Summary Report

MONTENEGRO

Overview

Montenegro has a single act governing concession PPPs and non-concession PPPs - the Concession Law (OG No. 08/09).

In 2010, the government accepted the Concession Policy 2010 as an indication of continued support for PPPs.

In addition, a number of sector-specific laws may apply to PPPs, including: the Law on Waters, the Law on Financing of Water Management, the Law on Geological Investigations, the Law on Geological Explorations, the Law on Forests, the Law on Harbours, the Law on Financing Local Municipalities and the Maritime Law.

The Law on the Participation of the Private Sector in the Performance of Public Services (OG No. 30/02 and 08/09) remains applicable to public services operated through leasing and management agreements.

A new PPP Law has been in the pipeline since 2015 but has not yet been adopted.

The Concession Law complies with the EU standards. The Commission for Concessions within the Ministry of Economy plays the role of a PPP agency. The legal framework defines “concession“ as including both concessions and BOT types of PPPs in their multiple forms and allows for a great deal of flexibility. The term concession can be interpreted as covering certain PFI arrangements. However, in order to determine whether the Concession Law is applicable, the details of any particular PFI project would have to be analysed first.

Project Development

The Concession Law requires the contracting authority to select a PPP following a preliminary economic evaluation/feasibility study (e.g. the requirement of financial cost-benefit analysis).

There are certain core areas which need to be further clarified such as the content of a concession, where a set of clear guidelines would be welcome. Additional clarity is needed in relation to a security package for lenders and the modalities of the government support.

The limitations that can be detected in the process for awarding concessions mainly relate to the monitoring of a project`s implementation and to the overlaps in competencies between the institutions participating in project.

The Concession Law does not clearly provide for adjustments to public tariffs. Tariffs are solely determined by a public authority. The Concession Law fails to provide for one-stop-shop permitting procedures and there are no clear rules on the scope of necessary permits.

Furthermore, the Concession Law does not provide for compensation to the private party at fair value in all cases of early termination if the assets provided by the private party depreciate. It ensures the stability of provisions in a project agreement during the entire contract term. The list of statutory termination events and the contents of the termination provision support the balance between the parties.

Award without Tender

Concessions can be exceptionally awarded without a public tender, but only with prior approval from the government and/or parliament. Institutional capacities could be improved by collecting all competencies in a single body.

Limited Experience

In 2012, two important projects were commenced in the area of energy, and are still ongoing. In 2013 one project was initiated in the area of energy and is still ongoing. In 2014 two projects in the area of energy and one project in the area of transport were initiated and are still ongoing. In 2015 one project in the area of energy was initiated, and is still ongoing. Finally, in 2016 one project in the area of transport and two in the area of energy were initiated, and are still ongoing. All these projects are somewhat within the definition of PPP as used in this 2017/2018 PPP assessment.