The Association of Oil Companies of Montenegro (UNKCG) has called for thorough scrutiny by competent authorities into the recent public tender issued by Monteput for the construction of the first highway gas station, which awarded the contract to Jugopetrol. UNKCG alleges irregularities and discriminatory conditions favoring non-Montenegrin companies.
UNKCG points out apparent coordination and synchronization among potential bidders, Monteput, and the Directorate for Oil and Gas. They assert deliberate delays in the tender process aimed at securing favorable terms for the gas station project. Concerns are raised that fuel prices at this station could exceed legal limits, as it is exempted from regulations governing maximum fuel prices in Montenegro.
The public tender, released on December 26, 2023, for the construction and 25-year lease of the gas station, set a submission deadline of February 26 of the current year.
Draško Striković, General Secretary of UNKCG, highlighted in a letter to “Dan” that Monteput’s tender specified a minimum lease price of €66,760 and an additional cent per liter sold at the planned gas station at KO Mrke.
“Those familiar with Montenegro’s oil market dynamics understand the impracticality of such terms. Profit margins for oil companies in Montenegro are constrained, and increased labor costs significantly inflate retail prices beyond those permitted by the Regulation on Maximum Retail Prices of Oil Derivatives in Montenegro. Hence, it’s unrealistic for any company to bid under these conditions, which include not only lease costs but also sales commissions,” said Striković, who has served as General Secretary since July.
Despite these challenges, Jugopetrol initially requested deadline extensions before submitting an official bid. Monteput’s tender committee extended the deadline three times, totaling four months.
“The terms of the tender were discriminatory, automatically excluding all domestic oil companies because the tender required bidders to own at least seven retail outlets for oil derivatives. The criteria for this requirement are dubious. UNKCG has repeatedly communicated to Monteput that such conditions discriminate against domestic businesses, contrary to fair market conditions guaranteed by law and the Constitution. This discriminatory clause deliberately excluded numerous domestic companies that have operated successfully in Montenegro’s limited oil derivative market for decades, despite facing challenging and unequal conditions. Similar barriers prevented domestic entrepreneurs from bidding on the purchase, construction, or lease of available maritime storage facilities, unlike neighboring countries with numerous storage operators, aiming to enhance supply security and market competitiveness,” Striković emphasized.
He also criticized certain state institutions for bias toward Jugopetrol, citing a recent proposal by the Directorate for Oil and Gas to partially abolish regulations on maximum retail prices of oil derivatives, specifically on highways. This move would allow unrestricted fuel pricing on highways, potentially leading to significant price hikes.
“These proposals were presented by the Acting Director of the Directorate for Oil and Gas at a meeting on June 26, 2024, held at the Montenegro Chamber of Commerce. It’s noteworthy that the Directorate unilaterally engaged in proposing and considering the partial abolition of regulations, along with numerous demands exclusively advocated by the company in question, despite opposition from many industry stakeholders. This was preceded by a commissioned and seemingly biased market study on oil derivatives conducted by professors and associates from the Faculty of Economics, possibly influencing Monteput’s public tender to favor Jugopetrol,” added Striković.
In conclusion, Striković highlighted the perceived collaboration among potential bidders, Monteput, and the Directorate for Oil and Gas to prolong the tender process and tailor conditions favorably for the gas station project, at the expense of fair competition.
“In this manner, other interested participants were effectively barred from participating after these changes in market conditions, unable to ‘create the necessary conditions for themselves,'” Striković concluded.
Despite these challenges, UNKCG urges competent authorities to investigate the allegations promptly and prevent the implementation of what they view as an unlawful and discriminatory transaction detrimental to numerous Montenegrin companies and citizens.
