The Montenegrin government has ranked first the bid of Chinese company CCCC worth EUR 810mn for the design and construction of the priority 44-km Smokovac-Matesevo section on the future Bar-Boljare motorway, transport minister Ivan Brajovic said on July 4.

“We will continue talks with them in order to identify the final elements on the contracts for the design and construction and for the project financing,” Brajovic told a news conference following a cabinet meeting.

The bid was selected as the most favourable as it will be supported by a 20-year loan extended by Chinese Eximbank, which will have a five-year grace period and a 2% fixed interest. Eximbank is offering to lend 85% of the project financing, or some EUR 689mn, which means the Montenegrin government will have to provide the remaining EUR 121mn.

Since the project will be implemented under a special intergovernmental agreement between Montenegro and China, the government will seek a parliament approval on the decision for awarding the contract – in order to raise the transparency around Montenegro’s biggest infrastructure project.

The government is preparing to begin talks with the Chinese partners already next week, Brajovic said. The investor is ready to build the section in 48 months.

According to Brajovic, works could begin by the end of 2013.

REMAINING TWO OFFERS

Montenegro received two other bids for the construction of the Bar-Boljare section. They came from the Turkish consortium Dogus-Gulsan and from a consortium of US firm Bechtel and Turkey's Enka.

Brajovic said that Dogus-Gulsan offered to build the section for EUR 770mn but their way of financing was specific as it envisages the creation of a special purpose vehicle firm to be owned by the government but managed by the Turkish investors. However, in order to secure the financing this company should have assets worth twice the offer price for the project.

Furthermore, the consortium said it would need ten months to prepare for the project start. It, however, is also able to build the section in 48 months.

Bechtel-Enka, on the other hand, was ready for a quick start but it wanted to make only half of the motorway without the tunnels and bridges. They gave separate prices for two subsections, which when summed up exceeds EUR 1bn.

LARGEST EVER INFRASTRUCTURE PROJECT

The 169-km Bar-Boljare project was initialled six years ago and is expected to be the main south-north transport link in Montenegro. The motorway will connect Montenegro's biggest Adriatic port of Bar with the border with Serbia. Back in February 2007 the transport ministry and the World Bank signed a contract to cooperate on the project, estimated to cost EUR 2bn.

The Sokovac-Matesevo section alone has 24 kilometres of tunnels and bridges, illustrating how complicated road building is in mainly mountainous Montenegro and explaining the country’s need of a safer and more reliable transport network. Only last month the latest horrific traffic accident took place on the narrow roads from the Serbian border to the Adriatic coast with nearly 20 Romanian tourists finding their death in a bus crash.

A Croatian consortium was selected in 2009 to implement the project but the deal was later scrapped as the tender winner failed to provide the necessary bank guarantee. The section’s cost was then reportedly estimated at EUR 910mn.  The second-ranked Greek-Israeli consortium Aktor/HCH was also unable to secure bank guarantees. The Greek-Israeli tie-up estimated the construction of the section at EUR 1.2bn, though its offer also included the construction of the Djurman-Virpazar section.

Montenegro plans another major transport link as well - the Adriatic-Ionian motorway, which will be part of a bigger corridor that stretch along the entire eastern shore of Adriatic and Ionian seas – from Italy’s Trieste via Slovenia, Croatia, Bosnia, Montenegro, Albania and ending in Greece at Kalamata.

Croatia, Montenegro and Albania are seeking to list the Adriatic-Ionian motorway in the system of the Pan-European corridors in order to secure foreign funding since they consider this project of national importance.