Main Roads Reconstruction Project



Project number:


Business sector:


Notice type:


Environmental category:


Approval 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 is to be approved beginning of December 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 is engaged 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 Transport Administration, responsible for construction, maintenance and operation of Montenegro's national and regional (main) road network.

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 69.2 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 the Danilovgrad-Podgorica road section.

Update for the Danilovgrad – Podgorica Road Section (Tranche B)

The Danilovgrad-Podgorica road section includes the reconstruction and widening of the existing road from 2 to 4 lanes over 10km, hence this Project is categorised A under EBRD's Environmental and Social Policy (2014). The Bank's environmental and social due diligence (“ESDD”) was conducted accordingly with the support of several independent consultants and included documentation reviews and site visits.

The Project Environmental and Social Impact Assessment (“ESIA”) disclosure package includes the local EIA, a Supplementary ESIA, Non-Technical Summary, Stakeholder Engagement Plan (“SEP”), the Land Acquisition and Resettlement Framework (“LARF”) and Environmental and Social Action Plan (“ESAP”). These were disclosed on websites of TA and EBRD on 29 July 2019 and can be found at . Hardcopies have been made available at the TA offices locally and EBRD’s RO in Podgorica. 

The project has been subject to the national Environmental Impact Assessment (“EIA”) process, and EIA was approved by the competent authority in July 2019. The Project is intended to improve traffic flows (thereby reducing journey times) and road safety (for both drivers and pedestrians). Road drainage will be improved to reduce flood risk and run-off rates of contaminated water onto the surrounding land and into adjacent watercourses.  

The Client  will develop and implement a Project Environmental and Social Management System (“ESMS”). A series of mitigation and management measures have been identified for all the project phases. A number of these measures require that the Contractor prepares Specific Environmental Management Plans (“S-EMP”) before the start of construction activities such as Construction Management Plan; Labour and Working Conditions Management Plan; Spoil Disposal Management Plan and a Biodiversity Management Plan.

There has been extensive engagement activity including one to one interviews, group discussions, socioeconomic household surveys and community meetings carried out during the development of the Project as well as two ESIA consultation meetings. Concerns raised were related to access restrictions to properties and businesses, land acquisition, project nuisances and pedestrian and school children safety impacts during construction.

The route alignment is the existing one and does not cross any known protected areas. The description of the existing biodiversity baseline and conservation status of the Project area has been developed through a combination of desk based studies, expert consultations, and site surveys. In particular, the work included a biodiversity assessment with targeted surveys conducted throughout 2019.  These documents have identified the following sites, species and habitats that require special conservation measures to be put in place for them during construction and operation: locally designated sites (“Mareza source with Sitnica and area of Velje Brdo”); the rivers Susica, Sitnica Matica and Mareza; European Otter and Bats, Notable Amphibians including Albanian Water Frog, Notable Fish: Soft mouthed trout and European eel, Notable Invertebrates including endemic freshwater snails and white-clawed crayfish. A Critical Habitat Assessment has been carried out for the project, which concluded that there are species in the area that have the potential to trigger Critical Habitat (freshwater snails). To address this and meet PR 6 requirements, a Biodiversity Action Plan (“BAP”) has been prepared and disclosed as part of the ESIA package. The BAP will be used to enable the project to avoid, minimize and/or mitigate impacts to species and habitats of conservation importance.  The BAP includes appropriate biodiversity offset mechanisms to achieve No Net Loss of Priority Biodiversity Features in line with EBRD requirements.  A number of precautionary action plans have been prepared as part of BAP to help ensure that the Project results in “no net loss”, or in the case of the freshwater snails where Critical Habitat has been identified, “net gain” to the conservation value of these habitats and species. These action plans are referenced in the final ESAP and will need to be further updated and implemented upon further pre-construction surveys by the Client, which may include safe passages for the affected habitat in the road design prior to start of construction works.

Relevant risk assessments in relation to climate change impacts have shown limited overall risks to the project.  

The Project will involve limited physical and economic displacement. To this end, the LARF was prepared and publicly disclosed. A separate Land Acquisition and Resettlement Plan (“LARP”) will be prepared and implemented by the TA prior to the start of the civil works. Land acquisition/resettlement is financed by the Government of Montenegro. So far, 349 expropriation cases have been opened out of a total number of 551 expected parcels (474 private owners and 77 businesses) of approx. 157,000 square meters in total. Some residential houses will be affected and three business structures will need to be completely or partially removed. The implementation of LARP, once developed by TA, will be regularly monitored and verified through the Completion Reports prepared by the external implementation support and monitoring consultant.

During the construction phase, the Contractor is expected to employ several hundred construction workers, and any temporary accommodation and welfare facilities (construction camps or private dwellings) for workers will be designed and constructed to meet requirements of IFC/EBRD Worker Accommodation Guidance Note 2009. To prevent any adverse impacts on the communities, the Contractor will also be guided by the respective WB and IFC guidance and good practice notes, including on gender based violence. The core requirements of the EBRD Performance Requirement 2 will also be cascaded down across all contracting chains, including subcontractors, and monitoring by the Bank will be conducted.

An independent Road Safety Audit for the Project has been conducted during the design phase and its main recommendations have been addressed. Further effort by RSA consultants is currently ongoing to further enhance pedestrian/school children safety arrangements via a continuous safe pathway along the upgraded road, and specific provisions will need to be included in the detailed design.

Noise modelling carried out as part of the ESIA work indicates that noise mitigation is required for the road. A Noise and Vibration Management Plan for construction will be provided by the contractor, and during the pre-construction phase the Owner’s Engineer shall undertake further noise modelling to determine the specification and precise locations for any noise barriers and to reduce the number of affected properties along the route.

Assessment of air quality issues conducted as part of the ESIA indicated that no elevated sensitivity receptors in terms of air quality have been identified along the route of the road. No cultural heritage impacts have been identified in the Project area. However, as a precaution, the Contractor will adopt a Chance Find Procedure prior to the start of construction works.
The current SEP includes requirements for public engagement during the pre-construction and construction period, including a grievance mechanism.
The ESAP agreed with the Transport Administration includes, among others, the requirements:  to further improve its internal environmental and health and safety management systems in line with ISO 14001 and OHSAS 18001/ISO 45001 requirements; to develop HR policy in line with PR2; to implement a Contractor oversight plan including appropriate monitoring and enforcement of EHSS and Labour requirements;  to prepare a Traffic Management Plan (TMP) for the construction phase;  for the contractor to develop and implement a Construction Environmental & Social Management Plan (CESMP), as well as to implement requirements contained in BAP,  LARF and LARP and SEP. In addition, mitigation measures require that the Contractor and the Owner’s Engineer employ a number of professionals such as an Ecological Clerk of Works and Biodiversity Specialists. The TA is also required to ensure Contractor (and subcontractors) transpose relevant elements of the SEP into their own plans of work, as reflected in contractual agreements as well as review and improve the Grievance Management Process.

The independent implementation support consultants will undertake regular audits of the Project to assess EHSS performance during construction in accordance with the Bank Performance Requirements. The Bank will also monitor the Project through quarterly reporting during construction phase, annual E&S reports and carry out site visits, if and when required.

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

Business opportunities

For business opportunities or procurement, contact the client company.

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Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out how to submit a Request for review through our confidential online form, by email, mail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requestors’ identities may be kept confidential, upon request.

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