Montenegro has awarded a contract worth €693.97 million to a PowerChina-led consortium for the design and construction of the 22-kilometer Mateševo-Andrijevica section of the Bar-Boljare motorway. The competitive bidding process also included proposals from a Cengiz-Azvirt consortium and China Communications Construction Company. This decision mirrors earlier political dynamics associated with the initial motorway section, which involved a small state and a Chinese engineering firm, leading to one of Europe’s costliest road projects.
The financing structure for this project is notably different from previous endeavors. The European Bank for Reconstruction and Development (EBRD) has committed a €200 million sovereign loan, while the European Union will provide a €150 million grant. The procurement process adhered to EBRD protocols, classifying the project as Category A concerning environmental and social risks. Additionally, a separate supervision contract valued at €14.45 million, excluding tax, has been awarded to IRD Engineering. Montenegro is responsible for securing the remaining funding, rather than relying solely on Chinese policy banks.
The total construction contract surpasses the financial support from the EBRD and EU by approximately €344 million before considering land acquisition, supervision, contingencies, and financing costs. This figure indicates a significant change in how Montenegro perceives project financing; it cannot simply label this section as externally financed based on the backing of two institutions.
In contrast to this new project, the Smokovac-Mateševo section was developed by China Road and Bridge Corporation through a substantial loan from China Exim Bank. While that section addressed complex engineering challenges, its bilateral funding structure led to issues such as debt exposure and transparency concerns, making it emblematic of infrastructure risks in Montenegro. The country has since implemented measures to hedge its currency exposure and reported savings as it prepares to make its ninth loan installment in 2026.
This new contract does not inherently indicate that Chinese contractors are unsuitable; rather, their performance is contingent upon the contractual framework and incentives provided. The current section’s open competition, environmental assessments, lender remedies, grievance mechanisms, and independent oversight are expected to mitigate potential changes and social impacts more effectively than previous projects. However, these safeguards depend on timely provision of designs and land by Montenegro and its commitment to enforce compliance against influential contractors.
The Mateševo-Andrijevica section includes approximately 3.6 kilometers of tunnels and 21 bridges. Challenges such as unforeseen geological conditions, land expropriation issues, and environmental mitigation efforts could still affect both costs and timelines. A low initial bid may become burdensome if weak variations are accepted or if review processes are rushed to meet politically motivated deadlines.
Economic benefits from this motorway segment will not be fully realized until it integrates with broader market networks. While improving safety and accessibility in northern Montenegro, the strategic value of this project hinges on further connections to Serbia and enhancements along the route to Bar. Factors such as traffic flow, freight efficiency, tourism spread, and regional development will influence public returns; toll revenue represents merely one aspect of financial viability.
Local businesses stand to benefit from contracts related to aggregates, concrete supply, transportation services, accommodation, equipment provision, and various works associated with the project. Montenegro is encouraged to disclose subcontracting details and payment performance without enforcing discriminatory local-content regulations. The long-term advantages for local companies extend beyond temporary construction gains; improved access for northern producers and logistics providers will persist after project completion.
The EU grant signifies more than just affordable financing; it acknowledges the network benefits that cannot be fully captured through tolls alone. The EBRD loan introduces elements of procurement discipline while the state remains exposed to demand fluctuations and risks associated with project completion beyond contractual remedies.
To ensure transparency in this model project, Montenegro should maintain a public ledger detailing contract prices, land costs, supervision expenses, claims management, contingencies, and physical progress on a quarterly basis. Variation orders must clearly outline causes and responsibilities while environmental commitments should be monitored with equal rigor as construction milestones.
This initiative has the potential to exemplify effective Chinese-EU collaboration: leveraging engineering expertise from a Chinese consortium while integrating capital and standards from European institutions with ownership retained by Montenegro. However, there is a risk that oversight could become merely ceremonial if not managed properly.
While Brussels has established stricter regulations for this motorway section, it will not oversee contract management directly from Podgorica. The true measure of progress will depend on whether Montenegro can leverage external oversight to enhance its capacity as an infrastructure owner—an ability it must sustain even when multilateral lenders are not involved.
