Council for Privatisation and Capital Projects: Negotiations with Orascom on long-term lease of the Lastavica Island and the Mamula Fortress to begin soon

Podgorica, Montenegro (15 April 2014) – Council for Privatisation and Capital Projects, chaired by Prime Minister Milo Đukanović, discussed at its meeting earlier today the outcome of the international tender for the long-term lease of the Lastavica Island and the Mamula Fortress near Herceg Novi and charged the tender commission to begin talks with the Orascom Development company, the only bidder who submitted the formally proper offer.

Orascom Development has offered a 49-year lease of the property for the price of 1.5€ per m², 2 % income (without VAT) for variable rent for the locality and 0.9€ for the rent of the sea surface. Having the said parameters in mind, it is estimated that in the first 10 years Montenegro could collect direct revenue of 7.5 mil €, and social security contributions for workers of around 2.8 mil €, and VAT income of around 4.4 mil €.

The offer includes a business plan which contains the project design and the plan for the protection of cultural heritage and full observance of environmental standards.

The bidder would complete the project within 18 months from the moment he is issued with a building permit. The project is worth 15 mil €, and would include 23 hotel rooms, 4 catering objects, a protected historical area, reception desk, spa centre, convenience store, pier, 2 pools, water-sports club, taxi boats, related infrastructure, etc. This resort should employ, either directly or indirectly, around 200 people.

The project had been discussed having in mind the conclusions of the municipal assembly of Herceg Novi and concluded that the tender has been fully transparent and observant of legal regulations and state interests of the location owned by the state, as well as that the implementation of the project and the protection of historic and architectural heritage will provide an important contribution to Montenegro’s economy.

The Council also concluded that the tender for the privatisation of “Bigovo – Trašte” was unsuccessful, as the sole bid of Vienna’s Robert Placzek Holding AG did not meet the requirements, and has charged the tender committee to issue a new call as soon as possible.

The Council also adopted the draft decision to amend the 2014 privatisation plan and add the locality of Buljarica in the municipality of Budva to the list of locations for valorisation for this year.