Minister of Finance Aleksandar Damjanović informed the public at the beginning of the latest government session that the company North Starhad sent a noticeof termination of the land lease agreement for the construction of the hotelRitz Carlton (Marriott)in Luštica, the construction of which had been planned by the Kuwaiti ruling family.
“Taking into account the aspects of the contract, we immediately formed a team and in mid-August gave a response, in which we invited representatives and owners of North Star to look at what problems exist in the direct agreement, and ultimately try to find a solution in the interest of the national interests, the interests of tourism and the interests of investors,” Damjanović said.
The company, he added, called in early September to discuss the issue outside Montenegro.
“A response was given in which the owners of North Star proposed to look at what the problems are and try to find a solution in the interest of Montenegro,” the minister added.
Agreements on the lease of state land in Luštica
A consortium consisting of North Star and Equest Capital Limited Jersey paid just under four million euros to lease nearly half a million square meters of state land in Luštica. The lease payment covers a period of 10 years, i.e. until 26 August 2023.
In September 2009, the government signed a long-term land lease agreement with the consortium, with an obligation to build, develop and manage an exclusive tourist complex, which entered into force in August 2013, when a protocol on its legal validity was signed. The protocol was signed, but the implementation of these investments has still not begun. In August 2013, the first annex to the agreement was signed, defining the investor’s obligation to invest 141.8 million euros in the first phase of the project over the next five years. The second annex, proposed in 2017, reduced the first-phase investment value to 80 million, with a new five-year deadline, and stated that “the contracting parties have not fulfilled their obligations under the main contract.” Under the second annex, the government and the Municipality of Herceg Novi undertook to provide infrastructure (electricity, water and transport) at the site where the complex is to be built.
The investor’s obligation under the annex is that the minimum investment commitments amount to 80 million euros for the first phase of the project and another 130 million after the minimum investment commitments have been fulfilled, as well as payment of an advance lease fee of two million euros. The investor paid the lease for the first 10 years of the lease, i.e. for the period until 26 August 2023, in accordance with the contract, in the amount of 3,934,211 euros. In addition, it paid funds based on the contractual penalty due for the delay in providing the performance guarantee in the amount of 82,857.14 euros. According to Annex II, the investor also paid an advance in two equal installments totaling two million euros. This was a prerequisite for the return of the previously submitted performance guarantee of one million euros to the project company.