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Montenegro Laws |
The purpose of this act is to improve the participation of the private sector for the delivery of public services and, while taking into account the need for good governance and economic growth.
This Act shall apply to delivery of public services related to:
- Leasing and management contracts
- Concessions
- Built-operate transfer arrangements (hereinafter: BOT)
- Regulatory bodies defined under this Act.
This Act shall apply to all public entities, as defined under this Act.
Where the context so permits words importing the singular shall be deemed to include the plural and vice versa and words importing the masculine shall be deemed to include the feminine and vice versa; words importing persons or parties shall include firms and companies and any person having legal capacity. The meanings which shall
apply to this Act are:
"Build, Operate and Transfer, B.O.T.": a contract arrangement, under a franchise, whereby a private investor and /or operator
is obliged to build and operate a public utility and, after a determined period, transfer the ownership thereof to a public entity;
B.O.T. arrangements shall include build-lease and transfer, build-transfer-and- operate, develop-operate-and-transfer, rehabilitate-operate
and transfer; tariffs payable by the clients shall be regulated by the contract entered into and shall be subject to the decision,
after public hearings, of the regulatory body for the tariffs payable and the quality of the services delivered;
"concession": a repetitive contract arrangement offered under a license, to a private investor and / or operator for the
proper extraction or exploitation of natural resources or raw materials for a determined period of time; such arrangement may include
investment or rehabilitation by the private sector; in contract in which a public entity of the Republic of Montenegro transfers
some rights to a local or foreign firm or company which then engages in an activity subject to the terms of the contract
and in
Law on Participation of Private Sector in Delivery of Public Services 1
return provide revenues to the Government of the Republic of Montenegro (hereinafter Government) or to a Self-Local Government
per unit exploited or extracted;
"contingency liability": a liability that may occur only if a specific event happens; a liability that depends on the occurrence
of a future and uncertain event;
"franchise": a revocable right, under B.O.T. arrangements, conferred by the Government of the Republic of Montenegro or
in a similar manner by a self local government to a provider of services to engage in a specific business or to exercise corporate
powers; the rights necessary for public utilities companies to carry on their operations shall be designated as a franchise, under
wherewith substantial rights may be granted, contrary to a license wherewith less or limited rights are granted;
"Government-owned company or firm": refers to any company or firm, whether performing governmental or proprietary functions,
owned at majority or otherwise controlled by the Government of the Republic of Montenegro;
"investor": a person, natural or corporate, who invests money with an expectation of earning profit;
"invitation for seeking offers": a solicitation for offers as a preliminary step to forming a contract;
"leasing": granting the possession of movable or immovable properties to another in return for rent;
"license"; a revocable permission granted by the regulatory body, established under this Act, to operate a concession;
"license fee": a monetary charge imposed by a public entity for the privilege of pursuing a particular occupation, business
or activity; a charge of this type is accompanied by a requirement that the licensee takes some action or be subjected to regulation
or restriction;
"management contract": a contract to engage the services of the people in a company, or in a firm, who are responsible for
its operation;
"natural resource": any material from nature having potential economic value or providing for the sustenance of life, such
as timber, minerals, oil, water and wildlife; features of nature that serves a community's well-being or recreational interests,
such as parks;
"offer": a display of willingness to enter into a contract on specified terms, made in the way that would lead a reasonable
person to understand that acceptance, having
been sought, will result in a binding contract;
"operator": a company or a firm responsible to operate on behalf of an investor;
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"privatization council": the council established under the article 2A of the Privatization of Economy Act (Official Gazette of the Republic of Montenegro23/96, 6/99, and
59/00).
"public entity": public entities are courts, bodies of local government, all organizations designated as such by the Decree
on organization and methods of works for public administration / Official Gazette of Montenegro no. 8/93, 39/93, 19/95, 13/96, 24/96,
7/97, 13/98, 27/98, 38/98, 18/99, 31/99, 59/00, 31/01, and 33/01 and public entities which performs social duties pursuant to the
rules of Social Activity Act (Official Gazette of Montenegro No. 19/90, 25/90, 6/91, 27/91,21/95 as well as any other entity which
will be established and will utilize public funds;
"public services": a project or any kind of services normally financed and operated by the public sector, such as power
plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and
railways, transport systems, housing, government buildings, tourism projects, markets, solid waste management, education and
health facilities and any others as may be determined by the Government;
"raw material": substances that are in their natural state before being processed or used in manufacturing;
"regulatory body": refers to an independent body established under this Act that is responsible for issuing licenses or
authorizing franchises, regulating tariffs charged for public services and guaranties that the private operator and/or investor ensures
the qualities level of services;
"rules": refer to the rules and the necessary forms made under this Act by the Privatization Council or by the regulatory
body; where rules introduce a standard form, such form shall be mandatory.
For selection of any of the contractual arrangements authorized under this Act, leasing, management contract, concessions or B.O.T.
arrangements, that may be proposed to the private sector in compliance with this Act, a public entity shall prepare, as
a first step, a background document, submitted to the approval of the authorities established under the Privatization of the Economy Act, detailing:
(1) the public entity who will be responsible for the project; (2) what will be the object and scope of the contract;
(3) what will be the duration of such contract, and what circumstances will give rise to early termination;
(4) what will be the obligations and rights of the parties;
(5) where applicable, the key regulations that will be proposed;
Law on Participation of Private Sector in Delivery of Public Services 3
(6) who will manage identifiable key risks, such as design and development, construction, operating, revenue, financing,
force majeure, insurance and environmental risks;
(7) how will performance be measured and monitored; (8) where applicable, how will assets be transferred;
(9) where applicable, who will be responsible for past or future environmental liabilities;
(10) how disputes will be resolved; and,
(11) for transparency, what kind of solicitation methods will be utilized and the type of contract to be offered.
After having obtained license in compliance with the article 4 of this Act, contractual arrangements become the part of a privatization plan and are subject to all the duties which stem from this Act.
A public entity, in addition to the requirements under the article 4 of this law may propose a leasing arrangement, as an alternative
to public investment, where -
(1) there is an evident situation of lack of funds for such public investment; (2) the beneficiaries are suffering from lack of public
services; and,
(3) the funds can be properly appropriated for the private investor or operator to meet its obligations under such contract arrangement.
A public entity, in addition to the requirements under the Article 4 of this law may propose a management contract as an initial
measure toward more private sector involvement in the Republic of Montenegro (hereinafter Republic) or in the cities where -
(1) there is evidence made whereby initial conditions are not conducive to private sector investment and risk taking;
(2) where tariffs are below cost recovery levels; or
(3) where there is a need to administer and manage a complex arrangement, whether financial or technical.
A public entity, in addition to the requirements under the Article 4, may propose a concession agreement where -
Law on Participation of Private Sector in Delivery of Public Services 4
(1) natural resources such as minerals or such as any activity thereof such as for tourism activities, and potentialities thereon,
are not exploited properly therein;
(2) revenues may be generated therefrom;
(3) major private financial or technical inputs are necessary therefore;
(4) economic growth results are determined by a valuation made thereof;
(5) a regulatory body can, under a license, control the quality level of services and the applicable tariffs.
A public entity, in addition to the requirements under the Article 4, may propose a B.O.T. arrangement, as defined under this
Act, where -
(1) major new capacity for public services is needed and based on expert estimate or elaborateness;
(2) no divestiture of existing publicly owned companies or firms can permit hereunder proper investment for the new capacity required
therein; and,
(3) after a determined period of operation, enough for the private investor to recover the investment and the costs of operating,
the transfer of the properties, movable or immovable, is made thereinafter.
(1) A public entity may propose a combination of arrangements provided for in article 4 of this Act, in which case such a combination
must include conditions for each separate arrangement that is being proposed.
(2) The Government may decide to, in view of liberalization of economy, permit the inclusion of private sector in performing public
services by applying different contractual arrangements not provided for by article 4 of this Act, according to the conditions provided
by a separate Act.
Pursuant to article 4, where proposing a private sector partnership, the public entity, or many public entities together, such as
a group of self-local governments, shall, for any proposed partnership, demonstrate the need to -
(1) bring technical, financial, or managerial expertise and new technology in the sector;
(2) improve economic efficiency in the sector, operating performance and the use of capital investment;
(3) inject large scale investment capital into the sector or gain access to private capital markets;
(4) where applicable or otherwise doable, reduce public subsidies to the sector; (5) make the sector more responsive to consumers'
needs and preferences;
(6) the tentative schedule of tariffs to be paid;
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(7) competitive pressures deriving from markets for returns on the capital to be invested; and,
(8) competitive pressures deriving from similar services.
Upon approval, pursuant to article 4 of this law a public entity shall prepare the solicitation documents in compliance with this Act, and shall, before initiating solicitation, obtain a prior endorsement by the authorized organs on the contents of the solicitation documents; after solicitation, the public entity shall examine, evaluate and compare offers and obtain approval from the same organs before awarding the contract; copy of the contract shall be made available to the relevant regulatory body.
Any contract offered under a solicitation exercise or otherwise entered into under this Act shall be subject to maximum duration:
(1) lease agreement shall not exceed a period of two (2) years, but might be subject to renewal every year, in compliance with the
terms and conditions of the contract, but the total period, including renewal, shall be subject to a maximum period of five (5) years;
(2) management contract shall not exceed a period of five (5) years;
(3) concessions or B.O.T. contracts shall not exceed a period of (30) thirty years or, where the contract is based on recovery of
investment, shall not exceed the period necessary for the recovery of investment only where the determined recovery is based thereunder
on a determined percentage of the tariffs paid by the beneficiaries; nevertheless, where the period may exceed (30) thirty years
under such contract, the period shall be, at time of contract signature, based on a probable recovery not to exceed (30) thirty years;
where an extension is necessary for recovery and part of the terms and conditions of a contract, such extensions shall be permitted
strictly on the terms and conditions stipulated in the contract entered into;
(4) the period for which a concession or a B.O.T. has been granted may be extended in exceptional case because of a substantial change
in the conditions under which the concession or the B.O.T. was granted;
(5) the duration of preparatory work shall be specified in the concession as well as in a B.O.T. agreement.
Pursuant to article 13 of this law, the commencement of the period shall not include the period for construction or rehabilitation; therefore, the period shall start, in any case, on the day the operations start; for avoidance of doubt, the day the operations start shall prevail on the date -
Law on Participation of Private Sector in Delivery of Public Services 6
(1) the contract was signed therefore and,
(2) where applicable, of entering into effect of the contract.
Subject to articles 4 and 12 of this law, a public entity or more public entities may enter into solicitation to seek offers from private sector in compliance with the law.
A management contract being a contract whereby consulting services are delivered, and a leasing contract being a public procurement activity, the relevant articles of the public procurement law shall apply.
Subject to article 16 of this law, for management contract, any request for proposals and, for leasing contract, any bids solicited, therefore any procurement undertaking thereof, shall be in compliance with the public procurement rules and the standard forms approved by the Public Procurement Commission.
Pursuant to the articles 15, 16 and 17 of this law where a construction or rehabilitation, resulting from such management or leasing contract, therefrom, therein, thereunder or thereinafter, is planned for a building in public property and where its design is delivered by the private sector, the prior approvals of the Pre- Investment Committee established in conformity with the Public Procurement law.
Except for and not including any fair dialogue between investors and public entities prior to a solicitation exercise or permitted dialogue before award of a contract not resulting in unfair advantage, no unsolicited offer and any form of direct agreement without pre-qualification or solicitation shall be permitted. Therefore, to ensure transparency and fair competition, for concessions or B.O.T. arrangements,
Law on Participation of Private Sector in Delivery of Public Services 7
any unsolicited offer or direct agreement shall, upon receipt, be rejected and not be considered further.
Subject to article 4 of this law, for a concession or a B.O.T. project, the public entity responsible for the project shall establish
a project assessment unit of five members having the proper expertise whereby the combination of legal, technical, financial, environmental
and other relevant expertise is made available; selection of the members shall be subject to endorsement by -
(1) the Government, in the case of Ministries, Departments or Secretariats;
(2) their respective municipal assembly, in the case of a Self-Local
Government or organs of Self-Local Governments; or,
(3) the parent ministry, for the publicly-owned companies or firms.
Subject to article 20 of this law, members shall not be elected persons and shall be subject to the solemn statement made by public procurement officers under the public procurement law.
Subject to articles 4, 12, 20 and 21 of this law and to the rules made under this law, the members shall be responsible to supervise
and manage -
(1) the pre-qualification of investors; (2) the seeking of offers from them;
(3) the receiving and opening of offers;
(4) the examination, comparison and evaluation of offers; (5) the preparation of an evaluation report;
(6) the undertaking of dialogue with investors before award; and
(7) the preparation of a final recommendation.
Pursuant to article 22 of this law, a project assessment unit may, where necessary, seek assistance from consultants to assist in the undertaking of any activity. The consultants shall be selected in compliance with the Public Procurement Law.
The undertaking of dialogue, pursuant to sub-article (22) 6 s of this law hall be only for improvement of the understanding of the offer, before award, and shall not
Law on Participation of Private Sector in Delivery of Public Services 8
result in negotiation so as to alter substantially an offer or to render it substantially responsive to the solicitation documents.
Before award the endorsement is given by:
(1) the Government, in the case of Ministries, Departments or Secretariats;
(2) their respective municipal assembly, in the case of a Self-Local
Government or group of Self-Local Governments; or,
(3) the parent ministry, for the publicly-owned companies or firms.
For concessions and B.O.T. contracts, except for concessions and B.O.T. based on article 138 of this law, open and international pre-qualification of investors shall be undertaken, prior to the seeking of offers, after international advertising is made, as per the rules and the standard forms approved by the Privatization Council under this Act.
(1) Evaluation for pre-qualification shall be effected strictly according to pass or fail criteria stipulated up-front in the pre-qualification
documents.
(2) Any pre-qualification exercise shall be completed within the period stipulated in the solicitation documents.
(3) The investors shall furnish all such information, documents and provide such evidence as are required for the purpose.
Shall be selected the investors on the basis of the information given by them in the request made pursuant to Article 26 of this law,
subject to verification before award.
The results of the pre-qualification exercise shall be determined by an ad-hoc Evaluation Committee, set up by the project assessment
unit; members of the project assessment unit shall not be members of the ad-hoc evaluation committee.
The evaluation shall be undertaken as per the rules and forms approved under this Act by the Privatization Council.
Subject to any fresh verification of information, no investor who has met the criteria set out shall, at selection, be disqualified.
Law on Participation of Private Sector in Delivery of Public Services 9
The criteria for selection shall be -
(1) the cost and the magnitude of the financing offered; (2) the performance specifications of the facilities
offered;
(3) the cost chargeable to the users, beneficiaries or consumers;
(4) other income generated for the public entity or the purchaser by the facility;
(5) the period of facility depreciation;
(6) in addition to the conditions to post-qualify, the investor shall evidence that its investment by its available
capital will not be less than 25 % of the capital invested.
The report of the ad-hoc Evaluation Committee shall be signed by all persons who formed part of the evaluation process; the report shall include - (i) introduction to the project; (ii) copy of the opening report; (iii) details on investor examination and rejects; (iv) list of pre-qualified investors who pass all criteria and who will be, for a given period, eligible investors; (v) copy of the pre-qualification documents; and (vi) the list of investors under conditional pre-qualification and the criteria to be met within a set deadline.
An investor shall be notified in writing of the result of his pre-qualification; investors who have not been selected under a pre-qualification exercise shall be entitled to be given the reason for their disqualification and the criteria on which they failed.
Verification of the information provided by investors in the submission for pre-qualification shall be confirmed at the time of award of contract; therefore, award shall be denied to an investor who no longer meet one or more of the criteria or resulting in a lack of capability or resources to successfully perform the contract; any substantial information found false with evidence made at verification shall result in disqualification of the investor or rejection of his offer.
For seeking offers from pre-qualified investors, all project assessment units shall use the forms provided under the rules approved by the Privatization Council.
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A non-reimbursable fee may be charged to investors for solicitation documents; the amount of the fee shall be solely determined by the cost of their production and delivery; the fee shall not be so high as to discourage a qualified investor.
Any response by investors and any kind of document provided by them shall be in one of the languages authorized by the solicitation documents. If another language is utilized the certified translation in one of the language authorized shall be submitted.
Where an investor requests additional information on the pre-qualification documents or on the solicitation documents, such information shall be communicated to all investors provided with the documents, without identification of the source of the request; any additional information, correction of errors or alteration of contents thereof shall be sent immediately and in the same manner by issuing an addendum made available to all those who requested the original documents.
Where a site visit is convened, minutes shall be prepared to record any request for additional information, and, without identifying the source thereof, the minutes shall be made available by an addendum issued to all those who requested the original pre-qualification or solicitation documents.
The additional information provided by addendum as stipulated in articles 34 and 35 of this law shall be binding on the investors and shall be communicated to all investors within the period specified under the rules, before the submission of pre- qualification or offers so as to enable the investors to make a timely pre-qualification or offer.
The time allocated to investors to prepare the pre-qualification documents shall be not less than forty-five working days, starting on the day the advertisement is published, and for the preparation of their offers, not less than sixty working days shall be allocated.
Law on Participation of Private Sector in Delivery of Public Services 11
The time for opening of pre-qualification documents or offers shall be the same as for the deadline for receipt or promptly after the deadline for receipt, only to allow sufficient time to the ad-hoc opening committee to take the envelopes safely to the location stipulated for the opening; the solicitation documents shall indicate the location, the date and the time for the opening; envelopes received after the time stipulated for submission as well as those not opened and read out at the occasion of an opening shall not be considered; save in cases of force majeure, postponement of proceedings shall not be permitted.
Where an investor wishes to amend his pre-qualification or his offer he shall not be allowed to retrieve his original sealed envelope, but shall only be allowed to send another envelope equally sealed, properly identified and linked to his original envelope and marked as "modification" or "withdrawal" as the case may be.
A pre-numbered receipt shall be given for any envelope or package containing pre-qualification documents or offers delivered
by hand, after ensuring that it is correctly sealed; a member of the ad-hoc Opening Committee shall be responsible for the issuance
of receipts and the safeguarding of all offers related to a solicitation exercise; the name of the member shall be stipulated in
the solicitation documents.
Electronic communication shall be in compliance with the law and be permitted only where authorized in the solicitation documents.
Unless the solicitation documents require otherwise, ad-hoc opening committees shall use containers of a size and type capable of receiving pre- qualification documents or offers safe and sound therein, with a sleeve and a door with locks, of which could, for reasons of security and confidentiality, be suitably controlled by such number of different keys entrusted to senior officers.
Rejection of all offers shall be allowed only when there is lack of effective competition or when all offers are not substantially responsive; however, lack of competition shall not be determined solely on the basis of the number of investors; when all offers are rejected, the project assessment unit shall review the cause justifying the rejection and consider making revisions to the conditions of contract, design and specifications, scope of the contract, or a combination hereof, before
Law on Participation of Private Sector in Delivery of Public Services 12
inviting new offers; when the rejection of all offers is due to lack of competition, wider advertising shall be considered; when the
rejection is due to most or all of the offers being substantially not responsive, new offers may be invited from the same investors
who were originally invited.
In case of rejection of all offers, the notice of the overall rejection shall be given promptly to all investors who submitted offers
and in all cases, before the end of the validity period; any public entity shall not thereby incur any liability nor assume any obligation
to inform any investor of the grounds for the rejection or the cancellation of the process.
For a B.O.T., where the most responsive offer, offering the best business plan exceeds the estimate for payable tariffs, the project
assessment unit shall investigate causes for the excessive tariffs and shall consider requesting new offers; alternatively and after
the approval of the Privatization Council, the project assessment unit may, instead of calling for new offers and without
changing the substance of the solicitation, offer to the winning investor a reduction on the scope and / or a reallocation of
risk and responsibility which can be reflected in a reduction of the tariffs payable.
To afford reasonable protection against irresponsible offers, bid security may be required, but it shall not be set too high as to
discourage investors; the bid security shall be in the form of a manager’s or certified check, a letter of credit or a bank guarantee;
the bid security shall remain valid for a period stipulated in the solicitation documents which period shall be beyond the validity
period for the offers; the bid security shall be released to unsuccessful investors immediately upon determination that they will
not be awarded with a contract.
Solicitation documents may require security in an amount sufficient to protect the interests of the Republic of Montenegro in case
of breach of contract by an investor; this security shall be provided by a performance bond or a bank guarantee in an appropriate
standard form and in an amount specified in the solicitation documents.
Force majeure
The conditions of contract shall stipulate that failure on the part of the parties to perform their obligations under the contract shall not be considered a default if such failure is the result of an event of force majeure as defined in the conditions of contract.
The pre-qualification and the solicitation documents shall include a standard form to be signed by an investor certifying that his offer has been prepared
Law on Participation of Private Sector in Delivery of Public Services 13
independently and whereby he will accept to comply with any obligations under the law of the Republic for Montenegro, including anti-corruption.
All offers shall be first examined to determine if they (i) meet the minimum eligibility requirements stipulated in the solicitation
documents; (ii) have been duly signed; (iii) are accompanied by a valid security, where requested in the solicitation documents;
(iv) are substantially responsive to the solicitation documents; and (v) are generally, otherwise, in order; the following shall
not be sought, offered or permitted: (i) changes in prices, subject to this Act; (ii) changes of substance in an offer; and (iii)
changes to make an unresponsive offer responsive.
A major deviation shall result in a rejection of an offer while a minor deviation shall be subject to clarification.
The following shall be considered as major deviations:
1) with respect to clauses in an offer: (i) improper arbitration, (ii) unacceptable sub-contracting, (iii) unacceptable
time schedule, only where time is of essence, and, (iv) unacceptable tariffs adjustment mechanism;
2) with respect to the status of an investor: (i) the fact that he is ineligible or not pre-qualified; and (ii) the fact that
he is uninvited;
3) with respect to documents of an offer - (i) an unacceptable or missing security, or (ii) an unsigned offer;
4) with respect to time, date and location for submission: (i) any offer received after the date and time for submission stipulated
in the solicitation documents; and (ii) any offer submitted at the wrong location.
5) In cases of major deviations, offers shall not be considered any further and, where unopened, shall be returned as such to
the investor; in all cases of rejection, a letter stipulating the reasons for rejection shall be sent, and the investor shall not
be permitted to amend his bid to become compliant.
6) The following shall be considered as minor deviations: (i) the use of codes; (ii) the difference in standards; (iii) the
difference in materials; (iv) alternative design; (v) alternative workmanship; (vi) modified liquidated damages; (vii) limited liability
and insurance; (viii) omission in minor items; (ix) discovery of arithmetical errors; (x) sub-contracting that is unclear and questionable;
(xi) different methods of construction; (xii) difference in final delivery date; (xiii) difference in delivery schedule; (xiv) completion
period where these are not of essence; (xv) non- compliance with some technical local regulation; payment terms; and
Law on Participation of Private Sector in Delivery of Public Services 14
(xvi) any other condition that has little impact on the offer in cases not mentioned above.
7) Where there exists a doubt as to whether a particular condition in a bid is a major or a minor deviation, the following rules
shall apply: where the impact on the tariffs is major, it shall be regarded as a major deviation; and where the impact on the tariffs
is minor, it shall be regarded as a minor deviation.
8) In cases of minor deviations, written clarification may be obtained from the investor and, where applicable, a counter offer
made for the correction of the minor deviation; where an investor does not accept the correction of a minor deviation under the counter
offer, his offer shall be rejected; at the stage of evaluation and comparison, all minor deviations shall be quantified in monetary
terms.
9) For the rejection of an offer, a written notice shall be given promptly to the investor.
When determining the duration of the validity period of an offer, a project assessment unit shall ensure that it is sufficient to
enable the investors to respond to the solicitation, to allow time for evaluation and comparison of offers and, where applicable,
for any authorized organ to review the recommendation of award and give the necessary approval so that the contract can be awarded
within that period.
All reasonable steps shall be taken to avoid any situation where an extension of the initial period of validity becomes necessary;
a project assessment unit may extend the validity period, if justified by exceptional circumstances, by requesting in writing such
extension from all investors before the expiry date; where given, the extension shall be for a minimum period required to complete
the evaluation, obtain the necessary approvals and award the contract; whenever an extension of validity period is requested, investors
shall not be allowed to change the quoted price or conditions of the offer.
Investors shall have the right to refuse to grant such an extension without forfeiting their security; those investors who are willing
to extend the validity of their offer shall be required to provide a suitable extension of security.
The purpose of evaluation of offers shall be to determine the best business plan that permits comparison on the basis of calculated costs; subject to any verification of the capabilities of the investor, the offer with the best business plan, but not necessarily the lowest submitted tariffs, shall be selected for award.
Law on Participation of Private Sector in Delivery of Public Services 15
For the evaluation and comparison of offers that have been adjudged as valid for the purposes of evaluation and comparison, no other
methods or criteria shall be used except those stipulated in the solicitation documents; all relevant factors, in addition to tariffs,
that will be considered for the purposes of evaluation and the manner in which such factors will be applied shall be stipulated in
the solicitation documents.
When bid prices are expressed in two or more currencies, the prices of all offers shall be converted in the official currency of the
Republic of Montenegro, according to the rate and date of rate and source specified in the solicitation documents.
After opening of offers, information relating to the examination, clarification and evaluation of offers and recommendations concerning the award shall not be disclosed to the investors or to persons not officially concerned with the process until the successful investor is notified of the award.
Any evaluation and comparison of offers shall be reported in the manner and in the format laid down in the rules provided that the report shall always be signed by all evaluators and the supervisor confirming the correctness of the report and the compliance with this Act.
Subject to the approvals required under this Act, the public entity responsible for the project shall award the contract within the period of the validity of offers, to the investor
who met the appropriate standards of capability and resources and his offer has been determined (i) to be substantially responsive
to the solicitation documents and (ii) to offer the best business plan.
The investor shall not be required, as a condition of award, to undertake responsibilities not stipulated in the solicitation documents
or otherwise to modify substantially the offer as originally submitted.
The signatory of the contract, on behalf of the public entity, shall be provided with all offers, the reports on opening and evaluation
and shall examine them to determine their compliance with this Act; the signatory shall verify the validity of the offer recommended
for award and refuse to sign a contract with a supplier if his offer is not valid; the signatory shall have immediate access to
any document of the solicitation exercise that are directly or indirectly related to the contract to be signed.
The signatory shall be responsible to ensure that he is officially granted with the authority to sign such a contract on behalf of
a public entity.
Law on Participation of Private Sector in Delivery of Public Services 16
Any evaluation exercise undertaken under this Act shall be made by a ad-hoc Evaluation Committee. Chairperson of the project assessment
unit shall appoint the members of the Ad Hoc Evaluation Committee.
A ad-hoc evaluation committee shall be comprised of a Supervisor and five evaluators, who shall not have been involved in the opening
of offers to be evaluated and shall not be members of the project assessment unit.
The Supervisor or any member shall be public servants selected on the basis of the their necessary specialized expertise.
The Supervisor and the members shall not be elected persons.
When deemed necessary by the Supervisor, he may seek to obtain the following preliminary information (i) a preliminary assessment
report on the offers received from any expert in the area; and (ii) a preliminary examination of the offers; where the necessary
expertise is not available in the public entity responsible for the project, such expertise may be sought from any other public entity
or from any other sources.
The members of a ad-hoc evaluation committee shall continue in their functions until the evaluation report is submitted.
The supervisor shall be solely responsible for the supervision and co- ordination of the evaluation process but, in any
case, shall not be involved directly in the evaluation process or in rejection of offers.
The supervisor shall be responsible to take any action necessary to ensure the confidentiality of the offers, their evaluation
and of the overall process until completion.
He shall safeguard all offers and any documents related thereto which shall be transferred together with the evaluation report to
the authorized organs.
Each evaluator shall make his own individual evaluation without undue influence; thereafter, the supervisor shall determine the average,
in the presence of the evaluators from individual results obtained.
The evaluation shall be completed within the validity period so as to leave enough time for contract award.
Any recommendation for award made thereof, under any evaluation undertaken, shall be final; therefore, an evaluation exercise cannot
be re-conducted, except where there is an evident situation of non compliance with this Act; after evidence is made on non compliance,
another similar evaluation shall be conducted by another ad-hoc evaluation committee; the second committee shall not be provided
Law on Participation of Private Sector in Delivery of Public Services 17
with the first evaluation report which shall remain secret until the second evaluation exercise and report thereof completed.
Investors established in the Republic of Montenegro shall be encouraged to participate to any solicitation whereon the Republic of Montenegro encourages the development of the economy; they may offer independently or in joint venture with other investors established in the Republic of Montenegro or abroad, but such joint venture shall not be, under any solicitation exercise, mandatory or be a condition for eligibility.
Natural persons, companies or firms shall not be eligible for the award of contracts for concessions or B.O.T. where (i) they are
bankrupt, (ii) payments to them have been suspended in accordance with the judgment of a court other than a judgment declaring bankruptcy
and resulting, in accordance with their national laws, in the total or partial loss of the right to administer and dispose of their
property; (iii) legal proceedings have been instituted against them involving an order suspending payments and which may result,
in accordance with their national laws, in a declaration of bankruptcy or in any other situation entailing the total or partial loss
of the right to administer and dispose of their property; (iv) save after the completion of any punishment upon them, they have
been convicted, by a final judgment, of any crime or offence concerning their professional conduct, except after the enforcement
of the punishment against them; (v) they are guilty of serious misrepresentation with regard to information required for participation
in an invitation to offer; (vi) they are in breach of contract on another contract with the contracting public entity, only where
a final judgment by a court is made that the breach of contract is the responsibility of the investors and, (vii) they are found
guilty of bribery or kickbacks under international treaties or conventions or, they are ineligible on the same grounds and evidence
by any bank, institution or organization providing funds for general development, public investment or reconstruction (viii) and,
they have engaged in corrupt or fraudulent practices in competing for the contract in question.
To be eligible for participation in invitations to pre-qualify or to offer and thereinafter to be a contracting party, participating
investors shall provide evidence satisfactory to the authorized organ of their eligibility under this Article, proof of compliance
with the necessary legal, technical and financial requirements and of their capability and adequacy of resources to carry out the
contract effectively.
To this end, any offer submitted shall include the following information:
1) a document, dated less than 90 days previously, drawn up in accordance with the investors' national law or
practice certifying that (i) he meets the conditions laid down in this Article, and (ii) none of the situations referred to in this
Article applies to him;
Law on Participation of Private Sector in Delivery of Public Services 18
2) copies of original documents defining the constitution and/or legal status, and establishing the place of registration
and/or statutory seat and, if it is different, the place of central administration of the company, firm or partnership or, if a joint
venture, of each party thereto constituting the participating investor;
3) details of the experience and past performance of the investor (or of each party to a joint venture) on contracts of a similar
nature within the past five years, and details of other contracts in hand including details of the actual and effective participation
in each such contract;
4) where applicable, the major items of equipment proposed for use in carrying out the contract;
5) the qualifications and experience of key personnel proposed for administration and performance of the contract, at and away
from the place of performance of the contract;
6) information relating to the nature, conditions and modalities of subcontracting wherever the subcontracting of any elements
of the contract amounting to more than 10 % of the offer price is envisaged;
7) reports on the accounting and financial standing of the investor (or of each party to a joint venture) such as profit
and loss statements, balance sheets and auditor's reports for the past five years, an estimated financial projection
for the next two years, and an authority from the participating investor (or authorized representative of a joint venture) to seek
references from the bank of the investor;
8) information regarding any current legal or arbitration proceedings or dispute in which the investor is involved; the information
referred to shall be confined to matters of direct interest to the award or performance of the contract; and,
9) for companies or firms established in the Republic of Montenegro, evidence that previous payments were made or in
process to be made for any taxes, customs duties and any other payment due to the Government or to a Self-Local Government.
Subject to the articles 6, 11 and to chapter Three of this law, leasing shall be permitted for existing public facilities, to be rehabilitated or not, or for new public facilities, or for the use of an existing private facility to be utilized for public uses.
Pursuant to article 55 of this law, where a public entity prefers leasing to the owning a public facility, the public entity shall
-
(1) determine the market value of the facility by using the service of an independent valuator who shall be selected in
compliance with the law;
(2) clarify property titles;
Law on Participation of Private Sector in Delivery of Public Services 19
(3) seek the authorization, in compliance with the law, to dispose the existing public facilities, by public offer, whereby the disposal
is accompanied by an offer from the seller to lease for a given period the public facilities that are offered;
(4) seek the authorization, in compliance with the law, to enter into such agreement and therefore obtain yearly appropriations
to meet the obligations created thereunder; and,
(5) where a rehabilitation is needed resulting in an investment needed prior to the leasing, detailed drawings and budget estimates
shall be prepared and be part of the solicitation documents.
Pursuant to article 55 of this law, where a public entity prefers leasing to building a public facility, the public entity shall,
prior to any solicitation, in compliance with the law -
(1) obtain prior approval of the design by the Pre-Investment Committee of the Department for public works; where applicable, clarify
land titles where the new facility is needed; and,
(2) seek the authorization, in compliance with the law, to enter into such agreement and therefore obtain yearly appropriations
to meet the obligations created thereunder.
Pursuant to article 55 of this law, where a public entity prefers leasing a private facility for public use, the public entity shall,
prior to any solicitation, in compliance with the law -
(1) stipulate in the solicitation documents the standards for public facilities as approved by the Pre-Investment Committee of
the Department for public works; and,
(2) seek the authorization, in compliance with the law, to enter into such agreement and therefore obtain yearly appropriations
to meet the obligations created thereunder.
Under any leasing agreement, all insurance costs shall be on the private investor or the private operator; copy of the insurance contract shall be part of the leasing contract, and evidence of payment for renewal shall be conditional to the maintaining in force of the contract.
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Under any leasing agreement, the maintenance costs of the facilities, other than daily cleaning of interior shall be a responsibility on the private investor or of the operator.
Under any leasing agreement, the increase of the fee payable, for renewal, shall not be higher than the yearly inflation as per indices on inflation published by an official statistic office; the name thereof shall be stipulated in the solicitation documents and thereinafter be part of the leasing contract.
Under the provisions of this Chapter, the private sector investor or operator shall not be allowed to obtain any kind of benefits, directly or indirectly, from any kind of subsidy, or otherwise obtained by the use of any public funds for reconstruction or rehabilitation, or otherwise requires guarantees other than usual guarantees under a normal leasing agreement in the private sector; except in the case of gross negligence, or under a court decision, any provisions of a leasing agreement entered into, whereby any contingent liability is created on any public entity, shall be deemed to be null and void.
For avoidance of doubt, for investment made by a private sector investor or operator under this chapter, the procurement activities by him shall be undertaken as per the best recognized procurement practices in the private sector.
Subject to the articles 7, 12, 13 and to the chapter three of this Act, management contract may be entered into, whereby the management, legal, financial, technical or supervisory services are delivered by private consultants or private consulting firms.
Pursuant to article 64 of this law, management contracts being utilized under this Act for preparatory actions or control of activities for the privatization of the economy, any public entity, in addition to all requirements of the public procurement law, shall utilize the standard format for terms of reference as approved by the privatization Council for -
Law on Participation of Private Sector in Delivery of Public Services 21
(1) Economic consultants;
(2) Experts for formulating policy in the adequate field of expertise; (3) Legal counsel;
(4) Technical (Engineering) Consultants; (5) Financial Advisors;
(6) Procurement expert;
(7) Management, supervision expert; (8) Experts for corporate governance;
(9) Expert for environmental protection; and,
(10) Any adviser for privatization, as may be determined by the
Privatization Council.
Any public entity entering into management contract under this Act whereby the services are linked to a privatization exercise, shall appoint a monitoring committee of three members, subject to articles 67 and 68 of this law.
Selection of the members of the monitoring committee shall be endorsed by - (1) the Government, in the case of Ministries, Departments
or Secretariats;
(2) their respective municipal assembly, in the case of a Self-Local
Government or group of Self-Local Governments; or,
(3) the parent ministry, for the publicly-owned companies or firms.
The members of a monitoring committee shall not be elected persons and shall be public servants having the relevant expertise to make decision, made on majority, on behalf of the public entity to determine if services are delivered timely and satisfactorily or otherwise in compliance with the terms of reference and the contract entered into.
Under the provisions of this Chapter, any report made by consultants under management contracts shall be in the format approved by the monitoring committee, and copies thereof shall be made available to the Privatization Council.
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Besides the particular set under this Act for taking part in the preparation of offers, the application for taking part in the solicitation
exercise shall -
(1) be filed together with particulars relating to the duration of usage conditions and modality of usage compensation for the use
of the natural resources of goods in general use;
(2) conditions for the hand-over at the termination of usage; (3) credit rating of the investor or operator; and,
(4) particulars about other conditions concerning the rights and as particulars about other conditions concerning the rights and duties
of the contracting parties.
Subject to issuance of a license, a concession may be granted on the condition that the utilization of the natural resources
or goods in general use or performance of activity provides for
(1) the maintenance of the technical and technological unity for the system; (2) its efficient operation and rational management;
and,
(3) protection of the environment.
A concession contract shall especially include - (1) contracting parties;
(2) subject matter on concession;
(3) duration of preparatory operations; (4) duration of concession;
(5) modality of and time-limits for securing funds for financing; (6) conditions of usage;
(7) compensation for usage;
(8) rights and duties concerning the application of measures for general safety and protection of the environment;
(9) conditions for terminating the contract; (10) settlement of disputes; and,
(11) other matters the contracting parties may agree upon.
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Subject to article 74 of this law, alternatively to re-seeking offers, a concession may be transferred to another person, foreign or not, partly or wholly, with the approval of the authorized organ.
Any contract of concession transfer as referred to in article 73 of this law which is concluded without approval of the grantee of concession, without publication in the Official Gazette of the Republic of Montenegro, without public hearings and without any requirements for award under this Act, shall be null and void.
(1) A concession may be granted in order to provide for -
(a) rational exploitation of natural resources or goods in general use;
(b) technical and technological advancement of the business constituting the subject matter of a concession;
(c) technical and technological uniformity of systems in the field of infrastructure;
(d) efficient operation and rational control of such systems; and,
(e) protection and improvement of the environment in conformity with the environmental protection regulation;
(2) Natural resources and goods in general use as well as building devices and installation exploited by public enterprise founded
by the state or a self-local government unit may be conceded to another person provided that such public enterprise are unable
to provide for the rational exploitation or trouble-fee operation in conformity with the regulation governing the conduct of the
business of such enterprise.
The Subject matter of a concession may be -
(1) prospecting or exploitation of natural resources or raw materials with the aim to create employment opportunities and to generate
revenues to an investor / operator and to the Government, or otherwise, as the case may be, to the self- local governments;
(2) construction, maintenance and exploitation of facilities for prospecting or extracting, natural resources or raw materials;
3) construction of facilities, remodeling, modernization or rehabilitation of existing facilities, for exploitation of water having
natural curative properties and other similar item for the purpose of their exploitation;
4) construction, maintenance, exploitation of facilities, or rehabilitation of existing facilities, on natural sites, wildlife, or
national parks in the view to attract more tourists;
Law on Participation of Private Sector in Delivery of Public Services 24
5) any other raw material or natural resource of the Republic of Montenegro, where improved exploitation by a private sector investor or operator results in a possibility to generate revenues therefrom for the Government or to the Self-Local Governments, whereon there is an evident situation resulting in financial, social, environmental or economical improvement, or any combination thereof.
The recommendation for granting a concession shall be submitted to the Cabinet through the relevant Regulatory Body (hereinafter regulatory organ) established under this law and shall include the following :
1) | the subject matter of the concession; | |
2) | the size of investment; | |
3) | the duration of the recommended concession; | |
4) | the basic conditions for the utilization of the concession; | |
5) | compensation purpose of exploiting the subject matter | of |
concession; | ||
6) | the information on the interested contracting parties; and, | |
7) | any other information as may be requested by the Cabinet. |
Prior to submitting a recommendation to the Cabinet, a Regulatory Body shall ensure that inputs were already obtained from any other
public entity, wherefrom improvement of a concession may result.
A Regulatory body shall notify the investor or the operator of the position taken by the Cabinet on the presented recommendation.
Pursuant to the recommendation to grant a concession the Government adopts a decision on the granting of a concession.
Decision to grant a concession especially includes the following -
1) reasons wherewith the concession should be granted thereunder;
2) where applicable, in addition to any private sector investment or involvement, the necessary funds, resources and time limits
for raising them, that are necessary thereto;
3) anticipated income and expenditure associated with the concession for the whole duration, resulting therefrom;
4) the technological capacity of parties for the utilization of concession, and the risks thereafter;
5) particulars on the effects on the overall infrastructure and other economic areas, as well as on the uniformity of technical
and technological systems, their efficient operation and control to be rational thereinafter;
6) duration of concession thereat;
Law on Participation of Private Sector in Delivery of Public Services 25
7) modality of payment and issuance of guarantees or other sureties for the performance of duties and the amount therefor;
8) environmental impact studies undertaken and responsibilities resulting therefrom;
9) employment estimates, number of employees and qualifications needed thereto; and,
10) any relationships for property, movable or immovable, thereunder;
and,
11) permits, licenses, registration or any other requirements by law, whereby operation is to be permitted theretofore.
The Government shall adopt a decree regulating the details and conditions for granting a concession.
Any concession contract shall be -
1) made in writing;
2) concluded in conformity with the terms and conditions set out in the concession decree; and,
3) in compliance with this act and with the law infra civitatem.
Where authorized by a concession decree, any concession contract shall be concluded by the public entity responsible of the concession,
shall be subject to endorsement by a regulatory body and, shall include provisions relating to, but not limited to, the following
-
1) the name of the contracting parties;
2) the subject matter of concession;
3) the duration of preparatory operations and the duration of the concession;
4) the conditions under which the duration of concession may be extended or modified;
5) modality of a time-limit for raising funds;
6) the schedule of investment;
7) the amount and modality for guarantees on the performance of the activities;
8) where applicable, standards of the products or services as well as the criteria for setting the prices, rates or tariffs
payable by the end- users;
9) compensation paid for the concession license, terms and conditions for payment;
Law on Participation of Private Sector in Delivery of Public Services 26
10) rights and duties concerning the application and consequences thereof;
11) modality for disputes settlement;
12) the application law;
13) time and modality of handling over the building installation or plant and state in which it has to be application of ruling
law;
14) modalities of mutual reporting;
15) modalities for monitoring by the regulatory body;
16) rights and duties of contracting parties;
17) determination of risks and responsibilities resulting from the contract;
and,
18) any other matters mutually agreed upon by the contracting parties or otherwise stipulated in the concession decree.
Any concession contract concluded with a foreign party shall be reported and registered in the manner provided by the law governing foreign investment.
The compensation for any concession granted, hereinafter the concession compensation, shall be payable in conformity, in order of precedence, with the concession decree, the concession contract, the license issued by the regulatory body and any decision made by the regulatory body after public hearings, in compliance with this Act.
The concession compensation shall be determined by taking into account, but not limited to -
1) the kind, category or quality of the natural resource of the raw material;
2) the market price of the natural resource or raw material;
3) the general market conditions and trends;
4) the duration of concession;
5) the contracted risks;
6) the coverage of investment costs;
7) the anticipated profit; and,
8) any other item governing the contract entered into.
Law on Participation of Private Sector in Delivery of Public Services 27
Concession compensation shall be regarded as revenues for the Republic of Montenegro except where revenues shall be on a public entity, as defined under this Act.
Any concessionaire shall build, maintain and exploit facilities and pursue the concession activities and exploit natural resources
or raw materials in compliance with -
1) the regulations governing the regional and town planning;
2) the terms and conditions stipulated under the concession contract;
3) the standing environmental protection regulations;
4) the concession decree; and,
5) the law in force infra civitatem.
Any concessionaire shall not assign to some other party the concession;
therefore any such assignment shall be null and void.
Except as otherwise stipulated in the concession decree, any increase in the value of a publicly owned installation of any type, exploited as the subject matter of a concession or which is contributing to the exploitation which has arisen in the performance of the concession activity shall be the property of the Republic of Montenegro or the public entity, as the case may be.
Anything of historical, cultural, natural value, or other interest or of significant value unexpectedly discovered on a site shall be public property; therefore, the concessionaire shall notify, upon discovery, the regulatory body and carry out instructions for dealing with them.
In addition to rights, absolute and accessory, any concessionaire shall be guaranteed the rights stipulated under -
1) the concession contract;
2) the concession decree; and,
3) where applicable, the co- financing agreement.
Law on Participation of Private Sector in Delivery of Public Services 28
Where no specific provisions are made under the law of the Republic of Montenegro for specific rights of the concessionaires,
provisions made under international treaties or otherwise the best international practices shall be applied.
In the event of a change in the Republic of Montenegro law or regulations on the basis of which a concession contract has
been concluded, the law and regulations which were in force on the contract conclusion date shall apply to the relations, or
otherwise the most favorable to the concessionaire shall apply.
Where in any concession contract under this Act, investment is required for prospecting before exploiting, the same concession agreement
shall include the exploitation of the result of the prospecting.
The contractual rights of any concession enterprise shall include the following -
1) Performance of all operations associated with opening, development and exploitation for the construction of facilities necessary
for the exploitation of raw materials or natural resource;
2) Exploitation of all of the mineral raw materials or natural resources specified in the concession contract;
3) Utilization of other natural resources and conditions in conformity with the concession contract and the applicable law;
and,
4) Sale of the mineral raw materials or natural resources, produced from the exploitation of a concession, in local and international
markets in conformity with law.
Should it be necessary to expropriate and/or develop building or land in connection with the granting of a concession, the costs for
any expropriation and/or development of building or land shall be charged to the concessionaire and the concession contract shall
provide the costs thereof and the terms and conditions for the payment of such costs.
In a case as that referred to in sub-article 1 of this article, the determination of public interest and the expropriation shall be
carried out in compliance with the law.
If a public entity or the regulatory body issues, pursuant to the expropriation regulations, any legal instrument forfeiting or limiting
any right of use in relation to built any facility constituting, directly or indirectly, the subject matter of a concession, the
concessionaire concerned shall be entitled to a compensation which may not be lower than the market value, as determined by an independent
financial adviser to be paid by the public entity.
For the purpose of pursuing a concession activity, the concessionaire concerned shall establish an enterprise within 60 days from the date of the
Law on Participation of Private Sector in Delivery of Public Services 29
concession contract and the head office of such enterprise shall be in the Republic of Montenegro, unless the concessionaire concerned has already an enterprise established and registered for activities of a similar nature; therefore, the enterprise shall be operated and be otherwise organized and operated in conformity with the law of the Republic of Montenegro.
The head office or status of a concession enterprise may be changed only after a prior approval by the regulatory body issuing the license for concession.
In the event of dissolution of a concession enterprise, any private assets, property, movable or immovable, for the concession shall be offered to the public entity at the fair market value determined by a financial adviser; where, after sixty days of such offer, the public entity did not proceed with the buying, the private assets may be liquidated, or otherwise disposed by the concession enterprise in compliance with the law.
Any concession partnership may be terminated, as per the terms and conditions of the concession contract and by issuance of a decree,
in the following cases -
1) Expiration of the concession contract;
2) Redemption of the concession;
3) Forfeiture of the concession;
4) For any other reason stipulated in the concession contract; or,
5) By mutual agreement.
1) For the purposes of this Act, the deposits shall be classified as follows -
1) Deposits whose exploitation was under way on the effective date of the concession agreement;
2) Deposit existing in the exploitation was under way on the effective date of this decision but not subjected to exploitation;
3) Investigated deposits in the exploitation fields which are not being exploited;
or,
Law on Participation of Private Sector in Delivery of Public Services 30
4) Deposits which have not been subjected to geological prospecting and which in the opinion of the ministry responsible for mining
are suitable for being prospected and exploited on the basis of a concession contract.
The subject matter of any concession contract may be granting of the right of exploitation of the mines in which the exploitation
of mine waste dumps has ceased.
The ministry responsible for mining shall present to interested legal entities and to the regulatory body the particulars about the
deposits.
Where of public interest and where initiated by the regulatory organ, decision on sites may be subject to public hearings in compliance
with this Act.
In the case of prospecting for, exploitation of crude oil and gas in the land and seabed exploratory location within the territory of the Republic of Montenegro, the special character of these types of operations, the operating continuity and the specific conditions necessary to result in investment, local or foreign, shall be taken into consideration.
In case of deposits whose exploitation was under way or deposits existing in the exploitation fields of mining enterprises, but not exploited on the effective date of this Act, the ministry responsible for mining shall have the right of offering mineral raw material to obtain offers for concession in compliance with this Act.
The ministry in charge of mining shall open competition for award of concessions in compliance with this Act, for the investigated deposits located outside the existing exploitation fields and for the deposits which have not been subjected to derailed geological prospective, which in the opinion of the ministry responsible for mining, may be suitable for prospecting, exploitation on the basis of concession contract.
In addition to the requirements under this Act, approval for deposit site shall be obtained from the ministry responsible for mining, prior to any seeking of offers, and the request for approval shall include the technical and financial information on the deposit constituting the subject matter of the concession to be offered.
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In any technical report on any deposit that may constitute the subject matter of a concession, shall be included the following -
1) indication of the mineral raw materials involved;
2) name of the locality;
3) indication of the deposit together with a layout of the exploitation field involved at the scale of 1;10,000 delineated by control
points;
4) coordinates and area particulars, proprietary situation particulars, on the infrastructure surrounding and any building
located in the exploitation field;
5) deposit evidence of basic and detailed geological field;
6) deposit evidence of basic and detailed geological prospecting;
7) particulars on the quality and quantity of the mineral raw materials appraisal;
8) the cost effectiveness of exploitation;
9) duration of planned prospecting, exploitation;
10)expected compensation to be paid by the private investor or operator;
11)any requirements for any public entity to participate in the construction of infrastructure and acquisition of equipment;
The report on the deposit constituting the subject matter of concession shall be prepared by the ministry responsible for mining;
where a concession is offered for prospecting and exploitation, the same report requirements shall apply, but shall be based on preliminary
findings that are available before prospecting.
The ministry responsible for mining shall establish a special technical commission responsible of examining the technical information submitted by participating investors and prepare a technical assessment report to be made available to all evaluators, prior to their undertakings of the examination, evaluation and comparison of offers in compliance with this Act.
In addition to the requirements under this Act and under the concession contract, any concession enterprise shall report by 15 March of each year a status report on technical and financial results of the concession.
Any natural or corporate person, national or foreign, may be permitted to build- operate and transfer (B.O.T.) a specified facility, installation or plant or infrastructure set out under a franchise regulated by the regulatory body established under this Act.
Law on Participation of Private Sector in Delivery of Public Services 32
Are hereby permitted under this Act, Build, Operate and Transfer, B.O.T. contract arrangement, under a franchise authorized by a regulatory body, whereby a private investor and /or operator is building and operating a public utility and, after a determined period, is transferring the ownership thereof to a public entity; B.O.T. arrangements shall include Build-Lease and Transfer (BLT), Build-Transfer-and- Operate (BTO), Develop-Operate-and-Transfer (DOT), Rehabilitate-Operate and Transfer (ROT); tariffs payable by the clients shall be regulated by the contract entered into and shall be subject to the decision, after public hearings, of the regulatory body for the tariffs payable and the quality of the services to be delivered.
For the purpose of this Law B.O.T. arrangements shall be understood to mean the letting of the construction of building, installation or plant on the basis of the B.O.T. system (build-operate- transfer) under an agreement concerning the construction and financing of a complete building installation or plant, its operation and transfer to a public entity of the Republic of Montenegro within the contracted term.
The construction, rehabilitation, improvement, betterment, expansion, modernization, operation, financing and maintenance, of the
following type of projects which are normally financed and operated by the public sector which may be, under this Act, wholly or
partly financed, constructed and operated by the private sector, including other infrastructure and development projects as may be
authorized in compliance with this Act.
The following infrastructure or projects and related facilities shall be permitted:
1) highways including expressways, roads, bridges, interchanges, tunnels;
2) railways or rail-based projects packaged with commercial development opportunities;
3) non-rail mass transit;
4) port infrastructures like piers, wharves, quays, storage, handling, ferry services;
5) power generation and transmission;
6) telecommunications;
7) information technology;
8) water supply, sewerage and drainage;
9) education and health infrastructure;
10)tourism facilities and sites;
11)government or self-local government buildings;
12)housing projects for social security;
13)public markets;
Law on Participation of Private Sector in Delivery of Public Services 33
14)warehouses and post-harvest; and,
15)environmental and solid waste management including collection equipment, composting plants, recycling and, incinerators.
After the expiration of the franchise period and upon recovery of the investment, the project company shall transfer, in compliance with the terms and conditions of the B.O.T. contract, the entire facilities of such B.O.T. project to the public entity in good condition and without any claim.
Within the B.O.T. contract period, or otherwise extended sufficiently for the recovery of investment, the project company shall operate lawfully and independently, and recover and obtain returns on its investment through payments received from the beneficiaries.
The registered capital of an investor shall not be less than 25% of its total investment.
The project company shall be entitled to the ownership and management rights of such facilities during the franchise period as determined
under the B.O.T. contract.
Subject to article 4, prior to initiating any seeking of offers, a feasibility study report of a B.O.T. project shall be proposed by the public entity for the examination and approval by the Privatization Council.
Pursuant to article 111 of this law, upon obtaining approval for a B.O.T. project, the public entity authorized to issue such B.O.T. project shall start to prepare the pre-qualification documents and the bidding documents and submit such documents, for examination and approval, by the Privatization Council.
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Before the seeking of offers, a pre-qualification of investors, local or foreign, or in joint venture, shall be conducted to invite
investors intending to submit offers. For pre-qualification, an investor intending to submit an offer shall provide, in addition
to the requirements under this Act, at least the following documents:
1) A legal background on their on-going operations;
2) Certification of experience and performance of similar contracts in nature and complexity;
3) Ability to organize and manage the B.O.T. project; and,
4) Financial and credit status and evidence of available assets for the project.
In addition to the requirements under this Act for solicitation documents, shall be include herewith at least -
1) Feasibility study report of the B.O.T. project;
2) Proposed schedule of the construction of the project; and,
3) Proposed billing standards and adjustment formula.
Subject to article 111, the feasibility study report of the project shall include -
1. Survey of the project and target;
2. Assessment of the effects of the project on the environment;
3. Market demand for the project, as well as its costs and charges;
4. Description of project engineering and technical index, including the technology to be adopted;
5. Description of the project company, including engineering, construction and operation plans;
6. Financial analysis, including total investment, cost of labor and materials, financing scheme and cost, cash flow, internal rate
of return, inflation rate, supposed foreign exchange rate and interest rate, analysis of risks and sensitivity; and,
7. Other items included in the feasibility study report.
The B.O.T. agreement shall be concluded in accordance with this Act; therefore, the public entity shall submit the outcome of the evaluation of offers and the B.O.T. agreement, with the feasibility study report of the investor's project attached thereto, to the Privatization Council for examination and approval; after approval of the privatization Committee, the same documents along with the recommendation of the Privatization Council shall be made available to Cabinet for final approval before award of the contract.
Law on Participation of Private Sector in Delivery of Public Services 35
B.O.T. agreement shall be in compliance with the laws and other regulations in force and should at least include the following -
1) the names, places of residence and representatives of the legal persons of the relevant parties of the B.O.T. agreement;
2) The content, conditions and terms of the B.O.T.;
3) The duration of the B.O.T. and the terms for the recovery of investment by the investor;
4) Project design, construction, operation and maintenance standards;
5) The schedule and extension of the project, and the outcome of termination;
6) The construction price of the project and the billing plan;
7) The criteria and procedure for handing the project over to the Government after the expiration of the term of the B.O.T.;
8) The rights and responsibilities of the governmental organs;
9) The rights and responsibilities of the B.O.T. project company;
10) The risk-sharing by category of risks; and,
11) The transfer of the rights and responsibilities of the project company.
The investor approved to win the contract shall establish the B.O.T. project company in accordance with the relevant laws and regulations of the Republic of Montenegro.
The Public Entity shall carry out franchise registration with the regulatory body for all B.O.T. project agreements concluded pursuant to the provisions herein. To be a registered B.O.T. agreement, a franchise shall be issued by the regulatory body; therefore an investor issued with the franchise shall be protected by the laws and regulations of the Republic of Montenegro.
Except in cases where the existing B.O.T. project is unable to satisfy market demands, the governmental organs shall not approve any new competitive projects.
Law on Participation of Private Sector in Delivery of Public Services 36
The regulatory body shall be entitled to conduct supervision, examination and auditing of the B.O.T. project company's operational activities.
Except in the case of public private co-financing scheme, any governmental organ or any public entity shall provide any form of guarantee regarding the rate of return of the project investment. B.O.T. contract arrangements shall be based on identified returns sufficient to reimburse investment, and where such returns are insufficient at expiration, extension shall be allowed for full recovery of the investment made by the private investor.
The B.O.T. project company shall pay customs and taxes in accordance with the provisions of laws.
The project company shall be responsible for the training of the personnel required to assume independent responsibility for the operation and maintenance of the project after the transfer of the project. After the expiration of the term of B.O.T. agreement, the project company shall, without reservation, hand over the technology and data of the operation and maintenance of the project to the government organs without any compensation.
The B.O.T. project company shall be responsible of commercial risks such as project financing, construction, operation and maintenance through methods such as adjustment of the billing standards and the extension of the B.O.T. term, authorized by the regulatory body; the public entity shall be responsible of the risks of the B.O.T. project that are directly due to material effects resulting from changes in policy.
The B.O.T. agreement's execution, performance, and interpretation, as well as the settlement of disputes, shall be in accordance with the laws of the Republic of Montenegro; in issues not yet regulated by the laws of the Republic of Montenegro, the best international practices such as the ones made under international convention or the latest "Acquis Communautaire" of the European Union shall prevail.
Law on Participation of Private Sector in Delivery of Public Services 37
Any disputes arising during the performance of the B.O.T. agreement or having connection with the this agreement shall be settled through consultation between the parties to the agreement in the presence of the regulatory body. If a settlement cannot be reached through consultation after 30 days, such disputes shall be submitted to a Court of the Republic of Montenegro and the latest UNCITRAL Arbitration Rules shall be applied, supplemented by the Supplemental Rules of the International Center for the Settlement of Investment Disputes (ICSID).
Pursuant to this law the Government shall establish a regulatory body as an organ having powers to -
1) issue license for concession;
2) authorize franchise for B.O.T. arrangements;
3) determine allowable increases, decreases or no change in tariffs payables;
4) determine and control quality standards of public services delivered;
5) promote operating efficiency of investment made by private investors;
6) monitor the private company performance and contractual compliance;
7) ensure public satisfaction of clients, receive complaints;
8) arbitrate disputes with consumers and ensure responsiveness to final customer needs;
9) impose sanctions on private investors for failure to meet regulated quality standards;
10) ensure assets serviceability; and,
11) organize and monitor public hearings.
For B.O.T. or Concessions contract arrangements entered into under this Act, all functions and powers of the regulatory body herein
established shall be, mutatis mutandis, on the regulatory body established by law to regulate for a specific sector.
Where no such regulatory body for a specific sector is established by law, the regulatory body herein established shall exercise all
the powers and duties as imposed under this Act.
The members of the regulatory body shall ensure that the licenses and franchises permit the conduct of activities for development with the up-most transparency and integrity in full compliance with this Act.
Law on Participation of Private Sector in Delivery of Public Services 38
The regulatory body shall comprise four permanent members and one ad-hoc member
1) a Chairperson who shall represent the Cabinet and who shall be a judge or an ex-judge;
2) a member who shall represent the Ministry of Finance;
3) two members who shall represent the Self-Local Governments; and,
4) an ad-hoc member from the public entity initiating a B.O.T. or concession project;
and, decision shall be made on majority of votes, each member having one vote; quorum for decision and public hearings shall be 3
members; in case of equality of vote, the Chairperson shall have a casting vote.
Except for the ad-hoc member from the public entity initiating a project who shall be appointed by the head of the public entity,
the members of the Regulatory Body, who shall not be elected persons, shall be appointed by the Cabinet, in consultation
with the President of the Republic and with the leader of the opposition parties, and on such terms and conditions as may be determined
by the Prime Minister. Every member shall hold office for a period not exceeding 3 years and shall be eligible for one re-appointment.
The Cabinet may, in consultation with the President of the Republic and with the leader of the opposition parties, at any time terminate
the appointment of a permanent member who has been guilty of (i) any misconduct, default or breach of trust in the discharge of
his duties and, (ii) an offence of such nature as renders it desirable that his appointment should be terminated.
The Regulatory Body may engage in compliance with the law, such number of persons as may be necessary, capable of assisting it with
expert advice; such expert shall not have, in any matter, right to vote.
The Regulatory Body shall meet at such time and place, as the Chairperson deems fit and undertake public hearings in compliance with
this Act and the rules made under.
Subject to article 132 of this law, the Government of the Republic of Montenegro shall determine the remuneration of the members of the Regulatory Body, for carrying
out their duties under this Act.
To maintain national harmonization, fair competition and for proper governance on decisions made, the regulatory body shall -
Law on Participation of Private Sector in Delivery of Public Services 39
1) train regulatory staff;
2) publish local and regional performance indicators;
3) publish locally monitored activities and regulatory decisions; and,
4) report and monitor guidelines for comparable reports.
Members and staff of the regulatory body shall be impartial and criteria for their selection shall be determined by the Cabinet; the
selection shall be made so as to ensure -
1) the protection of the legitimate interests of investors and freedom from political influence;
2) the protection of consumers’ rights to receive public services from the operation at the level of quality expected and to
complain when services are not delivered as expected;
3) that regulators be devoted to the responsible discharge of their regulatory functions;
4) that the regulatory body remains true to its mandate and fully accountable; tenure may be given for a fixed period and provide
protection from arbitrary removal from office.
Except as otherwise authorized by the Cabinet, the regulatory body shall be funded through direct levies on concession and B.O.T. operations and not from public budgets; regulators shall have no personal, directly or indirectly, financial interest in any of the operations to be regulated; in addition, members shall have no personal interests for a period of three years on any B.O.T. or concession contracts, after termination of contract and for a period of two years after termination of office.
Notwithstanding any mutual agreement resulting to the contrary, for B.O.T. arrangements, the tariffs payable by the clients or the
consumers shall not be less than the tariffs determined under the B.O.T. contract.
Notwithstanding any mutual agreement resulting to the contrary, for concession contract, the compensation payable
by the investor or operator shall not be less than the compensation determined under the concession contract.
Any person may participate in the public hearings organized by the regulatory body; the public hearings shall be organized to permit the investors, the operators
Law on Participation of Private Sector in Delivery of Public Services 40
and the consumers to express their views before determining tariffs charged by the investors and operators for the public services
provided to the consumers.
The regulatory body shall report annually to the Cabinet on all their activities, including outcomes of public hearings.
After a license or a franchise is authorized under this Act, public hearings shall be conducted in compliance with the rules made under this Act for tariffs or fees under B.O.T. and Concession arrangements and for the compliance with standards on the quality of the services delivered, as determined by the contracting arrangements.
Any investor, operator, consumer, client, group of clients or group of consumers may appeal a decision made by the regulatory body by a written request to the regulatory body for a final public hearing; where such request for appeal is made, the proceedings of the final public hearing shall be held not later than one month after receipt of such appeal request; decision made under such appeal shall not limit in any manner any decision made by a court.
This article shall refer to major infrastructure projects B.O.T. or Concession by a private sector investor and / or operator co-financed
by a public entity, on prior approval of the Minister responsible for finance and the Regulatory body.
For co-financing schemes, the public entity shall collaborate with the Regulatory Body and the Ministry responsible for finance who
shall be the organs for the preparation and approval of any co-financing scheme.
Where appropriate, the Ministry responsible for finance and the regulatory body may seek the participation of development banks or
any other financial institutions for loans, credits or grants to be offered to a private investor without governmental or public
entity guarantee.
Where risk capital is to be made available by a public entity or by the Government in the form of shares for a corporate body to be
established for such a project, the Ministry of Finance and the Regulatory Body shall also seek the approval of the Cabinet and ensure
appropriation is made by the public entity or by the government to meet obligations.
Notwithstanding any conditions under loan, credit or grant of a banking institution or any condition under any co-financing agreement,
the investor or the operator shall be
Law on Participation of Private Sector in Delivery of Public Services 41
authorized by a regulatory body to procure the goods, works and services required for the facility, using its own procurement procedures
applicable by the private sector.
Where the goods, works or services required for the facility and to be financed partly by public or wholly by local, regional or international
public funds, such goods, works or services shall be procured in accordance with the provisions of the public procurement law or
of any treaty or agreement entered into with a co-financing development institution.
Where, exceptionally and after approval of the Cabinet, a public entity contributes directly by risk capitals to own shares of an
enterprise created for B.O.T. or concession, a divestiture plan not exceeding fifteen years shall be proposed by the investor, as
part of his offer, in the view that only the investor or the operator will own shares at time of the transfer of the facilities for
B.O.T. and at termination of the concession.
Where projects of low complexity are prepared by a public entity and approved in compliance with this Act, with the aim to promote the participation of the private sector for the delivery of public services of such low complexity, competitive licenses, concession or competitive franchises for B.O.T may be offered by the regulatory body under open and fair competition, and after advertising for pre-qualification and offering in compliance with this Act, among investors and / or operators, only where the value of the total investment for such low complexity projects does not exceed 1 million DEM and the duration does not exceed ten years.
Tariffs or fees for public services delivered shall be competitive with tariffs in force in the territory of the Republic of Montenegro.
Costs of licenses offered shall not be higher than licenses issued for similar services obtained in the territory.
Law on Participation of Private Sector in Delivery of Public Services 42
Except in co-financing scheme, the project shall not create or result in public debt or any contingent liability on the part of the public entity and / or the Government.
Special priority shall be given by the public entities and the regulatory body to not serviced localities and to indispensable public services contributing to economic stability or growth; for local development projects, the regulatory body and the self- local governments shall promote the use and the development of small scale B.O.T. or Concession enterprise; under this section; in addition, any offer for any concession or B.O.T. contract shall include subcontracting arrangements using such small scale enterprises for at least ten per cent (10 %) of the estimated total value of the contract.
The Privatization Council and the Regulatory Body pursuant to provisions of this law shall make such public solicitation rules, regulations under the guiding principles of accountability and transparency for purposes of this Act.
(1) Any person who directly or indirectly, in any manner influences, or attempts to influence any officer or member taking part in any seeking of offers, whether or not his role is critical to the decision-making, with the object of obtaining an unfair advantage
under this Act, shall commit an offence; any evaluator, supervisor of an ad-hoc evaluation committee, members of the regulatory body
who directly or indirectly, in any manner influences, or attempts to unduly influence a supervisor, an evaluator, shall commit an
offense.
(2) The permanent members of the Regulatory Body, on assumption of duty shall take their respective solemn statement of office specified
in the form set out in the regulations made under this Act; all experts or consultants engaged to deliver services that include access
to confidential information shall comply with confidentiality obligations as set out in the contract documents and under this Act;
all persons involved in seeking of offers shall be guided by the rules and by the code of ethics as laid down under this Act; the
solemn statement taken under this article shall include an undertaking to be bound by the Code of Ethics under this Act.
(3) The permanent members of the Regulatory Body shall file with the State Prosecutor a written statement of assets and liabilities
not later than 30 days after appointment and upon termination of appointment; where, subsequent to a declaration made therefore,
the state of assets and liabilities is so altered as to be
Law on Participation of Private Sector in Delivery of Public Services 43
reduced or increased in value by a prescribed amount, as set out by the State Prosecutor, a up-dated declaration shall be made;
no declaration of assets and liabilities filed shall be disclosed to any person except with the express consent of the person concerned
or by order of a Judge on reasonable cause shown.
(4) Subject to a reasonable administrative fee, the public shall be given prompt access by the Regulatory Body to this Act, to up-dated
provisions of this Act, to any legal instruments made under, to standard documents and forms, and to the annual reports; accessibility
shall also be made possible by electronic mode of communication.
(5) The Regulatory Body shall publish in the Official Gazette -
a) information on Concession license and on B.O.T. franchise being authorized, b) any change made on tariffs or fees,
c) not later than 45 days after such authorization or any changes made thereof.
(6) Any public entity and the regulatory body involved in any seeking of offers or in any activity under this Act shall record and safeguard
all relevant documents issued and received where they directly or indirectly relate to any activity undertaken under this Act; any
person who, willfully or negligently, by any action or omission resulting in the non availability of any document or evidence shall
commit an offense; all documents, of any type, shall be kept in safe condition for a minimum period of ten years after completion
and payment of contracts and, be available instantaneously for review or audit or by any expert hired therefore in compliance with
this Act; except for records, directly or indirectly, related to the national security, contractual documents for which the obligations
are fully fulfilled, shall be made accessible to any person interested within two weeks from receipt of a written request; where
the request concerns viewing only the documents, it shall be in the presence of an officer; where the request is to obtain copies
thereof, it shall be subject to payment of reasonable fee.
(7) Consultants, or any of their affiliates, shall not be hired for any assignment that would be in conflict with their previous
and current assignment, and prior obligations to other clients, or that may place them in a position of not being able to carry out
the assignment in the best interest of the public entity.
(8) All private investors and operators, shall, under this Act, include in their offers a declaration that the content of their offers
have been independently raised and prepared by certifying that no consultation has been made by other investors or operators and
consequently that no unfair advantage is taken from unfair and non equitable competition.
(9 For information, the regulatory body shall make available, at least once a year, a technical and financial report to the Government
of the Republic of Montenegro on the implementation of each of any concession or B.O.T. agreement, on any investment related thereto,
and the any activities initiated by the Regulatory Body, including its own activities, and financial results therefrom.
Law on Participation of Private Sector in Delivery of Public Services 44
The prime concern of all persons involved in solicitation activities shall be governed by principles of transparency and accountability.
All persons shall handle public solicitation by (i) ensuring adequate time for preparing offers, (ii) complying with this Act; (iii)
maintaining strict confidentiality as requested under this Act and (iv) maintaining ethical practices by developing and maintaining
honest and professional relations with investors and third parties, by having an attitude that shall reflect this Act.
No person involved, directly or indirectly, in public solicitation shall accept any type or form of advantage from an individual
or any type of organizations; any person, organization, entity, association or any other group of persons who is offered or received
such gratuities shall refuse it and return it to the giver in a dignified manner, advising him in writing that this Act prohibits
such reward or gift.
All persons involved, directly or indirectly, in matters of public solicitation shall be expected to be free from interests or relationships
which are actually or potentially inimical or detrimental to the best interests of the Republic of Montenegro and shall not engage
or participate in any commercial transaction involving the Government or a public entity in which they have any kind of financial
interest.
A conflict of interest exists where a person:
(1) possesses an interest outside his official duties that materially encroaches on the time or attention which should otherwise
be devoted to affairs of Government;
(2) possesses a direct or indirect interest in or relationship with an outsider which is inherently unethical or that may
be implied or inferred to be, or make possible gain or advantage due to the person’s ability to influence dealings;
(3) entertains relations which are unethical, rendering his attitude partial toward the outsider for personal reasons
or otherwise inhibit the impartiality of the person’s business judgments;
(4) presents, by acts or omissions, the public entity he represents or the Government in an equivocal, embarrassing or ethically
questionable position;
(5) entertains relations compromising the reputation on the integrity of the public entity he represents or the Government;
(6) receives benefits by taking advantage of an opportunity that properly belongs to the public entity he represents
or the Government;
(7) creates a source of revenue or advantage by using public property which comes into his hands either in course of his
work or otherwise; and,
(8) discloses confidential information of his public entity to a supplier or to unauthorized persons.
Law on Participation of Private Sector in Delivery of Public Services 45
The law on concession (Official gazette RCG 13/91) shall be repealed as of the application date of this law.
(1) Any right or obligation subsisting at the commencement of this Act in favor of, or against any of the public entities shall, on commencement of this Act, be a right or obligation in favor of the same public entities.
(2) Any situation which came into being but were not exercised before the entry into effect of this Act, shall remain in full force
in conformity with the old legislation; but their exercise, duration and procedure to enforce them shall be regulated by this Act
and by the Rules of Court; if the exercise of the right or of the action was commenced under the old laws, but is pending on the
date this Act takes effect, and the rules and regulations were different from that established in this Act, the rules and regulations
made under this Act shall apply.
(3) Rules and regulations laid down or made under this Act which may prejudice or impair vested or acquired rights in accordance with
the repealed legislation shall have no retroactive effect.
This Act shall take effect after eight (8) days following its publication in the
Official Gazette of the Republic of Montenegro, and shall be applied of 1 July 2002 .
Law on Participation of Private Sector in Delivery of Public Services 46
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