Main Roads Reconstruction Project



Project number:


Business sector:


Notice type:


Environmental category:


Target board date:

01 Nov 2017



PSD disclosed:

17 Jul 2017

Translated version of this PSD: Montenegrin

Project Description

Provision of a sovereign loan to Montenegro for the benefit of the Transport Directorate ("TD") of the Ministry of Transport and Maritime Affairs of Montenegro ("MoTMA"). The loan will be divided into three tranches. Tranche 1 in the amount EUR 10 million will finance the construction works and works supervision for the rehabilitation of the Ro#aje - Špiljani road section. Each of Tranche 2 and Tranche 3 in the amount of EUR 15 million will finance the construction works and works supervision for the rehabilitation and upgrade of the Tivat - Jaz road section and Podgorica i Danilovgrad road section.

This Project consists of 3 components. Section 1 has been Board approved on 1 Nov 2017 and signed on 7 December 2017. This ESIA disclosure is dealing with the currently uncommitted Cat A road section Danilovgrad-Podgorica, and the Board discussion for this part of the Project is expected on 27 Nov 2019.

The Project is part of a wider programme to rehabilitate twelve main road sections, with a total length of approximately 216.3 km, of Montenegro's main roads network, which will be parallel-financed with the European Investment Bank (EIB).

Project Objectives

  • Support of Montenegro's economic development and contribution to its cross-border integration by improving connectivity between its main cities and between Montenegro and neighbouring Serbia.
  • Improvement of the road infrastructure and services between Tivat Airport and the country's main

tourist destinations near the city of Budva on the Adriatic coast, facilitating the flow of goods and domestic and international tourists, and reducing transportation costs.

Transition Impact

  • The Project will support Montenegro's internal and external integration by improving connectivity between its main cities and between Montenegro and neighbouring Serbia. The Project will improve the road infrastructure and services between important tourist destinations along Montenegro's Adriatic coast facilitating the flow of goods and people, and reducing transportation costs.
  • In line with the Green Economy Transition (GET) approach, the Bank will engage with the Client in the identification of key climate risks, the vulnerability analysis of the road sector to climate change and the integration of structural and non-structural climate measures in the Project in order to increase resilience of the investments and contribute to improved management of the impacts of future climate change.

Client Information


The Borrower is the Government of Montenegro represented by the Ministry of Finance. The Client is MoTMA which has overall responsibility for the transport policy and strategy in Montenegro. Within MoTMA, TD is responsible for the construction, maintenance and operation of Montenegro's national and regional (main) road network. The urban and local roads network is managed by the local government.

EBRD Finance Summary

EUR 40,000,000.00

A sovereign loan of up to EUR 40 million divided into three tranches as follows:

  • Tranche 1: EUR 10 million
  • Tranche 2: EUR 15 million
  • Tranche 3: EUR 15 million

Total Project Cost

EUR 52,660,000.00

The total Project cost is estimated at approximately EUR 52.7 million.

Environmental and Social Summary

The rehabilitation of the Rozaje - Spiljani road section near the border with Serbia, which will be financed by Tranche 1 of the Bank's loan, has been categorised B in accordance with EBRD's 2014 Environmental and Social Policy. The Project involves partial re-alignment and upgrading of a 20 km long section of an existing two-lane road that requires widening from 6.0 m to 6.5 m, with an additional lane of 0.3 km to be built at the border crossing Dracenovac, and rehabilitation of 12 existing road tunnels (approx. 1.7 km in total length) with drainage works and safety improvements.  Any adverse environmental and/or social impacts are site-specific and can be readily identified and mitigated through the road design solutions, good construction practice and the implementation of mitigation measures.

The rehabilitation and upgrade of the other two sections, Tivat - Jaz and Podgorica - Danilovgrad to be financed by uncommitted Tranche 2 and Tranche 3 of the Bank's loan, have been categorised A and will undergo a separate due diligence involving preparation of an ESIA disclosure package and a 120-day public consultation and will be submitted separately to the Board for no-objection approval.

An initial site visit to the Project was undertaken by ESD, followed by Environmental and Social Due Diligence (ESDD) that was carried out by independent consultants which included a review of the existing Project documentation, detailed road designs, a site visit and meetings with the Client to assess the Project against applicable EBRD Performance Requirements (PRs). A Road Safety Audit has also been carried out for Rozaje - Spiljani road section and its recommendations will be addressed in the final design of the road.

The rehabilitation of the Rozaje - Spiljani road section is expected to improve road and community safety, including improved lighting and signage, strengthening and revitalising bridges and tunnels, fences and safety nets for the rocks, introducing new bus stops and potentially new side stops/rest areas. The Client does not yet have a formalised environmental and social (E&S) management system in accordance with ISO 14001, however, for this Project, they will form a Project Implementation Unit that will have internal capacity with dedicated E&S responsibilities.

The ESDD ascertained that the Rozaje - Spiljani road section does not require an EIA under the EU EIA Directive, and the local competent authorities concluded that a local EIA is not required. Cumulative and transboundary effects on air, noise, water quality and road safety were assessed in the Strategic Environmental Assessment (SEA) in the context of other developments in the Municipality of Rozaje and reflected in the project mitigation measures following ESDD.

The ESDD identified that the environmental footprint of the Rozaje - Spiljani road section will not be significant and that the existing road section will not have impacts on any sensitive protected areas or archaeological sites. No designated nature conservation sites are present within the project location itself and the nearest EMERALD site is the Hajla Mountain, located 6 km south of the project site. The Project will not affect this site directly and significant indirect effects are also unlikely. Pre-construction checks shall be conducted in the project area to avoid and manage any potential impacts on Annex I habitats of the EU Habitats Directive. The environmental risks of this project also relate to potential run-off to watercourses, and the final road design will also need ensure at a minimum that drainage from the road should be sealed and treated before discharge at all locations where the run-off could enter the Ibar river and its tributaries or other water bodies to prevent any impacts on the aquatic environment. These potential biodiversity have been identified and adequately addressed through actions in the ESAP.

The main social impacts are expected to be related to expropriation of some land and assets (no physical displacement is required), health and safety including road safety, access arrangements, dust and noise during construction, and noise during operation, which are readily managed with standard mitigation measures. The rehabilitation of the Rožaje i Spiljani road section does not include installation of footpaths to improve pedestrian safety, and further solutions will be sought by TD in cooperation with the local authorities to address and improve the situation for the pedestrians, particularly in the areas of local schools and bus stops.

Most of the land required for the project works is state-owned, however some limited economic displacement within the Project is likely to occur in close vicinity of the road and will affect some business parking areas, front gardens (including some trees and possibly some cultivated areas) and fences/walls for houses. No informal land occupancy has been identified in the project affected areas. TD has previously produced a Resettlement Policy Framework (RPF) in line with both Montenegrin and EIB requirements for several other road sections. Given the existence of the RPF, and the relatively small footprint of the project, TD will need to develop and implement a Land Acquisition & Livelihood Restoration Plan (LALRP).

A comprehensive Environmental and Social Action Plan (ESAP) has been developed and agreed for the Project to address the ESDD findings to ensure the Project is structured to meet EBRD PRs. Some elements of the ESAP (mainly related to road safety, environment, health and safety risk management, stakeholder engagement and monitoring during constructions stage) will be also addressed through the Project supporting TCs. The ESAP requirements focus on: adequate environmental and social pre-construction surveys, detailed analysis of impacts and development of specific protection/mitigation measures, evaluation of hydrogeological risks from tunnel reconstruction and managing run-off to watercourses, evaluation of impacts on natural resources, a biodiversity management plan,  worker accommodation, preparation of a LALRP and grievance mechanisms for both workers and other stakeholders. A Traffic Management Plan (TMP) will be required for construction phase, and Occupational Health & Safety (OHS) Plans will be required for both construction and operation in line with OHSAS 18001 requirements. The corresponding ESAP actions and measures will be incorporated into the design and build contractors requirements.  The Contractor will produce a Construction Environmental & Social Management Plan (CESMP) to address these requirements as part of good construction practice, and its implementation will be monitored by a Supervision Engineer, to be engaged by TD under a separate contract. TD will require a chance finds procedure to be implemented by the Contractor. For operation, an Operations Environmental & Social Management Plan (OESMP) shall also be produced. A Stakeholder Engagement Plan (SEP) has been prepared for the project to ensure consistent engagement with any affected stakeholder in accordance with PR10, including some appropriate engagement with and notification of the Serbian counterparts although no major transboundary issues have been identified during the ESDD.

The development of detailed environmental and social mitigation and management plans satisfactory to the Bank will be a condition precedent to disbursement of the Bank's loan prior to any construction activity. Further details on environmental and social issues are included in the Non-Technical Summary of the Project, and it will be disclosed to the public alongside SEP and LALRP on TD's website and as part of the Bank's Project Summary Document. The Bank will closely monitor the project implementation through annual E&S reporting, ESAP implementation progress and monitoring visits to the Client, if necessary.

Non-technical summary (NTS) in English

Stakeholder Engagement Plan (SEP) in English

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

The following Technical Co-operation assignments are envisaged as part of this project:

1. Works supervision;
2. Project implementation support;
3. Preparation of a Study on improvement of public transportation and preparation of tender for a multi-year distribution of public lines;
4. Development of a Strategy for Climate Change Adaptation in the road sector.

Company Contact Information

Mile Ostojic
+382 67 316 185
+382 20 655 359
Transport Directorate, IV proleterske 19, 81000 Podgorica, Montenegro

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Text of the PIP

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