Azerbaijan’s SOCAR to invest EUR 258m to turn former military site in Montenegro into tourist resort

Podgorica, Montenegro (5 July 2012) – The Government will conclude an agreement on long-term lease of the “Orijen Battalion” barracks in Kumbor for a period of 90 years with the State Oil Company of Azerbaijan Republic (SOCAR), the Council for Privatisation and Capital Projects concluded on Wednesday.

The Azerbaijani company is obliged to invest at least EUR 52 million into the resort’s development during the first four years of the lease, or EUR 258 million in total during the first eight-year period of the lease.

The fixed rent will be paid in advance for a 45-year lease period. The lessee shall also provide a performance bond in the amount of EUR 3.6 million for the agreed investment, and the lessor is entitled, in the event of the termination of the lease, to keep the amount of the rent paid in advance.

The rent will consist of a fixed rent in the amount of EUR 1 per m2 of the locality and a variable rent in the amount of 5% of the profit. The lessee has the right to establish a local company in Montenegro, to which it will transfer all the rights and obligations under the lease agreement, and must be able to guarantee fully for all the commitments of the local company.

The final investment plan for the resort’s development will be adopted following the adoption of the state location study, thus creating conditions for concluding the contract.