Insights from the NGO Action for Social Justice (ASP), derived from documents accessed through freedom of information requests, indicate that the Montenegrin government originally intended to sell just 60% of the shares in the newly formed company “Luštica Development” back in 2008, a stark contrast to the 90% stake offered later in the international bidding process.
At that time, the government, led by the Democratic Party of Socialists (DPS), established Luštica Development AD with the purpose of leasing over six million square meters of state-owned land on the Luštica Peninsula to attract foreign investment for tourism. The initial strategy included retaining 30% of the company for future sale to Montenegrin citizens, potentially through compensation mechanisms such as restitution or old savings bonds.
However, by July 2008, the privatization committee altered its approach and opted to auction off 90% of the company’s shares in an international tender, which saw only one participant — the Egyptian Orascom Group.
As per ASP’s findings, this decision heavily favored the foreign investor. The final agreement incorporated long-term land leases and partial ownership arrangements under a hybrid model, particularly for land associated with villas or apartments.
Notable contractual stipulations included:
ASP highlighted that the government’s initial target for lease rates was €0.75 per m², with a backup figure of €0.50, yet they ultimately accepted considerably lower rates during negotiations.
Fast forward 15 years, and Orascom now holds nearly 90% of Luštica Development, with the state retaining a minor stake, while only a minimal number of Montenegrin citizens possess shares in the initiative. ASP contends that the arrangement disproportionately favors the foreign investor, offering limited benefits to the Montenegrin state.
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