Are airports going under concession?

The Tender Commission, in cooperation with the IFC consultant, is preparing a proposal for a public call for qualified bidders together with a proposal for a new concession contract that will be for 30 years.

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Analyzes showed that ACG can be profitable even in the hands of the state (illustration), Photo: Siniša Luković
Analyzes showed that ACG can be profitable even in the hands of the state (illustration), Photo: Siniša Luković
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

The government has decided to make a new proposal for a concession contract with which it will go before three pre-qualified bidders who were shortlisted based on the tender for the concession of the Airport of Montenegro (ACG) announced five years ago, and invite them to negotiations.

This was confirmed by "News" in the Ministry of Transport and Maritime Affairs (MSP), which a few months ago formed a new tender commission for ACG, which had the task of deciding what to do with the tender for the long-term lease of the airports in Podgorica and Tivat. This tender was launched in 2019 by the former Prime Minister's Government led by DPS Duško Marković.

"The government formed a tender commission and extended cooperation with the IFC consultant. At this moment, the tender commission, in cooperation with the consultant, is preparing a proposal for a public call for qualified bidders together with a proposal for a concession contract that will be an integral part of the public call. The mentioned process is very demanding because it will define the concession period of 30 years and all the minimum technical conditions. After the published call, three qualified concessionaires have the opportunity to submit bids. When the state receives offers, negotiations with interested concessionaires follow with the possibility of improving the offer, after which the Government will decide whether to accept one of the offers, the Ministry of Transport and Maritime Affairs, led by the PES minister, told "News" Filip Radulović.

The Ministry of Transport, which he headed at the time Osman Nurkovic (BS), in October 2019, announced a pre-qualification tender for awarding concessions for airports, which received seven applications, four bidders qualified, one of which withdrew. The South Korean company Incheon International Airport, Luxembourg's Corporacion America Airports and the French-Turkish consortium Aeroports de Paris - TAV formally remained in the game. However, the process was stopped due to the corona virus pandemic in 2020, so none of the three shortlisted bidders has presented their final offer so far. Therefore, for four years now the process of giving ACG into concession has been "hanging", because of the Prime Minister's Government Zdravka Krivokapića i Dritan Abazović from the end of 2020 until the end of their mandates, they have not decided what to do regarding the way in which Montenegrin airports will be further developed and exploited.

The management of the state-owned company ACG led until recently by the executive director Vladan Drašković made a detailed analysis in March of last year that confirms that the company can be profitable and provide adequate development of airports on its own in the next seven years, and that ACG should not be leased. Drašković's plan showed that ACG can be a successful and profitable company that can provide its own development in accordance with the needs of the state and in the next seven years achieve a profit in the total amount of more than 120 million euros, with a simultaneous investment of 138,4 million euros into development. However, neither did the former Prime Minister's Government Abazović, nor the current premiere Milojko Spajić (PES) did not pay attention to that. At the beginning of the year, Spajić's government announced that a final decision would be made by the summer on what to do next regarding the airport concession, and according to unofficial information from "Vijesti", from circles close to the PES leadership, Spajić is determined to "privatize airports". that is, transfer them to a foreign concessionaire for a long-term lease.

Decision by the end of the year: Milojko Spajić and Filip Radulović
Decision by the end of the year: Milojko Spajić and Filip Radulovićphoto: Boris Pejović

According to unofficial information from the top of PES, Spajić is allegedly most inclined to the option of choosing the South Korean Incheon Airports as the concessionaire, which is in contrast to the previously undisguised favoring of the Turkish TAV, whose interests in this business were more or less openly pushed by the former leaders of the former Ministry of Capital Investments from the Bosniak Party. The Ministry of Transport did not respond to the question of "Vijesti" to confirm or deny the information that the most attractive offer for the Government is the South Korean consortium Incheon Airports.

According to the current concession act, it is envisaged that the state will receive a minimum of EUR 100 million in one-time compensation for the budget and at least EUR 200 million in investments over the next 30 years, i.e. a variable compensation of 10 percent of the realized traffic of the concessionaires at the airports in Tivat and Podgorica. When the concession act was passed six years ago, even then there was a lot of criticism on its account due to, as pointed out by some of the public and analysts, insufficient mechanisms in it to protect vital state interests in connection with the functioning and development of the airport in the next few years decade. In the meantime, the officials of the three governments that have changed so far, in which there is no DPS, stated that the financial conditions from 2018 were set too low and that the circumstances have changed drastically in the meantime, and that a higher concession fee can now be obtained for airports and more investment from a new tenant.

They are making a report on the assessment of the property scheduled for expropriation

At the end of May, the Government adopted the "Information on the procedure for the expropriation of immovable property in the scope of Phase II of Tivat Airport and determined that the Ministry of Transport will be the formal beneficiary of the expropriation of over 56 hectares of private land in the immediate vicinity of the current airport complex in Tivat. According to the valid State Study of the Tivat Airport location, that land is intended for the second phase of the airport's expansion.

According to unofficial estimates, this will cost the state at least around 50 million euros, bearing in mind the prices at which land in the vicinity has been expropriated from citizens for the purpose of expanding the road transport infrastructure.

"Vijesti" from the Ministry of Transport did not receive a concrete answer to the question of where this ministry, as the official beneficiary of the expropriation, will provide such money.

"The ministry has been designated as the authority that will lead the expropriation process. We are currently working on the elaboration of a study that should be the first step in the process of assessing the property that is slated for expropriation. After the experts provide information on the amount needed for expropriation, we continue communication with colleagues from the Ministry of Finance to see how to provide the necessary money that was not foreseen in the budget", said the Ministry of Transport.

As they added, the expropriation is necessary above all so that the airport and the airport operator would be able to carry out their regular operations in Tivat and improve the airport infrastructure, which currently does not meet the needs of passengers and the state.

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