Research by the NGO Action for Social Justice (ASP), based on official documents obtained through freedom of information requests, reveals that Montenegro’s government initially planned to sell only 60% of the capital in the newly established company “Luštica Development” in 2008 — not 90% as was later offered in the international tender.
The government, led at the time by the Democratic Party of Socialists (DPS), founded Luštica Development AD with the goal of leasing over six million square meters of state-owned land on the Luštica Peninsula to a foreign investor for tourism development. The original plan included retaining 30% of the company for eventual sale to Montenegrin citizens, potentially through compensation mechanisms such as restitution or old savings bonds.
However, by July 2008, the privatization commission changed course and decided to offer 90% of the company’s capital on the international tender, with only one bidder participating — the Orascom Group from Egypt.
According to ASP, this shift significantly favored the foreign investor. The final agreement included long-term land leases and partial sales under a hybrid model that combined lease and ownership, particularly for areas beneath villas or apartments.
Key contract terms included:
- An initial fixed lease payment of €1 million annually for the first 10 years;
- An additional €1 million annually in company shares for the government;
- After 10 years, lease payments of €0.15 per square meter;
- Transfer of land ownership under villas at €80 per square meter, but just €4 for remaining villa plot areas;
- Apartment transfer fees were also set at €80/m², and €15/m² for business-related land use;
- A turnover rent of just 2% of revenue.
ASP noted that the government initially aimed for a lease rate of €0.75 per m², with a fallback of €0.50, but settled for much less during negotiations.
Today, 15 years later, Orascom controls nearly 90% of Luštica Development, the state holds a small minority stake, and only a negligible number of Montenegrin citizens own shares in the project. ASP argues the deal disproportionately benefits the foreign investor while yielding limited returns for the Montenegrin state.
