Business Environment Macroeconomic Outlook Capital Market Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up...
Privatization and Investments Agreement Achieved with SOCAR to Provide Encouragement for the Development of Tourism in Montenegro The Government of Montenegro and the State Oil Company of Azerbaijan (SOCAR) signed an agreement on a long-term lease for the Orijen Battalion barracks in Kumbor. The site will be rebuilt into a tourist resort. The document was signed in Podgorica by Gafar Gurbanov (SOCAR) and by the Minister of Sustainable Development and Tourism, Predrag Sekulic. The Azerbaijani group is committed to invest at least €52 million during the first four years of the lease, or €258 million during the first eight years. It will also pay a fixed rent of €1 per square meter, in advance, for 45 years of the lease, along with a variable rent of 5% of profits.
Turkey's Toscelik to Invest €35 Million in Montenegro's Steel Mill Turkey's Toscelik, part of Tosyali Holding, will invest €35 million in Montenegro's steel mill and will increase its number of workers along with its annual output. At the official takeover on 12 June the Tosyali President, Fuat Tosyali, said that his plan for the steel mill was to turn it into a regional leader in the production of steel and to take advantage of Montenegro's geographical position to start delivering products within the region. Toscelik bought the Niksic-based steel mill after four previous auctions had failed. He paid €15 million which was half of what was originally asked for in January.
EBRD Finances the Construction of a Cable Car from Kotor to Cetinje The European Bank for Reconstruction and Development (EBRD) is ready to support the construction of a cable car from Kotor to Cetinje. It has approved a loan of €150,000 for technical support; to provide an audit and to update the existing feasibility study. The royal capital’s ambition is to launch a bid for tenders by the end of the year in order to start the implementation of the project as soon as possible. The cable car will start in Cetinje and will pass through Lovćen and finish in Kotor. It will be 15 km long with four stops. The first will be in Cetinje, near the summer stage, the second will be at Ivanova Korita, the third will be at Kuk and the fourth will be in Kotor.
Investors from Slovenia Show Interest in Lipska Cave Slovenian investors have shown interest in the famous Lipska Cave (Lipska Pecina) in Cetinje. The investment group says that it is interested in developing the touristic value of the cave, and also nearby Cetinje, through direct investment and marketing activities. Lipska Cave, one of the largest in all of the former Yugoslavia was once a touristic gem of the region. According to the valorization model for Lipska Cave that was proposed to the government, in terms of tourism purposes, it would offer a new product which is always very valuable in the tourism market.
Government to Provide €36 Million for a Plan to Restructure Montenegro Airlines The Montenegrin government is set to pump €36 million into its national carrier in order to carry out a restructuring plan. The government has also ordered the country’s two international airports, Podgorica and Tivat, to write off Montenegro Airlines’ debt which totals €9.7 million. In return, the state owned airports will be given a certain amount of shares in the national carrier. The Montenegrin carrier already receives €400,000 from the state budget on a monthly basis. Montenegro Airlines, which keeps most of its business operations as a closely guarded secret, was forced to suspend flights to Priština and Skopje due to unpaid fees last year. The Montenegrin government has already written off over €3 million of the carrier’s debt and issued state guarantees for a €9.6 million loan in 2011. Recently, the carrier has been lobbying for an open sky policy across the former Yugoslavia; this would allow it to launch flights from Belgrade to other countries.
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July 2012
Privatization and Investments Montenegro Seeks Strategic Partner for KAP The Montenegrin Prime Minister, Igor Luksic, said that the government is determined to resolve ties with its Russian partner, EN+ Group which belongs to the Russian billionaire, Oleg Deripaska, regarding the aluminum plant KAP. It was recalled that in February the government took over the troubled aluminum plant, KAP, including €132m in debts. The owner, Deripaska, failed to revive the smelter after taking a majority of the stake in 2005. Montenegro owns a 58% stake in KAP along with its Russian partner. Montenegro aims to seek a strategic partner with which it can work in a similar way to another Montenegrin company, Niksic Steel Mill. Several companies showed interest in taking over the KAP. German HGL Group started negotiations with the Russian owner of the aluminum plant about taking over their stocks. The Government of Montenegro was only prepared to confirm that it had enabled contact between the Germans and the Russians and that negotiation were in progress. Toshcelik, a Turkish company, which recently bought Niksic Steel Mill for €15.1 million and announced increase of production, is also interested in taking over KAP.
French Company, Vichy, Interested in Igalo The French company, Vichy, is interested in buying the Institute Dr Simo Milosevic in Igalo. It is also interested in investing in the health institution according to the president of the company, Jerome Phelipeau. He added that Vichy wants to put Montenegro on the same level of investment as Brazil, Mauritius, China, Morocco, and Qatar. Phelipeau said, "If we succeed in doing that, Montenegro will be, in addition to France, the only country that offers the complete range of our services." According to Phelipeau, Igalo’s resources are respectable; people are already trained and experienced in Vichy’s field of business. Phelipeau explained that his company does not want to come to Igalo for quick profit, but rather to stay for a long time.
Canada Interested in Building Hydro Power Plants in Montenegro Canada is interested in the hydropower potential of Montenegro. In an interview on Montenegro’s National Television, the Canadian ambassador, Roman Vashchuk, said that a bid to build hydropower plants through private-public partnership had already been submitted to the Montenegrin government. Vashchuk said that a Canadian corporation, REV, is planning to build a hydropower plant in Serbia, and that it has proposed a similar project to the Montenegrin government. He said that the Canadian government would support the eventual agreement. He also disclosed that the Canadian corporation, REV, was considering the construction of a second block in the thermal power plant at Pljevlja and that negotiations were ongoing. According to unofficial information, Chinese investors have also shown interest in this project.
Greeks Invested €43 Million in Sveti Stefan So Far The Company Adriatic Properties, owned by the Restis group of companies, invested €43 million into the project “Sveti Stefan Aman resports” - showed independent auditor’s report hired by the European Bank for Reconstruction and Development. In the first phase of the project implementation Adriatic Properties invested €33 million for refurbishing hotel complex Sveti Stefan and Miločer, while €10 million was covered from the EBRD’s loan. In the second phase, which anticipates development of the hotel Queen’s Beach, Adriatic Properties plans to invest €22 million, while the rest (€49.6 million in total) would be covered from EBRD’s loan. Adriatic Properties requests 30% decrease of annual lease and the extension of the lease period. Annual lease amounts to €1.6 million. Greeks claim that, due to unexpected circumstances, they suffered considerable material losses. However, the lease for the last nine months has not been paid yet, thus the current debt amounts to €1.3 million. What seems to be problematic in the whole situation is the fact that almost five years after signing of the lease contract, the plan for the Hotel Queen’s Beach has not been adopted yet and permits for Sveti Stefan Block 25 are in delay. Lease Contracts for Sveti Stefan, Miločer and Queen’s Beach were concluded on January 15th, 2007 for the period of 30 years, and Greeks stated they would leave ‘the Saint’ only if they receive €50 million compensation.
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Privatization and Investments Upcoming Tender
Chinese Want to Build the Second Block of the Thermo Power Plant The second block of the Thermo Power Plant Pljevlja is to be built by Chinese companies. This project is designed to be a joint venture of Montenegro and China and includes the construction of the second block of the thermo power plant and the extension of the Coal Mine capacities. The project is worth €330 million, which is a €190 million higher than predicted by the Strategy for Energy Development until 2025, according to which the construction of the second block should be completed by the end of the next year. The Expert team from Chinese company China Gezhouba Group International Engineering Co. Ltd visited coal mine and TPP Pljevlja and Maoce pit, with the aim of informing about the basic technical and exploitation performances of the terrain and their specificity. The team expressed readiness to start the operational process of the project, through collection of data for development of the Feasibility Study and Project proposal, which will be the basis for further negotiations between the Government of Montenegro and Chinese companies. Source: Government of Montenegro
Open Tenders
Request for Expressions of Interest for the Sale of the Container Terminal and General Cargo at Bar The Government of Montenegro has decided to privatize the Container Terminal and General Cargo, a joint-stock company at the port of Bar (CTGC), to sell its state shares (62%) and to give CTGC a concession for the use of port area. With this privatization initiative, the government aims to develop its port sector and to generate additional economic activity. The privatization has been supported by EBRD, the European Bank for Reconstruction and Development. The Government of Montenegro, through the Ministry of Transport and Maritime Affairs, has invited prospective bidders to submit expressions of interest in purchasing government shares in CTGC. Prospective bidders must submit qualification documents by 1 August, 2012, before 16:00 p.m. Source: Government of Montenegro
Tender for the Construction of a New Tobacco Plant “Novi Duvanski Kombinat” (New tobacco company) a joint stock company based in Podgorica, announced a public invitation for the selection of a main contractor to carry out “turn-key” construction work for building a new plant. The shareholders of Novi Duvanski Kombinat are the Government of Montenegro and the Capital City of Podgorica. The core business of the joint stock company is to purchase, produce and sell tobacco and tobacco products. Any interested local or foreign entity, as well as any consortium, may participate in the tender process. The deadline for the submission of bids is 2 August, 2012, 16:00 (local time). The deadline for completing construction work is 28 February, 2013. Source: www.noviduvanski.me
Closed Tenders
Single Bid for the Privatization of Zora Dairy
The Second Attempt of the Sale of Ulcinj Saltworks Failed
The Montenegrin firm, Simsic Montmilk, has filed the only bid in the tender process for the privatization of the Berane-based dairy company, Zora. Simsic Montmilk has offered to pay €250,000 ($307,500) for Zora Dairy and to invest as much again in the business over a five-year period. The company has also agreed to assume all of Zora's obligations. During the following 15 days, the tender commission will review the offer and come up with a recommendation. The Privatization and Capital Investment Council has launched a call to invite both local and foreign investors to submit bids for a 99.56% stake in the Berane-based Zora Dairy. The potential buyer has been offered 582,560 shares of the Berane company which is owned by the Government of Montenegro.
The public auction for the sale of “Bajo Sekulić” Saltworks in Montenegro under starting price of €232 million has failed since there were no interested bidders. This is the second attempt of the sale with no bidders to apply. The bankruptcy proceedings have been started, total debt of the company amounts €3 million, out of which €1.7 million refers to credits, and electricity debt is €300.000, while the rest goes on receivables of suppliers and employees. In the meantime, the Parliament of Montenegro adopted a new Spatial Plan, which re-zoned the grounds of the Ulcinj Saltworks into land designated for tourist accommodations. This was followed by the loss of concession for salt exploitation this year.
Source: Government of Montenegro
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Source: Government of Montenegro