructure in terms of improving the coverage of the territory with fixed broadband infrastructure is one of the priorities in the work of the Ministry. In that sense, at the end of last year, the Government of Montenegro candidated again the project "Development of infrastructure for broadband Internet access", which is included in the Single project pipeline list, thus demonstrating the readiness to continue activities on this project. We truly believe that development of broadband will reduce the digital divide and provide a fixed broadband connection for educational institutions, hospitals, public institutions, municipalities and households, with special focus on rural areas, increase business opportunities in all economic sectors and enable inclusion of all participants and communities through access to information and communication technology.”
More about the WBIF activities in Montenegro
More about the WBIF project "Broadband Infrastructure Development in Montenegro"
Project fiche here