Sixteen kilometersof road from Budva to Tivat Airport, along the Montenegrin coast, will be built by the Chinese consortium “Shandong” 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 regarding whether the state would end up taking on 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 section of the highway, RFE writes.
Economic analyst Mirza Mulešković 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 carry out projects.
And the fact that four of the eight bids for the boulevard construction came from Chinese companies shows the interest of Chinese companies in doing business in Montenegro.
Could the boulevard be more expensive than agreed?
The consortium “Shandong Foreign Economic and Technical Cooperation” and “Shandong Luqiao Group” registered a representative office in Podgorica six months ago.
However, the road price of 54 million euros could still rise, 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 about providing the missing funds for the construction of the boulevard.
Commenting on China’s business in the region, Mulešković points to the effectiveness of its business strategy: “China made a smart move by providing the financial resources it has and thereby further strengthening its influence in these countries.”