Montenegro and China Ink Agreement to Extend Controversial Highway

Montenegro’s state-owned road construction firm, Monteput, recently entered a significant agreement with the PowerChina-Stecol consortium, valued at €693.9 million. This contract pertains to the construction of the second section of the Bar-Boljare highway, a crucial infrastructure project in Montenegro.

Financing Structure of the Bar-Boljare Highway

Contrary to the funding model for the first section, which relied heavily on Chinese loans, this phase will receive financial backing through European Union resources. Monteput’s CEO, Milan Ljiljanic, emphasized that the project will be financed by a €200 million loan from the European Bank for Reconstruction and Development (EBRD) and a €150 million EU grant. Additional funding will come from Montenegro’s national budget.

Significance of the Project

The Bar-Boljare highway is intended to enhance both regional and internal connectivity, particularly in Montenegro’s economically underdeveloped north. This new section, named Matesevo-Andrijevica, represents the second phase of a planned 165-kilometer highway, which will connect Montenegro’s Adriatic port of Bar to Serbia.

• Previous Phase: The first section, Smokovac-Matesevo, spans 41 kilometers and was completed in 2022 at a cost of approximately €1 billion.
• International Tender: The Chinese contractor was chosen through an international tender following EBRD guidelines, ensuring they met all technical requirements.
• Construction Timeline: The contractor will have five years to design and construct this highway section, with an additional two years for addressing defects.

Challenges and Criticism

The initial phase of the highway faced intense scrutiny regarding its high costs and the associated Chinese financing model. Montenegro currently owes China’s Exim Bank €655 million for the prior phase, raising concerns about the country’s debt management.

Critics have commented on the highway, describing it as leading “from nothing to nowhere.” They argue that the route fails to connect significant urban or business centers despite traversing challenging mountainous terrain. Montenegrin authorities have defended their choice of the Chinese contractor, stating that no competitive bids were received from Western firms capable of managing the project’s technical demands.

Ultimately, the comprehensive financing and construction strategy for the Bar-Boljare highway reflects Montenegro’s efforts to engage with Western institutions while still relying on Chinese expertise in infrastructure development.