Montenegro has established guidelines for subcontracting related to the €693.97 million Mateševo-Andrijevica motorway project, aiming to create significant opportunities for local construction firms while capping outsourced work at a maximum of 40% of the total contract value.
The national motorway company, Monteput, has specified that domestic companies interested in subcontracting must be registered within Montenegro and must have been operational since before January 1, 2023.
The primary contractor for the project is a consortium led by PowerChina, Stecol, and PCCD, which is expected to facilitate participation from local firms when feasible. To date, two subcontractors have already received approval: Belgrade-based VS Infra Design, tasked with field investigations and design work, and Kolašin-based Keker, responsible for access-road construction.
This motorway project encompasses approximately 23 kilometers between Mateševo and Andrijevica and represents a key expansion of Montenegro’s north-south highway network. Financing for the project includes a €200 million loan from the EBRD, a €150 million grant from the EU, and contributions from the national budget.
Preparatory activities commenced in late June, with the main construction phase anticipated to begin roughly one year later. The subcontracting framework is particularly significant as this motorway is projected to be one of Montenegro’s largest construction endeavors in the coming decade.
The potential for domestic companies to engage in this project could lead to substantial revenue streams across various sectors, including engineering, earthworks, transport, quarrying, concrete production, electrical works, and other construction-related services. If the full 40% subcontracting limit is utilized, it could yield contracts exceeding €250 million, although actual engagement will likely depend on technical qualifications and procurement decisions made by the main contractor.
The focus on local participation raises important considerations regarding the capacity of Montenegrin firms in specialized areas of motorway construction. International contractors often maintain control over critical functions such as tunneling, bridge construction, and project management. Consequently, local companies are more likely to compete for roles in areas like access roads, earthworks, logistics, materials supply, and smaller structures.
The stipulation that qualifying Montenegrin companies must have been established prior to 2023 appears designed to deter the formation of new entities aimed solely at accessing these contracts. This approach may also mitigate risks associated with inexperienced subcontractors but could limit the pool of potential bidders and necessitate a transparent selection process.
Infrastructure projects in the Western Balkans have historically faced scrutiny over insufficient domestic participation despite considerable public funding. Montenegro’s strategy seeks to balance local economic benefits with the main contractor’s need to uphold quality and delivery standards.
The technical demands of this project are noteworthy; the northern terrain necessitates extensive tunneling, bridging, and earthmoving efforts, contributing to high costs per kilometer. At nearly €30 million per kilometer, this initiative ranks among Montenegro’s most significant transport investments.
This financing arrangement alleviates some pressure on the state budget. The €150 million EU grant covers a substantial portion of construction expenses while the EBRD loan provides long-term institutional support. This contrasts with earlier projects like the Bar-Boljare motorway section that heavily relied on sovereign borrowing, which raised concerns about public debt levels.
The government faces mounting pressure to avoid repeating such financing models while simultaneously advancing roadways, railways, airports, and energy infrastructure projects. International lenders have advised Montenegro to maintain public debt around or below 60% of GDP, advocating for greater reliance on grants, loans from international financial institutions (IFIs), and private investment where feasible.
The structure of the Mateševo-Andrijevica project reflects this shift towards more sustainable financing practices. For local businesses, however, immediate concerns revolve around securing contracts rather than macroeconomic financing issues.
This motorway initiative has the potential to generate several years of work for Montenegro’s construction sector amid rising demands in tourism, housing, and public infrastructure. While this could enhance revenues and employment prospects for local firms, it may also lead to increased wage and material costs.
Companies positioned early within the supply chain could experience significant advantages. The crucial question remains whether Montenegrin firms will effectively capture a meaningful share of the available subcontracting opportunities.
The government has laid out a framework intended to promote local involvement in this major infrastructure project. Ultimately, its economic impact hinges on whether it evolves into a genuine domestic construction pipeline or predominantly remains an externally managed megaproject financed through Montenegro’s public accounts.
