Press release following The Bidders conference for the Bar Boljare Motorway Concession project

The Bidders conference for the Bar Boljare Motorway Concession project took place on November 26th and 27th, 2008 in Podgorica. This important event was attended by representatives of top management of the six bidders, including Aktor, Greece; Bouygues, France; HCH, Israel; Konstruktor, Croatia; Alpine/Porr, Austria and Strabag, Austria.
The conference was opened by Prime Minister, Milo Djukanovic, who confirmed that BBM is a clear priority for the Government of Montenegro and will continue to enjoy its full support. As evidence of this, Mr. Djukanovic pointed out that the BBM Law and Decree have been adopted in an extraordinarily short period of time - three months from initial concept to passage by the Parliament.
The Prime Minister also noted that since the tender procedure was launched in the summer the world economic situation had deteriorated significantly and that the Conference would, among other things, serve as a forum for the Government of Montenegro and investors to exchange information on possible ramifications of the global financial crisis for the Bar Boljare project. In this sense, he expressed willingness to listen to investors views and suggestions, in particular whether they consider that any adjustments to the tender process may be needed in the coming weeks.
Minister of Transport, maritime affairs and telecommunications, dr Andrija Lompar also announced that Serbias Minister of Transport, Mr. Milutin Mrkonjic, authorized Minister Lompar to announce that Serbia will continue pursuing construction of the motorway from Belgrade to Pozega and the border with Montenegro in order to eventually link Bar with Belgrade via a modern motorway.
The opening statements were followed by individual meetings between the top management of each investor with the Prime Minister, the Minister of transport, representatives of the Govarnment Oparational team, and International Finance Corporation (IFC) a renowned multinational organization which is monitoring the tender process in its capacity as the lead advisor to the Government of Montenegro.
One of the main goals of the Bidders conference was for the Government to obtain constructive feedback from investors regarding the tender process and the very detailed tender documentation, which prescribes in great detail, among other things, very strict conditions for maintaining the motorway which the future concessionaire will have to meet (such as, for example the requirement for the motorway operator to respond to road accidents within a very short time).
Ministry of transport and IFC had prepared very extensive tender documentation, consisting of hundreds of pages of legal documents and thousands of files of technical designs, drawings and other studies.
To the credit of Ministry experts and its advisors, the issues that were raised regarding legal and tender documentation were relatively few and similar in nature. This serves to prove that the bidders were largely satisfied with the quality of these documents and hence provided suggestions for improving them rather than challenging and criticizing their content.

However, investors also pointed out that the sheer volume and high degree of complexity of technical documentation as well as the negative effects of the global financial crisis on the ability of commercial banks to provide pricing and terms of financing for the project at this moment, the deadline for submission of bids should be postponed by several weeks. Investors stated that this short extension would allow them to submit much more competitive bids, resulting in significant benefits for the Government and citizens of Montenegro.
The discussions also confirmed that investors will have to rely on International Financial Institutions such as EIB, EBRD, IFC ect. to a much greater extent than would usually be expected. In this regard, GOM will be playing an active role in communicating with these financial institutions in order to obtain stronger commitment for the Bar-Boljare motorway project.
As is usually the case in these types of projects, the bidders indicated that they would prefer to shift all traffic risk to the government. However, Minister Lompar stated that even though Government is prepared to assume as much traffic risk as may be required by the winning bidder for the successful implementation of the project, the government also wants to encourage the bidders to share some traffic risk. The idea is to incentives the future concessionaire to provide high quality of service and attract as much traffic as possible to the motorway.
Another issue raised by investors in regards to the tender documentation was the amount of bidding security as well as construction and performance bonds that need to be submitted by bidders during the tender process. As a sign of good will under the current adverse financial environment, the Government agreed to halve the amounts of these bonds.
Finally, it was stated that the Environmental Impact Assessment is in the completion stage. Nonetheless, the EIA will be further improved in the coming weeks with the guidance and assistance of IFI environmental experts to make sure that it fully complies with the requirements of IFIs on whose support the project will rely.
It is important to point out that the tender process is being conducted according to best international practices in terms of transparency and equal opportunity for all investors. For instance, the bidders access all information related to the project via a secure web-based data room a virtual room containing all tender, technical and legal information about the project.
The public has already been informed about the large costs and technical complexities associated with the building of the Motorway. On this occasion, we also wish to remind that the motorway will be about 170 km long, and those bridges, tunnels and viaducts will constitute a very significant portion of its total length. It is planned that the part of the motorway between Smokovac and Matesevo will be constructed first. This is the most technically challenging, and hence expensive, section of the motorway.
The strategy for building Bar Boljare Motorway is to implement the project through a public-private partnership, allowing the Government to attract private sector expertise and financing to a project, which would otherwise have to be financed in its entirety by the Government.