Port privatization in Montenegro - 24.02.2010

Mr. Milutin Mrkonjic the Serbian Minister of Infrastructure, distinctly claims – it is Serbian political interest to have a sea access, but he is convinced it as an economical interest as well for the Serbian industry. Despite the Serbian businessmen have not shown big interest to the Montenegrin Bar Port privatization and to Belgrade-Bar railway reconstruction plans, Miodrag Kostic the owner of MK Group supported by Serbian Premier Mirko Cvetkovic became the promoter of the project, taking the initiative to set up an appointment with the biggest industrial investors in the region and to stay behind the preparation of a technical feasibility study of the Belgrade-Bar railway reconstruction. The owner of East Point company, Mr. Zoran Drakulic states that he moves annually 1, 5 tones of grains and non-ferrous metal goods by the river of Danube to the Romanian Port Constanta. For him it is not rentable to push cargo through Montenegro as the less than 500km route requires an average 13 hours to get to the port, while he has a cheaper and faster arrangement with Constanta Port shipping by the river corridor VII. Miroslav Miskovic as well as the US Steel jumped out after the first session as they see no economical interest in such a big investment, while there is no reliable cost-benefit analysis about the railway corridor. For the Serbian industry such an investment would be too big not to have a negative effect on the domestic market as it would require a huge relocation of assets, while in Serbia is the infrastructure also in a poor state. The Belgrade – Bar route is not listed among the European main corridors because it has no transit potential, henceforth the Montenegrin Government cannot count on European support by IPA founds, only for credits by better conditions in the process of deeper integration to EU structures. For Montenegro it is vital to connect to the main corridors across Belgrade to corridor X and VII as well as to the Belgrade Airport which is the biggest aero hub for passenger and cargo transfer in the region. Montenegro has no capacity to attract industry investors as there are few bigger, better equipped and technically on a higher level operating ports (see table 1.) in the Mediterranean sphere. The port is rather could be attractive for countries without a direct sea exit. According to the Serbian media alluding to the experts of the Belgrade Technical Faculty, 80% of the Suez crossing ships cannot embark into the Bar Port, while Mr. Andrija Radusinovic the director of Container and General Cargo Terminal of Bar Port denies this emphasizing that only the 40 biggest trans-ocean freighter above 12 thousand container load cannot dock in Bar. Anyway it is fact that the landing stage has no adequate depth, which is one of the first and most expensive positions on cost side. Without sinking the harbor pool we cannot speak seriously about connected transport investments, because most of the boat operators not willingly direct their ships to the dangerous dock.
In the same time Montecargo, the state owned railway cargo carrier is on sale as well as the Railway Infrastructure Company (Željeznička infrastruktura Crne Gore) . Italian investors led by their government agreed to finance in part the upgrade Study of the Belgrade – Bar railway line, which should be ready until the end of 2010 in a cooperation of Italferr and CIP Transport Institute. For Italian business is interesting an eventual connection of the South-Italian Bari Port with Bar and Belgrade to Timisoara as there are many Italian manufacturing companies producing in Western Romania. Mladjan Dinkic the Serbian Minister of Economy and Regional Development also insists to realize the project which would be undoubtedly a success also for the Fiat investment in Kragujevac. This would ensure the shortest route to supply the parts to the mill as well as to transport Fiat cars to Italy. However to see a rational context in the whole project we have to look out to the wider region. Next to Serbia there are yet few Central –European countries without a direct sea access. Austria, Czech & Slovakia, Hungary and Bosnia and Herzegovina also could benefit from a new logistic center. As it is written in the Serbian Foreign Investment Law (2002) and in part regulated by the Railway Law (2005) public assets and infrastructural objects are allowed to be given to concession or to construct in a BOT model. The same rules apply to Montenegrin legislation too.
There could be a synergy connecting Budapest by a state of art railway to Belgrade and to ensure commercial credits for Serbia and Montenegro for the reconstruction southern from Belgrade. The Belgrade railway junction is part of the Russian credit line devoted for the Serbian Railway. From Belgrade to the Croatian border Sid the double track lane is in the best state which is the axis of X corridor in the direction of Zagreb and Ljubljana. While the Branch B runs from Stara Pazova junction across Novi Sad to Budapest. This single rail track from Stara Pazova to Budapest is in a very bad state from both of the Hungarian and Serbian side. This rout leads through Vojvodina in one connecting the two biggest cities in Serbia, Belgrade and Novi Sad, while from Novi Sad through Senta – Horgos line to Szeged (HU) still exists the abandoned for long years not used railway road, which is already listed as one of the track of the planned double track Novi Sad Subotica/Szeged-Budapest route. In Hungary there are no international European routes which pass through Szeged. It makes one of the biggest cities in Hungary to a dead-end while in case of building a divided double track could reintegrate 2 regions, ensuring dual direction passenger traffic on both of the lines, among them connecting Budapest Ferihegy Airport with Belgrade Airport. Meantime the freight traffic between Belgrade and Budapest would be operated as on a standard double track platform. Between Budapest and Bar there are two car plants, opening a south stream alternative could involve other industries on the route, not to mention the potential of intermodal (RO-LA) and container transport.
According to Budapest based ITCB consulting, there is an increasing number of investors from Hungary who are launching businesses both in Bosnia and Herzegovina and in Montenegro. Montenegro after the Russian investors becomes more interesting also for entrepreneurs from surrounding countries. Buying the port would not only ensure terminals and stores for cargo transfer, but also would give a much wider opportunities to the development of connected transport industry and services, not mentioning the security effect for a developing economy without an own sea exit. Other fact is the general increase of the volume of cargo transport in upcoming years which solely generates grows in case of every port manager in the Adriatic and Black Sea region. As it is underlined in Serbia the State administration alone is not taking part in the tender, only a consortium led by the newly established BB Cargo. The big silent from Austria and other Central European countries however anticipates, that despite all the envisaged investments most probably the project barely becomes profitable or just simply it requires too big investment in a (post)crisis period. It is obvious that Western-Balkan region becomes the part of EU already not so long. Such an input anyway will effect to speed up complex infrastructural projects.


The Bar Port and the Belgrade-Bar Railway line.
The port was built under Tito`s governance to ensure for the Montenegro member Republic an important traffic point in order to lead there stable infrastructure. After the 1979 earthquake almost the whole harbor had to be rebuilt. In former Yugoslav republic it was the smallest cargo seaport and generally used to serve the Serbian export of car, steel and agricultural production. According to the call for public tender for the sale of 54.0527% shares of the company Container Terminal and General Cargo, concession would be awarded for the period of 30 years with the obligation of investing . Originally the deadline to submit application was 1. February, but it has been prolonged to 31.March.
In 1975 the Montenegrin and Serbian electrified single railway tracks (standard gauge,25 kV, 50 Hz AC) were joined near to Kolasin, ensuring an average 90km/h transport speed between the port and Yugoslavian capital city. Nowadays the average speed is under 45km/h due to the lack of maintenance and later upgrades. The 476km long route passes through a difficult mountainous landscape, numbering 254 tunnels and 435 bridges. Technical Study of Upgrade is in preparation. Not officially the whole line reconstruction is estimated on 350 million EUR.

BB Cargo
The Serbian Government in the end of 2009 established the BB Cargo limited liability company, registered for railway cargo transport. The central office is registered in one of the governmental buildings in Belgrade. The paid-in capital is 62.000 EUR. By the decision of the board of directors the capital could be increased and it is decided to take a part in the privatization of Montecargo and Container and General Cargo Terminal of Bar Port. The tender documentation has been paid in amount of 20.000EUR. On the base of media reports the government is allocated 500 million RSD to submit offer as a minority shareholder in a consortium with interested companies.
Table 1. (Cargo traffic in 2009, source: official web sites of the ports)
port cargo type (thousand/T) Constanta (RO) Thessaloniki (GR) Rijeka (HR) Koper (SLO) Bar (MNE)**
general cargo 20.723 3.530 2.650 4.901 1.031
dry bulk cargo 10.418 3.427 3.377 5.575 738
liquid bulk cargo 10.873 8.006 6.364 2.667 452
total 42.014 14.963 12.391* 13.143 2.220*
* 2008 dates
** source: NIN