Sixteen kilometers of road from Budva to Tivat Airport, along the Montenegrin coast, will be built by the Chinese Shandong consortium for almost 54 million euros.
According to Radio Free Europe (RFE), this is 14 million more than the authorities had planned to spend.
Of these 54 million euros, the state provided less than 15 million, it was announced at a government session at the end of September. The government said the missing funds would come from the "capital budget or other sources of financing".
RFE did not receive a response from the State Road Administration as to whether the state would ultimately take on the debt.
Montenegro previously had a problematic experience borrowing funds for projects carried out by Chinese companies, for example in the case of the construction of a highway section, RFE writes.
Economic analyst Mirza Muleskovic tells RFE that China's influence in Montenegro and the region has grown in recent years, partly because of the loans the country offers to governments, through which its companies implement projects.
And the fact that four of the eight bids for the construction of the boulevard came from Chinese companies shows Chinese companies' interest in business in Montenegro.
Could the boulevard be more expensive than agreed?
The consortium "Shandong Foreign Economic and Technical Cooperation" and "Shandong Luqiao Group" registered an office in Podgorica six months ago.
However, the road price of 54 million euros may still increase, since the tender documentation includes a sliding scale clause, which serves as protection, especially for contractors, against inflationary movements in the market.
"Whether it will be higher or lower than the bid amount depends primarily on the movement of prices for metals, fuel, sand, cement...", the government said in its announcement on providing the missing financial resources for the construction of the boulevard.
Commenting on Chinese business in the region, Muleskovic points to the effectiveness of their business strategy: "China made a smart move by providing the financial resources it had and thereby further strengthening its influence in these countries".
However, he says that countries must take into account the terms on which they take out loans, as well as what this debt includes. "Often we only have the story about interest rates and debt terms, but we must also see everything else related to these debts".
Chinese projects in Montenegro
Broader business cooperation between Montenegro and China began more than ten years ago, when an agreement was reached with a Chinese partner to purchase ships for two state-owned companies.
According to the Digital Forensic Center, the value of Chinese projects in five non-EU Western Balkan countries exceeds 13 billion euros.
However, the EU and the US have identified negative consequences of cooperation with China. One of them is the creation of unsustainable debt that threatens economic stability and, consequently, the overall social environment and security of countries that take Chinese loans, RFE writes.