Indecon Consulting

[Montenegro] – Privatisation Advisory / Legal Frameworks

Assignment Name

Transaction Advisor for the Privatisation Council of Montenegro’s Railway Undertakings



Total Value

Large (> EUR 800K)




Direct mandate as Transaction Advisor (resulting from a competitive bidding procedure) with the Council for Privatisation of Montenegro. The contract foresaw the:

(a)  Privatisation of Montecargo JSC, the railway freight operator of Montenegro;

(b) Spinning off and outsourcing the infrastructure maintenance activities of the railway infrastructure company (ŽICG); and

(c)  Outsourcing the commercial development and commercial operation of the railway stations owned by ŽICG.

Besides reviewing, commenting and developing the legal and institutional framework required to ensure the functioning of the sector and necessary for the respective privatisation, each of the involved companies needed to be individually assessed with regard to their corporate governance practices. Respective reports and recommendations were prepared, presented to and discussed with the Minister.

Type of Services Provided

  • Reviewing the corporate governance legislation, their gaps and insufficiencies with regard to SOEs;
  • Assessing the corporate governance practices in the state owned railway companies (infrastructure and cargo operator) and discussing its improvement with the Ministry of Transport (owner) – in the meantime all three state owned rail companies (infrastructure, cargo and passenger transport) are reporting their compliance with the Montenegrin Corporate Governance Code (established 2009 by the Montenegro Stock Exchange in cooperation with the IFC);
  • Performing legal and commercial due diligence;
  • Preparing and implementing the tender process including the preparation of the respective information memorandum, the identification and attraction of investors, carrying out the respective tenders and elaborating and negotiating the purchase agreement for the cargo operator;
  • Developing a strategy to spinning-off routine infrastructure maintenance activities of ŽICG, defining the rights and duties of the Railway Directorate in monitoring signing off infrastructure maintenance activities, preparing a five year Multi-Annual-Contract to outsource the maintenance activities and have these activities outsourced through competitive bidding; and
  • Identifying the key railway real estate suitable for outsourcing it for development and commercial operation through long term concessions or long lease agreements.

Key achievements of the project are:

  1. Negotiated purchase price: € 4.620.000
  2. Guaranteed investment obligations: € 12.000.000