The updated cost estimate for the construction of the second section of the Mateševo to Andrijevica motorway reflects the results of an open and competitive procurement process conducted for this project. Many large infrastructure projects across Europe are facing rising costs due to rising prices for construction materials, labour and financing. These factors are affecting the entire sector, and the bids received for this project are in line with prevailing market conditions for works of similar size and complexity.
This was officially told to "Vijesti" by the European Bank for Reconstruction and Development (EBRD), according to whose rules the state-owned company "Monteput" implemented a tender for the construction of an important infrastructure facility in the north of the country.
"In such circumstances, the agreed price represents the most realistic and reliable reflection of current market dynamics," the EBRD said.
The second section of the Mateševo-Andrijevica highway will be built by the Chinese consortium "PowerChina - Stecol - PCCD", at a contracted price of 693.969.668,88 euros.
"Monteput" told "Vijesti" at the end of last week that the price was increased due to the difference between the initial estimate, based on a preliminary design prepared in 2019, and the offer of the selected consortium "PowerChina - Stecol - PCCD", which was formed in accordance with current market conditions, the scope of work and risk distribution.
"The selected Chinese consortium offered 693.969.668,88 euros, while the preliminary design for the Mateševo-Andrijevica section from 2019 estimated costs of 638 million euros, which included 15 percent of unforeseen works. The project is being implemented on the basis of FIDIC contracting conditions, namely the Yellow Book (Design & Build), which implies that the contractor has included in the price all design and construction works necessary for the integrity of this section. Also, this method of contracting implies that the contractor assumes a certain part of the risk related to geological conditions," the company stated.
The EBRD's due diligence and approval of the project, as explained by this international financial institution, is based on cost estimates from the updated 2024 Feasibility Study, prepared by consultants funded through the Western Balkans Investment Framework (WBIF).
“These studies use internationally recognized methodologies and form the basis for the Bank’s internal assessment. However, actual market prices can only be determined through competitive tendering, which is the clearest real-time indicator of costs. Comparing motorways in the region is not always straightforward, as costs vary significantly depending on terrain, required facilities, geological conditions and technical standards. The section in question is characterized by significant engineering complexity, which directly impacts the overall investment needs,” the EBRD explained.
This section is about 23 kilometers long, and its construction will be paid for with 250 million euros from the state treasury, through a 200 million loan from the European Bank for Reconstruction and Development (EBRD) and a 150 million euro European Union grant.
Three bidders competed for this job: the "Cengiz-Azvirt" consortium, which offered 735.010.330 euros, the "China Communications Construction Company" company, whose bid was worth 724.636.904 euros, and the "Power Construction Corporation of China" consortium.
The deadline for the construction of the highway section from Mateševo to Andrijevica is five years, but "Monteput" and the Chinese consortium "PowerChina - Stecol - PCCD", as announced by the director of Monteput Milan Ljiljanic, work to build this route by the end of 2030.
The Chinese contractor should deliver the accompanying guarantee and additional documentation to "Monteput", after which the contract will be signed by the end of this month or early next month. After that, the contractor will begin design and preparatory work.
The company "PowerChina" is already working on or has completed billions of euros worth of projects in the Balkans, including infrastructure for the "Expo 2027" project in Serbia, part of the Belgrade metro and city bypasses, as well as the Herzegovina Bridge on the Neretva between Mostar and Čapljina, the "Ivovik" wind farm and the Kalinovik hydroelectric power plant. The company "Stecol" is their daughter company, while there is no information about "PCCD" on the internet.
The Chinese contractor also built the first section of the highway from Smokovac to Mateševo, and the job, which then went to the China Road and Bridge Corporation (CRBC), lasted more than seven years. Those 42 kilometers of highway, with basic and forgotten works, interest and exchange rate differences, cost Montenegro about 1,3 billion euros.
All deadlines for this route have been met, and the works that began in May 2015 were supposed to be completed on the same day in 2019, and the former Minister of Transport guaranteed that the highway would be opened then. Ivan Brajović. The section was officially opened on July 13, 2022, more than three years after the original deadline. In addition to the delay, the construction cost was exceeded by about one hundred million, and an entire interchange, electrical and water supply networks, and several access roads were forgotten during the construction contract...
The contractor selection process is completely transparent
The EBRD stated that the procurement procedure was conducted in accordance with the EBRD's procurement policies and rules, which require open competition, equal treatment of bidders and full transparency.
"The procurement was carried out through the EBRD Client Electronic Procurement Portal (ECEEP) in accordance with applicable public procurement procedures. Based on the assessment conducted, it was determined that the procedure fully complied with the stated standards and resulted in a transparent and competitive selection of the contractor," the EBRD claims.
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