(Podgorica, 6 June 2013) – The Government of Montenegro has submitted a draft Law on Amendments to the Law on Spatial Planning and Construction to the parliament. The proposed law totally annuls the requirement to pay utilities on ‘facilities of general interest’ (whose definition is significantly broadened).
In light of the disrepair of communal infrastructure in nearly all Montenegrin municipalities, the government’s decision to rid itself of an enormous source of revenues in order to secure the interests of so-called ‘strategic investors’ is incomprehensible. This, at the same time, means that the building of communal infrastructure will either be financed from the budget (at taxpayer expense) or through further indebtedness with local banks or international financial institutions (which will once again negatively impact citizens, as was done most recently with the ‘KAP tax’).
Particularly problematic is the fact that the government, through this proposed amendment, has broadened the list of facilities that should be considered ‘facilities of general interest.’ Included on this list now are facilities for the production of electrical energy from renewable resources, meaning that the future builders of hydroelectric power stations and wind-power stations won’t be paying the state a cent for utilities. Some companies that are close to the Government and that are involved in these deals include Bemax, Čelebić and Zetagradnja. It isn’t clear why the private facilities of these companies would have the status of ‘facilities of general interest,’ since the benefits will accrue only to their owners. MANS has previously noted that the producers of electrical energy are already subsidized through lower tax rates. This measure thus represents further concessions at the expense of the state budget (which will be paid for by citizens).
Additionally, in the existing version of the law, five star hotels are included under the category of ‘facilities of general interest’ that are exempt from paying utilities. The government has now decided to include four star hotels as well in this category, as well as smaller hotels, hotel resorts, boutique hotels, tourist settlements as well as wild beauty resorts, eco-lodges, and ethno-villages. This essentially frees a considerable portion of most buildings on the coast, as well as many in the north of the country, from having to pay for utilities.
This is particularly problematic in the north of the country, where the infrastructure that needs to be financed from utilities is either non-existent or poorly developed. Instead of financing the necessary infrastructure through utility receipts, the costs will be covered by further public indebtedness (which will be paid by all citizens).
In so far as such draft amendments are adopted, hotels of ‘general interest’ would include those owned by Naser Keljmendi in Ulcinj, the tourism complex owned by Vlatko Rakocevic (the controversial former ANB official), as well as the illegally built and retroactively legalized hotel Polar Star in Zabljak (partially owned by the family of former Prime Minister and the current Minister of Foreign Affairs, Igor Luksic).
The infamous Zavala development will also become a ‘facility of general interest,’ since it is still classified as a tourism settlement, even though we’re essentially dealing with an ordinary housing colony.
The government’s proposed amendment predicts that the change in planning documentation dealing with such ‘facilities of general interest’ will be carried out through an expedited procedure, opening up ample room for these objects be treated differently (of course, for the benefit of tycoons that have illegally built it).
In justifying such solutions, the government has cited its low rankings in the World Bank’s Doing Business reports when it comes to the issuing of building permits, including the intention to stimulate tourism development in the country’s impoverished north. The text mentions as a potential example the area of Bjelasica and Komovi whose development they argue would be facilitated by freeing developers of the obligation to pay utilities. When we consider that the plan for this area was done by the RZUP company, owned by the Prime Minister’s brother, Aco Djukanovic, who also owns substantial property in the area, and that other members of the family as well as close friends also own property in the area, it is no wonder that the government is now deciding to free such ‘strategic investors’ of the obligation to pay utilities.
At a time when citizens are facing increasing VAT charges, in order to fill gaps in the budget resulting from the unsustainable policy towards the KAP (including paying the debts of Russian tycoons), we believe that such a forsaking of revenues for the benefit of domestic and foreign tycoons is shameless, and that it will lead to the further indebtedness of citizens.
