The Chinese consortium Shandong, which was awarded the contract for the reconstruction of the Tivat-Jaz road and the construction of part of the regional water supply system, has not only requested around two million euros due to a price difference in the procurement of water pipes, but also an additional half a million euros for delays in starting work due to the absence of a building permit, as well as an extension of the project deadline by at least 45 days.
These are the latest findings from the Action for Social Justice (ASP), which also reveal that the Chinese side has announced a claim for further payment and deadline extension due to recent bad weather in Tivat. They argue that “during the work, the ductile pipes DN700 were completely destroyed due to heavy rainfall and extremely unfavorable weather conditions.”
According to ASP, the contract for the reconstruction of the Tivat-Jaz road, which also includes the installation of a water supply pipeline in Lastva Grbaljska, was signed in March last year based on FIDIC rules, for a total of 54 million euros (excluding VAT). Under the agreed conditions, the project is expected to be completed by the beginning of 2026.
“However, it is becoming apparent that there are serious problems on the ground, and questions are being raised as to whether the investment was based on a flawed design solution, which was prepared back in 2019,” the ASP stated in a press release.
Reliable information from ASP suggests that strong underground waters, coming from Lovćen, during the recent storm literally lifted the installed water pipes from the ground. Additionally, the number of designed drainage channels is questioned, which could require payments beyond the contracted price.
Regarding this situation, the Chinese Shandong consortium has expressed its intention to demand an extension of the project deadline and additional payment. Previously, on July 12 of this year, they submitted a report for a damage claim of around two million euros related to the price difference between Chinese and Turkish pipes, fittings, and valves. The Chinese side claims that their proposal, made during the tender period, was to procure pipes and fittings from the Chinese supplier Xinxing and valves from the Turkish company Samsun Makina Sanayi.
According to ASP, the offer from Xinxing was for pipes worth 2.9 million euros, but the Engineer instructed that all materials for the water supply be procured from the Turkish supplier, leading to a contract with “Sanivod” from Belgrade for 5.1 million euros.
“Based on the two offers, there is a cost difference of 1.988 million euros, which is an increased expense for us. Considering the intention for good cooperation and the fact that the project’s progress should not be delayed, the contractor procured pipes and fittings from Samsun Makina Sanayi in Turkey, according to the Engineer’s instructions. However, the contractor believes that the Engineer’s instructions seriously violate the contract and has submitted a claim for additional payment,” the Chinese side stated, as reported by ASP.
The Engineer, as explained by ASP, is the supervisory authority on the project, or a consultant carrying out supervision under FIDIC rules. For this project, the supervisory role is carried out by the joint venture IRD Engineering and P.P.G. from Italy, though foreign consultants typically employ many local engineers or those from neighboring countries.
At the same time, ASP adds that the Engineer, in correspondence with the Chinese side, has stated that comparing the prices of two suppliers, transport costs from China or Turkey, and payment methods are not his responsibility. His task is to ensure quality and adherence to contractual deadlines.
“We have repeatedly expressed our opinion to the supervisor and the investor that all materials should be procured from a single supplier, due to the nature of the work and the constant need for emergency procurement due to possible works outside the scope of the main contract. Given the geographical proximity and the fact that the Turkish supplier has a branch in Belgrade, we opted for this option,” the Engineer said.
ASP further notes that the reconstruction of the Tivat-Jaz road is being financed with around nine million euros from the Regional Water Supply of the Montenegrin Coast and the Traffic Administration. The Chinese side has requested 499,104 euros from the Traffic Administration due to delays in starting the work and taking possession of the land before the investor issued the building permit.
The contract with the Chinese contractor was signed in March last year, preparatory works began in August, but were halted due to the lack of a building permit, which was not issued until the end of October last year, according to ASP.
According to reliable information from ASP, the Regional Water Supply formed an Implementation Unit to monitor this project, led by Saša Radulović, a former state secretary in the Ministry of Sustainable Development in the government of the Democratic Party of Socialists, who is additionally paid monthly for overseeing this project, a task that should be part of his regular duties.
