Montenegrin draft Concession Law and Amendments to Decree on Promotion of Direct Investments in Serbia

Montenegrin draft Concession Law

The Ministry for Economic Development of Montenegro has published a draft Concession Law ( “Draft” ). Concessions have until now been regulated by the Law on Participation of P rivate Sector in Performance of Public Services (Of ficial Gazette of RoM, n.30/2002) which was, due to its complexity and poo rly drafted provisions on procedures, widely recogn ized as a key obstacle to the larger introduction of PPP projects in Monteneg ro. The major novelty introduced by the Draft is the po ssibility of awarding the concession without a publ ic procedure for large infrastructure projects (e.g. power production or p ower distribution facilities, roads, railways, port s, communal infrastructure, pipelines etc.) of strategic importance for Montene gro provided that awarding the concession in such n on.public procedure would accelerate the realization of the project. This exc eptional procedure is triggered by the submission o f a bid by the prospective concessionaire, accompanied by technical and techno logical documents for its realization. A decision o n bypassing the public invitation procedure and of award of such concessio n is rendered by the Government of Montenegro, subj ect to prior approval of the National Assembly. Extension of existing concessions in time or in sco pe (subject to limitations), as well awarding a con cession that is vital to national security or defence may also be performed without a public bid. Other than these exceptions, the Draft prescribes t he awarding of concessions based on a competitive p ublic tender procedure with the possibility of a pre.qualification phase for mo re complex projects or summary proceedings for simp ler projects. The competence for administering tender is with the ministry or th e local municipal authority in charge of the releva nt sector, depending on whether the relevant property that is the subject.matter of concession is in the ownership of the Republic or local municipality. However, if the value of the subject.matter of the concession i s above a threshold determined by sector specific l aw, the concession is meant to be awarded by the National Assembly. The Draft envisions establishment of the Commission for Concessions, to be appointed by the Government of Montenegro. This body is supposed to be in charge of resolving appea ls submitted by the participants in the tenders for awarding concessions. Decisions of the Commission for Concessions are mea nt to be challengeable in judicial accountancy proc eedings. The Draft, at the date of this bulletin, does not d etermine the maximum term of the awarded concession but, instead, declares that duration of the concession is determined based on p ublic interest, nature of the awarded concession, e tc. The Draft stipulates the possibility of extending the duration of the awarde d concession subject to the fulfillment of certain conditions. There are some indications that the final version of the Draft mig ht contain an explicit maximum duration of the conc ession award of 90 years. It is expected that the Draft will be put before th e National Assembly in September, in time for many announced PPP projects in Montenegro, predominantly in the energy sector.

Amendments to Decree on Promotion of Direct Investments in Serbia

In July 2008, the Government of the Republic of Ser bia enacted the Amendments to the Decree on the Pro motion of Direct Investments ( “Amendments” ) . The Amendments broaden the incentives for direct in vestments established by the Decree on Promotion of Direct Investments enacted in 2006 ( “Decree” ). The Amendments broaden the palette of existing ince ntives for investments in the manufacturing sector, R&D and services in international trade with additional incentives for “investments of special importance” . meaning inves tments of at least 200 million euros which create at least 100 new jobs, all withi n a period of 3 years from the initial day of inves tment, in the f sectors of car industry, electronics, IT and telecommunications. Incentives for investments of special importance ma y be granted in two ways: by financial grant or by establishing a joint venture company owned by the state and the investor, where the state invests financial resources, movable and immovable assets or other rights. A financial grant may be awarded to the inv estor of special importance in the amount of up to 25% of the total amount of the investment. The dynamics of payment of such grant f ollow the dynamics of the overall investment. The Government of the Republic of Serbia decides on incentives for every single investment of special importance, on the basis of its importance, value and investment period. The Go vernment signs an agreement with the investor which defines the subject. matter, amount and dynamics of investment and event ually the amount of grant. Incentives foreseen by the existing Decree are gran ted on the basis of a public announcement made by t he Serbian Investment and Export Promotion Agency. Investments in agricul ture, tourism, catering industry and trade do not q ualify for the incentives prescribed by the Decree. Investments must also me et certain thresholds. A minimum number of employee s within each sector is necessary . 50 new employees in the production sect or, 10 in R&D and 10 in the services sector. The ma ximum amounts that may be granted per employee are defined in the Decree a nd depend on the number of new jobs created in a 3 year period, type of investment (production sector, services sector or R &D) and geographical region and range from 2,000 to 10,000 Euros for each new employee. The Amendments prescribe that the incentives (exis ting and new ones) will be available until the end of 2010.

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