31065 - Podgorica Roads

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Summary of Proposed Investment

Project Number

31065

Company Name

CITY OF PODGORICA

Date SPI Disclosed

Mar 29, 2012

Country

Montenegro

Industry

Infrastructure

Projected Board Date

Apr 30, 2012

Status

Active

Sector

Highway Operations (Includes Toll Roads)

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : May 15, 2012
Signed : Jun 8, 2012
Invested : Sep 28, 2012

Project Description

The proposed IFC investment would help the City of Podgorica finance the construction of the first phase of the South-Western Bypass from the junction with the Podgorica-Cetinje Highway to the junction with the Podgorica- Petrovac Highway. A portion of the IFC loan would be used to re-finance existing debt that the City contracted in the midst of the 2009 crisis for other capital expenditures.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	33.05
Equity

Development Impact

Given the central location of Podgorica along the main road axes connecting different cities within Montenegro and providing access to neighboring countries, a targeted investment in the roads sector is expected to improve national and international connectivity, reduce travel times and vehicle operating costs and contribute significantly to local economic growth. By keeping transit traffic out of the city, the Project is also expected to help reduce air and noise pollution and road crashes along the existing network. The first tranche of IFC investment will allow the City to refinance expensive existing debt, thus reducing the cost of financing its capex and improving its debt servicing capacity.

The Municipality''s ability to raise long-term financing to complement its limited budget resources has been hampered by the ongoing financial crisis. IFC will play a countercyclical role providing long-term financing for essential public infrastructure at a time when other financiers are cutting their lending in the region. In parallel with the proposed project, IFC will also capitalize on its existing relationship with the City to mobilize PPIAF-funded technical assistance aiming at improving the City''s road management practices.

For the construction of a 3,6 km section of the South West Bypass only minor economic resettlement is expected: there will be no physical resettlement as the alignment of the South West Bypass section is positioned within the existing public corridor already reserved for infrastructure development as per Podgorica’s Urban Plan. Other aspects of the Project related to the construction of section 1 of the South West Bypass that can have potential adverse environmental and social impacts are few in number, site-specific, largely reversible and readily addressed through mitigation measures. This is therefore an environmental category B project according to IFC’s Environmental and Social Performance Standards.

Contacts

For Inquiries About the Project, Contact

Mr. Pavle RadulovicAdvisor to the MayorNjegoseva 13. 81000 Podgorica, Montenegrotel/fax: + 382 81 665 077; 665 042website: http://www.podgorica.me

For Inquiries and Comments About IFC, Contact

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Local Access of Project Documentation

http://www.podgorica.me

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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