The bypass around Rožaje will be continued by another contractor, but the state budget will suffer millions in losses because the Bosnian company “Euro-asfalt” and its partners did not complete the project within the agreed timeframe. Sixteen years later, Rožaje still does not have a completed bypass around the town. Of the planned 20 million euros, after penalties, paid works, and funds allocated for further construction, the project will ultimately cost the state around 25 million euros.
This can be concluded from the documentation related to the public procurement of works for the Rožaje bypass, provided to Institute Alternative by the Traffic Administration based on a freedom of information request.
16 years later: First phase unfinished, works failed
Construction of the bypass began in 2008 with the first phase of relocating the main road from Serbia, which passes through Rožaje, to the intersection with the Rožaje – Kula – Peć road. The contracted price for the first phase was nearly 3.8 million euros, and the project was awarded to the company “Konstruktor Inženjering.” The planned completion date was the end of 2009. However, the works were not completed by 2012, when the technical acceptance committee required corrections to the work.
There isn’t much data on this project, but it is clear that what was completed didn’t serve much purpose, and by the time construction on the second phase began, after eight years, or up until today — 16 years later — the first phase had significantly deteriorated and remained partially unfinished.
The then Minister of Transport, Ivan Brajović, clarified in a parliamentary session in 2012, responding to questions, that the first phase was completed but not the additional works. The works requested by the technical acceptance committee, amounting to 50,000 euros, were not finished due to the bankruptcy of “Konstruktor Inženjering.”
Although Brajović announced a new tender procedure and said the works would be completed by 2014, activities related to the project did not resume until 2017. More than five years passed from this parliamentary debate and the claim that the first phase was completed until the start of the second phase of construction.
Second phase: Deadline extensions and contract termination
For the construction of the second section of the bypass around Rožaje, funded by a loan from the European Investment Bank, the proposal from the contractor “Euro-asfalt and partners” was selected. A year earlier, the Bosnian firm “Euro-asfalt” had been awarded the contract to build the new regional road from Berane to Kolašin, specifically the second section from the village of Lubnice in the Berane municipality, over the Jelovica mountain, with the “Klisura” tunnel through Bjelasica. At the time, it wasn’t known that they would delay that project by four years and that the cost would rise from the contracted 37 million euros to nearly sixty million. The tunnel was only recently opened, and the Berane – Kolašin road was put into trial operation.
According to media reports, the Special State Prosecutor’s Office became interested in the rapid rise of this company in Montenegro and the fact that it had secured contracts worth 60 million euros in a short time. In 2022, the Ministry of Capital Investments provided information to the Prosecutor’s Office about the contracts awarded to this company. The outcome of this investigation is still unknown.
The estimated value of the second phase was 20 million euros, and the lowest offered price was the selection criterion. The selection process included a complaint from “Džim company” that was rejected, as well as amendments to the tender documentation regarding technical details. The process concluded with the selection of the sole offer from “Euro-asfalt and partners” for the amount of 19,778,320 euros. The construction contract was signed in October 2017, and “Euro-asfalt and partners” began work in December 2017. According to the contract, they were supposed to complete the second, certainly more challenging, section, as well as repair the first section of 3.4 kilometres, within 730 days, or two years.
Although the deadline was set for 2019, it was significantly extended through two annexes. The first annex, on November 7, 2019, extended the deadline by 480 days, until April 15, 2021, citing unresolved property and legal issues and changes to the project documentation due to discrepancies between the actual and projected geology of the terrain.
In that annex, article 4 hinted at the possibility of another deadline extension. This happened with the second annex on November 16, 2020, when the contractor was given an additional 240 days, until December 11, 2021. The main reasons cited were the negative impact of the COVID-19 pandemic, unresolved property and legal issues, and expropriation, along with further changes to the technical project documentation caused by discrepancies between the actual and planned documentation. It was also emphasized in the second annex that “no other provisions of the contract are supplemented or changed.”
In the end, the Traffic Administration decided to terminate the contract
The Bosnian company and its partners withdrew from the Rožaje bypass project after collecting around 17.5 million euros. They left the construction site completely unsecured, which is contrary to the contract signed in 2017. As a result, the state of Montenegro will now cover all the remaining costs and mistakes.
Radomir Vuksanović, the current director of the Traffic Administration, who inherited the “hot seat” from the former director Savo Parača, stated that the new Montenegrin authorities have done everything to minimise the damage.
“We tolerated the two-year delay just to see the project completed. We managed, with the mechanisms available to us, to encourage all contractors across Montenegro, whose projects were at risk due to the rising cost of construction, to continue working. The Rožaje bypass and the road project from Pljevlja to Bijelo Polje, on the Vrulja section, are the only two projects in the country where we were forced to terminate contracts with contractors,” emphasised Vuksanović.
In a letter from October last year about the termination of the contract, the Traffic Administration informed “Euro-asfalt” that it would activate guarantees as penalties for the unfinished work, which could not exceed 5% of the contract value of 19,778,320.00 euros, amounting to 998,919.00 euros.
In the mutual claims related to unfinished work on one side and unpaid situations on the other, the total amount that the Traffic Administration was supposed to collect by activating the guarantee rose to 1,034,883.24 euros.
“Euro-asfalt requested that the bank guarantees not to be activated to avoid causing business damage and harming the company’s reputation, due to other projects in Montenegro and the possibility of account blockages. They asked to pay that amount in two equal instalments, which they did,” said the Traffic Administration.
The Traffic Administration further explained that since October of last year, they had to wait for approval of the Public Procurement Plan for 2024 before announcing a tender to select a new contractor who would complete the second phase of the bypass and also repair the first phase, which was also “Euro-asfalt’s” obligation.
According to this year’s Public Procurement Plan, the Traffic Administration was allocated 6,611,000 euros from the state budget for this work, with an additional 1,388,310 euros including VAT. The plan also allocated an additional 123,900 euros, plus VAT of 26,019 euros, for professional supervision.
“I hope that we will soon announce a public procurement call for the completion of the bypass works so that by the end of April, we can sign a contract with the new contractor and, by the end of the year, finish the entire project,” said Radomir Vuksanović, director of the Traffic Administration, in a recent statement to IA.
Partners and (undeclared) subcontractors
The partners of “Euro-asfalt” for the project included “Tehnoput MNE” LLC Podgorica, “ROCC RAND – M i V” LLC Šavnik, “Telekom elektro” LLC Podgorica, “ETG group” LLC, and “Geopremijer” LLC, Podgorica. Although it was emphasised that no subcontractors, apart from the partners, would be engaged for this project, accidents that occurred during the work revealed that other companies had been involved.
The documentation shows that “Euro-asfalt and partners” employed several engineers from Sarajevo, Zagreb, and Belgrade, but there is no trace of how and in what capacity companies such as “Vektra integra” from Sarajevo, which built two bridges, “AXA company” LLC from Bijelo Polje, and “Tofi” LLC from Rožaje were engaged. The construction contract included signed statements from “Euro-asfalt” and all partners stating that they did not intend to hire subcontractors for this public procurement. The Law on Public Procurement allows for the engagement of subcontractors during the contract execution, but their share cannot exceed 30% of the contract, and only with the client’s consent and proof that they meet the same conditions as the contractor.
The Traffic Administration confirmed that the contractor had not sought approval for engaging subcontractors but argued that they were not required to request such consent. They explained, “Euro-asfalt and partners, as the leading member of the consortium, had its suppliers for certain materials, labours, etc., and thus was not required to seek approval from the Traffic Administration.”
The construction contract specified that “the contractor is responsible for the work and omissions of any subcontractor, their representative, or workers, as if they were the work and omissions of the contractor itself.” This would later prove significant due to two major incidents that occurred during the construction.
The collapse of the “Veliki Ibarac” bridge during construction in December 2020 revealed who was actually involved in the works. According to police and the Basic State Prosecutor’s Office in Rožaje, which filed criminal charges following the bridge collapse, four companies and seven responsible individuals, including directors and engineers, were charged with serious offenses against public safety.
Charges were filed against the Montenegrin branch of the Sarajevo-based “Euro-asfalt,” its owner and director, and the main engineer. They also included the company “Vektra Integra” from Sarajevo, its director and site manager, and the subcontractor “AXA company” from Bijelo Polje, along with its director.
In this serious incident, two workers were injured: S.N. from Serbia, employed by “AXA company,” and S.K. from Bosnia and Herzegovina, employed by the Podgorica branch of “Euro-asfalt.” Another injured worker, A.K. from Rožaje, was employed by “Tofi” from Rožaje, indicating that this company was also involved in the project.
Despite the bridge collapse, “Euro-asfalt” was required to cover all the costs and rebuild the bridge at its own expense. Two years earlier, in 2018, another serious incident occurred when one of the tunnels, “Ibarac,” collapsed, though fortunately, no workers were harmed. In September 2021, just two months before the deadline under the second annex, the company withdrew its equipment and workers from the site, promising the locals they would return in a month, but they never did.
In addition to the unfinished works, the consortium also faces ongoing legal disputes initiated by locals. Brothers Ervin and Mustafa Demić, whose land was used by the contractors for waste disposal, filed a lawsuit. For the devastation of 3.5 hectares of land, a lawsuit for compensation has been pending against “Euro-asfalt” for two years in the Basic Court in Rožaje.
“We are not particularly concerned about their business reputation. We were very accommodating and allowed them to use our land for waste disposal instead of transporting it 10 kilometres away, as originally planned, but under the condition that they would restore it afterward. They left without doing so, and the type of waste, including a lot of concrete, cannot be easily restored. Their superiors acted in Rožaje as if they were a state within a state, and everything was made easy for them,” said Mustafa Demić.
Sixteen years later, Rožaje still does not have a completed bypass around the town. Of the planned 20 million euros, after deducting the penalty fees, approximately 16.5 million euros have been spent so far through the second phase of the project. With the remaining work budgeted at over 8 million euros, the total cost to the state will ultimately be close to 25 million euros.
This investigative article was produced within the Project “Procurement under spotlight – Making Watchdogs Work!”, with the support of the Embassy of the Kingdom of the Netherlands in Serbia and Montenegro within the MATRA Rule of Law program. Project aims to empower and motivate watchdogs to combat corruption and undue influence in public procurement.
