The Chinese consortium Shandong, awarded the contract for the reconstruction of the Tivat-Jaz road and the construction of a section of water supply pipelines, has been denied its request for an additional two million euros. The request was made due to price differences for the procurement of water pipes.
According to unofficial information from the Montenegrin government, Shandong had submitted this request as part of a claim for additional payment, citing the difference in the cost of procuring pipes from Turkey instead of China. The contract for the reconstruction of the Tivat-Jaz road, which also involves the installation of water pipelines for the water supply in Lastva Grbaljska, was signed in March of last year with Shandong, at a contracted price of 54 million euros (excluding VAT). The project is set for completion in 2026, and is funded by the Traffic Directorate and the Regional Water Supply System of Montenegro’s Coastal Region, with partial financing from a loan from the European Bank for Reconstruction and Development (EBRD) of 14 million euros.
The contract for technical supervision of the works was awarded to a consortium of Italian companies, IRD Engineering S.r.l. & PPG d.o.o.
When asked about the claims from the Chinese contractor, including the request for compensation and an extension of deadlines due to price differences for the pipes and adverse weather conditions in Tivat, the Traffic Directorate stated that they could not comment. They referred to the fact that the contract is being executed under FIDIC conditions, which require confidentiality regarding the details of the contract, including compensation claims.
The NGO Akcija za socijalnu pravdu (ASP) recently reported that the Chinese side is seeking an additional two million euros due to the price difference in the procurement of pipes from Turkey, as the contract originally required pipes from a Turkish supplier. Shandong also requested a 45-day extension of the work deadline.
The documentation reviewed by Vijesti, obtained by ASP through a freedom of information request, shows that the supervision team responded to Shandong’s claims by emphasizing that their role is to ensure the quality and adherence to the contractual deadlines. The supervision team refused to comment on the price differences between suppliers, the transport costs from China or Turkey, and payment methods, stating that these matters would not be discussed.
Regarding Shandong’s request for additional payment for the pipes, the supervision team disagreed with the Chinese contractor’s claim that they were forced to work with a Turkish supplier. “You (Shandong) selected the supplier, not the supervision team,” they stated.
The supervision team also rejected the request for an extension of deadlines, stressing that the delay in the procurement of the necessary pipes and fittings was due to the slow internal procedures of Shandong, rather than any external factor.
Chinese complaints about weather conditions
According to ASP’s data, Shandong has also indicated that they may seek additional payment and an extension of the deadline due to extreme weather conditions in Tivat several months ago. They argued that heavy rainfall and adverse climate conditions caused significant damage to some of the pipes. However, sources within the Montenegrin government claim that the pipes were not damaged and that the construction work is progressing in phases, meaning delays in one phase do not affect the entire project.
Construction on the Tivat-Jaz road began in January this year, although the contract was signed in late March 2023. Shandong also requested 499,104 euros from the Traffic Directorate due to delays in the start of works and the acquisition of the land parcel before the investor issued the building permit.
Tivat-Jaz road project
The stretch of the Adriatic Highway between Tivat and Budva is the busiest and most congested road in Montenegro, with over 30,000 vehicles passing through daily during the summer season. The government plans to transform the road into a boulevard with four lanes in order to alleviate the summer traffic jams along this section of the coast.
In early November, the Traffic Directorate reported that the Tivat-Jaz boulevard is being constructed according to the planned timeline, with works underway in different phases depending on the section. On some sections, finishing works have already begun, while others are waiting to start.
The main focus is currently on completing the first section, where works are in the final phase, including asphalting. Soon, the removal of the existing asphalt on the second section will begin.
Project specifications
The reconstruction of the Tivat-Jaz road involves a 16-kilometer stretch passing through three municipalities: Tivat, Kotor, and Budva. The road will be transformed into a modern boulevard with two lanes in each direction (total width: 4 x 3.25 m), sidewalks on both sides (total width: 2 x 2 m), and a median strip (2 m). A new water pipeline for the Regional Water Supply System will also be constructed along the road to improve water supply in these municipalities.
The project includes the reconstruction of five existing smaller bridges, the construction of five parallel bridges, and the creation of 11 new roundabouts.
