Montenegro has two state-owned shipping companies, both heavily indebted with two ships each. The government plans to resolve the financial crisis of one of them, Montenegro Shipping Company (Crnogorska Plovidba), by renting out its ships to another company, Bar Shipping Company (Barska Plovidba).
Minority shareholders of Bar Shipping oppose this move, arguing that they should not be responsible for paying off another company’s debts, according to Radio Free Europe.
The Captain’s Association believes that the Ministry’s plan is contradictory and could lead to the demise of the domestic maritime industry.
Both companies have millions of euros in debt, with the state acting as a guarantor for loans taken in 2010 and 2013 from the Chinese Exim Bank. In late January, the government paid 4.2 million dollars in loan installments to this bank, with 2.4 million dollars allocated for Montenegro Shipping’s debt.
Montenegro Shipping Company is facing severe financial difficulties, with total debt of around 37 million euros, of which 36.2 million is owed to the government. It also has a 400,000-euro loan overdue with Prva Banka, where Aco Đukanović, the brother of Montenegro’s former president, holds a 43% stake. In mid-April, the bank blocked Montenegro Shipping’s account, which, according to the Ministry of Transport, threatens the company with bankruptcy.
As a temporary solution, the Ministry proposed that Bar Shipping rent two of Montenegro Shipping’s ships and advance one million euros to prevent bankruptcy. However, Prva Banka has offered a loan restructuring arrangement to avoid bankruptcy, though no agreement has been reached yet.
Bar Shipping Company also has significant debt, but according to the Ministry, it is in a better financial position than Montenegro Shipping. Bar Shipping owes 9.3 million euros to the government but has secured high-paying ship leasing contracts for a year, which has helped maintain its liquidity. Additionally, Bar Shipping owns commercial real estate in Bar and Belgrade, and the proceeds from selling part of these properties could be used to pay off debts.
However, minority shareholders of Bar Shipping, who own 48% of the company, oppose the Ministry’s plan. They argue that paying off the debts of another company is not in their interest, and they refuse to allow their funds to be used for this purpose. They also object to the plan adding more employees and members to the Board of Directors.
In response, the Ministry of Transport has stated that it understands the concerns of minority shareholders but insists that the decision is made to preserve the Montenegrin shipping industry. They argue that the arrangement could bring long-term benefits to Bar Shipping by generating additional revenue and strengthening its market position.
Confusion over the Ministry’s Plan
The Ministry’s plan for urgently addressing Montenegro Shipping’s liquidity problems is deemed contradictory by the Captain’s Association. The Ministry refers to Bar Shipping taking two ships on lease, but in another part of its plan, it suggests that the ships will be taken on rental. This inconsistency suggests that the Ministry and those who prepared the proposal do not understand the difference between leasing and renting.
Captain Janko Milutin explained that leasing a ship means the lessee takes responsibility for the crew, maintenance, and commercial operation of the ship, whereas renting a ship involves taking the ship along with the crew and equipment, and the renter is not responsible for operating costs like crew salaries and maintenance.
This contradiction raises concerns in the Captain’s Association, which questions whether the Ministry truly understands the situation and whether the proposed solution is a step toward the collapse of the maritime industry in Montenegro.
The Captain’s Association also publicly questioned whether the Ministry had considered using one of Montenegro Shipping’s ships as collateral for the 400,000-euro loan, which could have eliminated the need for the Bar Shipping arrangement. They also questioned why the Ministry did not hold the company’s management accountable for its failure to secure new long-term contracts.
Several months ago, the Captain’s Association proposed that the Ministry hire an independent agency to conduct a study on the state of both shipping companies and provide recommendations on their future operations or potential closure. However, the Ministry rejected this suggestion.
