Although announced, the proceedings before the Arbitration Court of the Chamber of Commerce in Zurich due to the three-year delay in the construction of the priority section of the Bar-Boljara highway have not yet been initiated.
This is what the Ministry of Transport told "Vijesti" in response to the question of whether the arbitration procedure in Zurich was initiated and who initiated it, the Government or the Chinese China Road & Bridge Corporation (CRBC), which was building the priority section.
"Before the Arbitration Court of the Chamber of Commerce in Zurich, there are no disputes initiated either by the Government of Montenegro or by the CRBC", said the Directorate for State Roads of the Ministry of Transport, without specifying how the existing dispute regarding compensation for late works will be resolved. solve
The section of the highway from Podgorica to Kolašina (Smokovac-Mateševo) was completed in July 2022. The construction of the 41-kilometer long section took seven years, costing almost one billion euros, and the main contractor was the Chinese CRBC.
Although the priority share was opened more than two years ago, the dispute between CRBC and the state of Montenegro as an investor has not yet been resolved, as to who is to blame for the three-year delay in works and who should pay whom the penalties which, according to "Vijesti" ' wrote earlier, they can amount to around 50 million euros for a year of delay.
In the meantime, CRBC's parent company, China Communications Construction Company (CCCC), applied for a tender for the construction of a new section of the highway from Mateševo to Andrijevica, along with seven other companies and consortiums. The tender was announced by the state company Monteput in cooperation with the European Bank for Reconstruction and Development (EBRD) in April this year.
The new Mateševo-Andrijevica section, 22 kilometers long, makes up 14 percent of the total highway route. The estimated costs amount to around 530 million euros, of which the EBRD has already provided a loan of 200 million. It is planned that the design and construction contract will be signed in the first half of 2025, and the completion of the works is expected in 2030.
The source of "Vijesti" said that the offer of the Chinese company CCCC is among the most favorable.
Monteput did not answer the question of "Vijesti" which companies were shortlisted for the tender for the construction of the second section of the highway.
CRBC does not say when it will initiate arbitration
Two months ago, CRBC announced proceedings before the Arbitration Court of the Chamber of Commerce in Zurich, which was designated as arbitration in the contract between CRBC and the Government, but it has not yet filed a lawsuit.
CRBC refused to answer the questions sent by "Vijesti" through their representative in Montenegro - when they will start the arbitration and how much money they want from the state of Montenegro.
In the last year of the construction of the priority section, CRBC submitted several requests to the Government as an investor requesting an extension of the deadline for the completion of the works and additional payments. They asked for an extension of the deadlines because they believed that they were 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.
According to the contract, they had to first claim their claims from the independent Project Engineer, the French-Italian consortium "Ingerop Conseil & Ingenierie-Geodata Engineering", 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, except for the one due to covid-19 when the contractor was granted an extension of 47 days, instead of the requested year and a half. After that, the possibility of arbitration was announced.
Montenegro submitted a counterclaim to the Engineer requesting that the Chinese contractor pay them penalties due to the delay.
The Ministry of Transport previously said that in accordance with the FIDIC contract (a key standard in the construction and engineering industry worldwide), the contracting parties have the right, if they are dissatisfied with the Engineer's decision, to initiate disputes before the Dispute Resolution Commission, or ultimately before Arbitration, i.e. Chamber of Commerce in Zurich.
"On this project, the state claims 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", said the Ministry of Transport at the beginning of October.
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 construction was accompanied by fiscal and environmental problems
The completion of work on the first section of the highway was postponed five times, and the construction was accompanied by problems with non-transparency, fiscal and environmental, such as the devastation of the bed of the Tara River, which is under the protection of UNESCO.
The Basic Court in Podgorica decided in 2021 that the CRBC should pay 200.000 euros for the destruction of the Tara River, but the decision of the High Court overturned that verdict. In the verdict, it was stated that the company is guilty because in 2019 it started building facilities without previously submitting an application and documentation for that work, thereby contributing to the destruction of fish and other living things in the Tara River.
Non-governmental organizations and the opposition at the time pointed out that the construction project was poorly contracted and that the state did not protect itself properly through the contractual arrangements.
Thus, the Special State Prosecutor's Office (SDT) is once again determining whether the former Minister of Transport is Ivan Brajović violated the regulations in the case of contracting and building a forgotten interchange on the highway. They do this according to the guidelines of the Supreme State Prosecutor's Office.
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At the end of 2022, the Special Prosecutor's Office rejected the application of the Network for the Affirmation of the Non-Governmental Sector (MANS) and assessed that there was no criminal offense of abuse of official position. MANS filed a complaint in 2019 against former high-ranking state official Ivan Brajović and NGOs, who participated in the preparation and contracting of the construction of the highway section from Podgorica to Mateševo due to suspicion of abuse of official position and damage to the budget of around 134 million.
Brajović previously denied the accusations on several occasions, claiming that there was a loophole in the project terms of reference and the offer for the construction of the priority section.
827 million paid to CRBC, the company still owes taxes
The Ministry of Transport told "Vijesta" that so far CRBC has been paid a total of 827.330.928 euros, out of a total of 859.067.356 euros contracted, based on the basic contract and all annexes.
CRBC is on the black list of tax debtors, published by the Tax Administration.
The company was put on the black list of tax debtors for the first time in February of this year, due to value added tax (VAT) debt.
According to the black list of the 200 largest debtors of the Tax Administration, CRBC's debt at the end of June was around 11,6 million euros. During the construction of the first section of the highway, CRBC was exempt from taxes and duties.
At the end of October 2022, the then Administration of Revenue and Customs, as announced by the NGO Action for Social Justice (ASP), passed a decision after an inspection in which it determined CRBC's VAT liability of over 7,8 million euros for the tax period December 2017-2021. and June 2022, as well as interest due to an untimely payment of more than 2,2 million euros.
"The tax authority previously challenged the application of the VAT rate of 0 percent after the inspection control, and this referred to certain procurements of food and materials for workers, the purchase and service of cars, materials and tools for camp maintenance, PR and audit services, maintenance services IT systems and assignment of workers, services of lawyers, lease of business premises, fuel for cars", stated the ASP.
CRBC filed an appeal with the Ministry of Finance, and after its rejection, initiated an administrative dispute.
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