Almost 22 million euros will be needed for commodity reserves

The draft law on commodity reserves envisages the re-establishment of state commodity reserves consisting of agricultural and food products, medicines and sanitary materials, while the cost of their establishment in the first year would amount to around 21,97 million euros. In addition, currency and securities could also be included in commodity reserves.

Of the total amount of money for commodity reserves, 88 percent (19,33 million) would be the costs of purchasing and supplying goods, and 12 percent (2,64 million) would be the current costs of storage and operations of the Strategic Reserves Administration, which would manage the commodity reserves.

In the event of a serious market disruption, citizens would be supplied with goods from state reserves through authorized distributors and traders who would conclude distribution and sales contracts with the Administration. The final price of the goods would be determined by the Government, and it should not be higher than the retail price that the goods had before the crisis or market disruption. It is also envisaged that the same type of goods from the commodity reserves would be sold at the same price throughout Montenegro.

"Vijesti" has access to this document, which was prepared by the Ministry of Economic Development and on which the Ministry of Finance gave its opinion.

"Given the significant fiscal effect and the estimated costs not planned in the 2026 budget, it is necessary to establish a sustainable financing model that will not burden the budget further. The Ministry of Finance proposes considering a financing model modeled after the financing of mandatory reserves of petroleum products, which implies a combined financing model," the Ministry of Finance states.

According to the Draft Law, the money for the establishment, renewal, storage and use of commodity reserves, as well as for the provision of storage space, would be provided from the budget of Montenegro, revenues generated by the Administration through operations, loans and other sources in accordance with the law. It is also envisaged that the Administration may take out loans with the prior consent of the Government, whereby it could establish a lien on immovable property. The Draft also defines that the Administration may not receive donations for the establishment and renewal of commodity reserves.

The draft law needs to undergo a public debate before it can be sent to the Government for further procedure.

The commodity reserves that Montenegro had were abolished on December 25, 2003, and on that day the Law on Intervention Procurement was adopted, which regulates the procedure for supplying the market with wheat, wheat products, edible oil, sugar and other products that are necessary to meet the needs of the population in conditions of serious market disturbances.

Three-year program

According to the Draft Law, commodity reserves would be formed to ensure basic supply and maintain stability in Montenegro in cases of natural disasters, catastrophes, ecological, technical-technological and other accidents, crisis situations, state of emergency or war, threat to public health of people and animals, shortage of goods on the market when there is no possibility of purchasing substitute products, as well as serious market disturbances. It is also envisaged that commodity reserves can be used to send humanitarian aid to other countries and fulfill Montenegro's international obligations.

It is further defined that the formation, renewal, storage and use of commodity reserves would be carried out on the basis of a medium-term program and an annual plan for commodity reserves. The program would define the types and quantities of reserves, sources and scope of financing, territorial distribution of stocks, method of storage and the need to provide storage space, and when developing it, the risks of crisis situations and market disruptions, the state of supply of the state, economic conditions and global security risks would be taken into account. It is envisaged that the Program, at the proposal of the Ministry of Economic Development, will be adopted by the Government for a period of three years.

"The draft program is being prepared by the Administration in cooperation with the Ministry of Economic Development and the Ministries of Agriculture, Health, Environmental Protection, Internal Affairs, Defense, Transport and Spatial Planning," states the Draft Law, which clarifies that an annual plan for the formation of commodity reserves will be adopted based on the medium-term program.

The Commodity Reserves Administration will be obliged to submit to the Government, by January 31st of the current year, an annual report on the status and operations of commodity reserves for the previous year, with a summary of the status as of December 31st.

Storage rules

According to the Draft Law, commodity reserves could be stored with producers of goods in Montenegro, other economic entities that have the conditions for storing certain types of goods, in warehouses rented from legal and natural persons or municipalities, as well as in state-owned warehouses. The premises for storing commodity reserves must meet the conditions for long-term storage of goods that make up commodity reserves so as to preserve the quality and quantity of that type of goods, in accordance with the law.

Commodity reserves with manufacturers in Montenegro would be stored as increased commercial stocks, while reserves of medicines and medical devices would be kept with legal entities that have a license for wholesale trade of these products, with whom the state would conclude contracts for the storage, storage and renewal of commodity reserves.

A storage contract and a contract for maintaining commodity reserves may be concluded for a period that cannot exceed ten years.

"The formation of commodity reserves would be carried out by purchasing goods, contracting for production and exchanging goods, while their renewal would be carried out by selling and purchasing goods, contracting for production, exchanging goods and lending goods. It is also envisaged that the formation and renewal of commodity reserves can also be carried out through other appropriate legal transactions in accordance with the law," the draft law defines.

Procurement of goods for commodity reserves will be carried out in accordance with public procurement rules, while it is envisaged that reserves will be formed by purchasing goods, contracting production and exchanging goods. Renewal of reserves will be carried out by selling and purchasing goods, contracting production, exchanging and lending goods.

As stated, the sale of goods from commodity reserves will be carried out on the basis of a public invitation through the collection of bids. The sale of goods from commodity reserves would be carried out through a public invitation and the collection of bids, where the invitation would contain data on the type, quantity and technical characteristics of the goods, as well as the conditions and criteria for participation in the procedure. Exceptionally, the sale could also be carried out by direct negotiation when only one bidder is expected, if the value of the contract does not exceed 100 thousand euros or when the contract is concluded with a legal entity under public law. It is also envisaged that the Administration will publish the intention to conclude such a contract on its website and the website of the Ministry, while the detailed rules of sale would be prescribed by the Government.

The draft also defines that the Administration would determine the selling price of commodity reserves based on an assessment of the market value of the goods and a comparison with the prices of the same or similar goods on the market. If no bid reaches the estimated value, the goods could be sold at a lower price in cases where there is a threat of destruction due to the expiration date, when urgent emptying of the warehouse is necessary, or when the costs of further storage would be higher than the value of the goods themselves.

Commodity reserves can be loaned out

The Administration could lend goods from the commodity reserves for the purpose of replenishing stocks and preserving the quality and health safety of goods that are about to expire. The borrower would be obliged to return the goods of the same type, quantity and quality, and if this is not possible, the Administration could accept another type of goods that the commodity reserves operate with, according to the market value determined on the day of delivery. Interest would be paid on the value of the borrowed goods, except in cases where the goods are about to expire or the stocks are given to the Ministries of Internal Affairs and Defense, as well as the Army of Montenegro, when the loan could be granted without interest.