Two years have passed since the completion of the construction and the ceremonial opening of the Podgorica - Mateševo highway section, as well as six months since obtaining the use permit, but the dispute between the main contractor of the Chinese company CRBC and the state of Montenegro as an investor has still not been resolved as to who is to blame. for a three-year delay in works and who should pay penalties that can amount to fifty million euros for a year of delay.
The final decision on who should pay whom in this dispute should be made by the Arbitration Court of the Chamber of Commerce in Zurich, which is designated as arbitration in the contract between CRBC and the Government. The Ministry of Transport told "Vijesti" that the Chinese company had just announced the proceedings before this arbitration.
The contractor with the full name "China Road & Bridge Corporation doo Peking, Republic of China - part of the foreign company Podgorica" in the last year of the construction of this section presented the Government as an investor with several claims by which it requests an extension of the deadline for the completion of the works and additional payments. They are asking for an extension of the deadlines because they believe that they are not to blame for the delays, but the Montenegrin side that did not prepare the project well, and they are asking for additional payments as compensation for the extension of the works due to the fault of the Government of Montenegro.
They had to claim their claims under the contract first from the independent Project Engineer, the French-Italian consortium "Ingerop Conseil & Ingenierie-Geodata Engineering SpA", which was paid about ten million euros for the control of the works performed on the priority section.
However, almost all of CRBC's claims submitted so far have been rejected by the Project Engineer, with the exception of claims due to Covid-19 when the contractor was granted an extension of 47 days, instead of the requested year and a half. After that refusal, arbitration was announced.
Montenegro has submitted a counter-claim in which they demand that the Chinese contractor pay them penalties due to the delay.
"According to the Fidic contract, the contracting parties have the right to, if they are dissatisfied with the Engineer's decision, initiate disputes before the Dispute Resolution Commission, or finally before Arbitration, i.e. Chamber of Commerce in Zurich. So far, we have no settled disputes, i.e. after the end of the disputes and the final decision, we will know whether CRBC is entitled to additional time and additional funds for payment. Also, on this project, the state demands the so-called penalties for exceeding the deadline for the completion of works, however, the final outcome in this matter depends on the outcome of the resolution of disputes that CRBC will apply to the Dispute Resolution Commission, i.e. to Arbitration", the Ministry of Transport told "Vijesti" when asked what stage this dispute is in , when its completion can be expected and whether they expect that Montenegro may have additional damages.
According to the contract, the state has the right to collect penalties for any delay by the contractor. In the event of a delay in the completion of works, FIDIC rules apply, according to which compensation for damages due to delay is calculated in the amount of 0,01 percent of the contract amount per day for delays of up to 90 days, and after a period of 90 days, the daily compensation is 0,02 percent of the contracted term. The agreed price is 809 million euros, so 0,01 percent would amount to 80,9 thousand euros per day.
For example, if the contractor's unjustified delay of one year were proven, the penalties would amount to 51 million euros. However, the contractor also has the right to compensation if the delays were caused by the error of the investor, that is, the state, as well as if due to errors in the technical documentation, which he received from the investor, he had increased costs, which the Chinese side claims happened.
The project was started while the Ministry of Transport was in charge Ivan Brajović. CRBC for that period, as previously announced, has objections to the preparation of the project, geological maps and other parts of technical documentation and projects, which is why the main construction works started only a year after the introduction into the work.
The work was then continued to be monitored by the ministry he headed Osman Nurkovic. He signed an annex on the extension of the deadline for the completion of the works. Then there was a dispute regarding whether the basic contract included the construction of the first phase of the Smokovac loop. Nurković and the then prime minister Dusko Markovic at the beginning they claimed that the loop was contracted, but in the end they agreed to pay an additional 30 million for that work, which was done as a subcontractor by the company "Bemax".
According to the basic contract, the deadline for the completion of the works was four years, i.e. May 11, 2019, and Nurković signed an annex extending it until September 30, 2020, without determining the culprit for the delay and the obligation to pay a penalty.
As even then the works were not finished, and the new Government was only elected in December 2020, the new line minister Mladen Bojanic signed a second annex at the beginning of 2021, which extends the deadline until November 30 of that year, with the obligation to calculate penalties for delay and compensation after the completion of construction.
The highway was not opened even after that deadline. Although there was a change of government, the old board of directors of "Monteput" was dismissed only in September 2021, due to the fact that they changed the company's statute on their own and tried to prevent their dismissal.
Although the deadline of November 30 was approaching, the previous board of directors and management of "Monteput" did not complete the procurement of the necessary equipment and installations for the operation and maintenance of the highway. The public procurement procedure was only initiated by the new administration. According to the law, the highway cannot be opened without equipment for supervision, security and maintenance, so the last delay of about six months could be the responsibility of the state, that is, the former administration of "Monteput".
This section of the highway was opened only on July 13, 2022, that is, three years and two months late.
They received 827 million, showed a loss of 308 million euros
So far, CRBC has been paid a total of 827.330.928,56 euros for the execution of works, based on the basic contract and all annexes, out of a total of 859.067.356,14 euros contracted," the Ministry of Transport stated when asked by "Vijesti" how much so far total paid to CRBC for the work done on this section of the highway.
According to the financial reports submitted by CRBC to the Tax Administration, every year since its establishment in Montenegro in 2014, they have operated at a loss.
According to the financial statements for the year 2023, the total accumulated loss of the company, for all years of highway construction, amounts to 308,2 million euros. This company, i.e. its part in Montenegro, paid most of the costs for construction materials and workers to its headquarters in Beijing.
In the financial statements from the end of last year, it was stated that liabilities to the parent company amount to 305,7 million euros.
The auditor gave a positive opinion on CRBC's statements.
Since last year, CRBC has been blacklisted by the Tax Administration due to a debt claimed by the tax authorities in the amount of 11,6 million euros.
CRBC did not recognize this debt and appealed to the Ministry of Finance as a second instance authority, which rejected the appeal and confirmed the decision of the Tax Administration. The Chinese company then launched an administrative dispute seeking cancellation of the debt.
Proceedings are being conducted against CRBC in the Basic Court in Kolašin, based on a lawsuit filed by the Basic Prosecutor's Office due to the damage caused to the Tara River.
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