The government has decided to drastically reduce the revenues that the municipalities of Zeta and Tivat should receive from the possible concession of the Podgorica and Tivat airports, in its own favor.
Namely, last Thursday, the cabinet of Prime Minister Milojko Spajić adopted a proposal for amendments to the recently prepared Proposal for Amendments to the Law on Financing Local Self-Government, which requires that municipalities in whose territories the state grants concessions for airports, ports and roads be given only 70% of the concession fee that the state takes from the lessee, instead of 20%.
"This amendment amends the legal solution relating to the percentage of revenue transfer based on concession fees for the use of airports, ports and roads in order to adequately distribute this revenue, taking into account the specificities of the subject of the concession," states the explanatory statement of the amendment, which does not explain what the "specificities of the subject of the concession" are that justify such a drastic taking of municipalities' revenues for the benefit of the state treasury.
The Law on Concessions stipulates that concession income is divided between the budget of the Government and the municipality on whose territory the subject of the concession is located, according to the percentages determined by the Law on Financing Local Self-Government. According to the current Law on Financing Local Self-Government, 70% of the income that the state generates by granting a concession of a good of general interest, which explicitly includes airports, is assigned to the municipality on whose territory the good is located, “except for income from the concession fee for the use of the port, of which 50% is assigned to the municipality in which the port that is the subject of the concession is located”.
Spajić's government, in the very final stages of the procedure for the possible lease of the airport, which has been going on for more than five years, decided to "change the rules of the game" to the detriment of the local governments of Tivat and Zeta and to drastically cut these two municipalities off from working with the future airport manager.
Calculation
The Government's amendments, if adopted by the parliamentary majority, will now mostly "fall on the backs" of Tivat and Zeta, but they will also directly financially harm municipalities in which seaports have been given concessions, such as Kotor, Herceg Novi and Bar, and in the future, all those municipalities through which highways or expressways that would be built under the concession system will pass.
In the tender launched in 2019, the state requested a minimum one-time concession fee of 100 million euros from the future airport lessee, a minimum 10 percent share in the annual revenues generated as a variable part of the concession fee, and investments of at least 200 million euros. This means that under the current legal solutions, Tivat and Zeta would receive 70 million euros (35 million euros each) of the one-time concession fee, and the state would receive only 30 million. The same ratio (70 to 30 percent in favor of the municipalities) would also be used in the division of the annual variable concession fee. If the government's amendments are adopted, from the one-time concession fee, if the tender process were to be completed according to the previously minimum required conditions, Tivat and Zeta would thus receive only 20 million euros together, instead of 70 million euros.
"Such proposed changes for the Municipality of Tivat and the Municipality of Zeta are totally unacceptable and we will officially state our position and arguments in the coming days," the President of the Municipality of Tivat, Željko Komnenović, told "Vesti" yesterday.
The tender commission for the concession award procedure for the right to use the Podgorica and Tivat airports, of which Komnenović is a member, has unanimously decided to extend the deadline for submitting bids within the second phase of the procedure until May 7. The original deadline was April 4, but, as stated by the chairman of the commission and Minister of Economic Development Nik Đeljošaj, it was extended "at the request of qualified bidders from the first phase of the procedure."
The Ministry of Transport, then headed by Osman Nurković (BS), announced a pre-qualification tender for the award of the airport concession in October 2019, 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 are now formally in the running. However, the process was halted due to the coronavirus in 2020, and none of the three shortlisted bidders have yet submitted a final bid.
The consulting company "Fidelity Consulting", headed by economic analyst Miloš Vuković, assessed yesterday that with "99% certainty we can claim that the concession for ACG is a done deal and that Montenegro will give the airports under concession", and that the current government is approaching this process much less transparently and with less consideration for the entire Montenegrin public than the former DPS government of Prime Minister Duško Marković, which initiated the tender procedure.
They would pay for the expropriation from the concession fee.
Fidelity Consulting states that the thesis that the airport concession is a "done deal" is confirmed by several moves made by Spajić.
"In May 2024, the Government decided to proceed with the expropriation of real estate around Tivat Airport intended for Phase II of its expansion, clearly stating that "the intention is to ensure the necessary valorization of the Airport in a long-term sustainable manner through the granting of a concession that will be in the interest of the state and its further economic development", and that "although the concession act stipulates that the implementation of Phase II will take place in the fourth and fifth years of the investment program, it is necessary to resolve the property and legal relations on the cadastral plots that are included in this Phase without delay", states "Fidelity Consulting"
Then, Fidelity reminds us, in December 2024, the Government approved 11 million euros from the current budget reserve to start the expropriation process for Phase II of Tivat Airport.
"Watch out for this madness: expropriation is being carried out from state (read: our) money for the concessionaire who will receive clean title deeds?! So what is the purpose of the concession then - to take one of our most important resources and develop it from our money, and we applaud loudly," Vuković wrote yesterday on Fidelity Consulting's FB profile, noting that the state will try to squeeze at least 50 million euros, which it needs for the expropriation of real estate in Tivat, through amendments to the proposed amendments to the Law on Financing Local Self-Government, which reduces the percentage of concession revenue for the municipalities of Tivat and Zeta from 70 to just 20 percent.
"In translation: If the concession fee for the Airports of Montenegro is 100 million euros, 50 million euros are literally being taken from the Municipalities of Zeta and Tivat. Where will those 50 million euros go? You guessed it – into payments for expropriation over the years," Vuković stated.
They should leave long-term obligations to other governments.
"Fidelity Consulting" assesses that the government of Prime Minister Spajić is "pumping" the state budget for 2025 with a one-time concession income, while long-term obligations on this basis remain with subsequent governments."
"How beautifully they imagined this, right? Of course, all this was known when they presented the budget, they just deliberately deceived and misled the citizens and the public (worse than the team before 2020). After doubling the VAT in the tourism sector, they hammered the pre-final nail into Montenegrin tourism with the concession arrangement, because the concessionaire is not interested in the number of passengers, but in profit. The first thing the concessionaire will do is raise airport service fees and worsen the service, which we are witnessing at regional airports that are under concession - except for Tirana, which was given to a domestic company under concession," Fidelity Consulting stated.
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