Montenegro Secures EU and EBRD Funding for Second Phase of Bar-Boljare Highway, Awarding Contract to Chinese Consortium

Podgorica, Montenegro – Montenegro’s state-owned road company, Monteput, has awarded a €693.97 million contract to the Powerchina-Stecol-PCCD consortium for the construction of the Matesevo-Andrijevica section of the Bar-Boljare highway. This marks a shift in funding sources for the controversial project, moving away from Chinese loans and towards European financial support.

From “Highway to Nowhere” to European Integration

The Bar-Boljare highway, intended to connect the Adriatic port of Bar with the Serbian border, has long been a subject of debate. The first section, completed in 2022, was criticized as leading “from nothing to nowhere” due to its isolated location and limited economic impact. Initial funding for the first phase came from a $1 billion loan from the Chinese Exim Bank, contributing to Montenegro’s rising national debt, which exceeded the country’s GDP in 2020.

A Fresh Financing Model

Unlike the first section, the 23-kilometer Matesevo-Andrijevica segment will be financed through a combination of European sources. The project will be funded by a €200 million loan from the European Bank for Reconstruction and Development (EBRD), a €150 million grant from the European Union, and the remaining funds from the Montenegrin state budget. This represents a significant change in approach and a move towards greater financial stability for the project.

Competitive Bidding and Consortium Selection

Monteput CEO Milan Ljiljanic stated that the Powerchina-Stecol-PCCD consortium was selected through an international tender process conducted under EBRD rules. The consortium submitted the lowest bid, at €693.97 million, beating out competing offers from Cengiz-Azvirt (€735.01 million) and China Communications Construction Company (€724.64 million). Ljiljanic emphasized the transparency of the advertisement and the solidity of the selection process.

Strategic Importance and Regional Connectivity

The completion of the Bar-Boljare highway is viewed by the Montenegrin government as a crucial infrastructure project for the development of the country’s underdeveloped north. Beyond national benefits, the highway is also part of the larger European transport corridor XI, connecting Bari, Italy, with Bucharest, Romania. Analysts at the China Observers in Central and Eastern Europe (Choise) suggest that the EU’s support is also motivated by a desire to curb the influence of China and Russia in the region.

Construction Timeline and Challenges

Construction is expected to begin in late April 2026, with a planned completion time of five years, followed by a two-year defect liability period. The project will involve complex engineering works, including the construction of 3.9 kilometers of tunnels. Despite the new funding model, the project still faces challenges, including environmental concerns and the need to complete two additional sections to fully realize the highway’s potential.

Chinese Contractors Remain Key Players

While the financing has shifted to European sources, Chinese companies continue to play a significant role in the construction of strategic infrastructure in the Western Balkans. Powerchina is currently involved in road and wind farm projects in Serbia and Bosnia-Herzegovina, and is leading the construction of Belgrade’s first subway line.

Sources: Balkan Insight, CDM, The Geopost, Xinhua