Preliminary Information Memorandum

Kotor - Cetinje Cable Car

Private Public Partnership (PPP)
THE PROJECT .3
BACKGROUND MONTENEGRO AND ITS TOURISM .4
TOURISM IN MONTENEGRO

THE CABLE CAR .5

ROUTE DESCRIPTION
MAIN TECHNICAL SPECIFICATIONS
TERMINAL LOCATION
APPLICABLE TECHNICAL REFERENCE NORMS
OPERATION
COST ESTIMATES
CONSTRUCTION COSTS
OPERATIONAL COSTS

THE LEGAL FRAMEWORK . 13

THE PPP ARRANGEMENT: THE CONCESSION
DESIGN, BUILD, MAINTAIN AND OPERATE

THE TENDER . 14
DOCUMENTS AVAILABLE FOR THE BIDDERS
INDICATIVE TENDER STEPS
REFERENCE CONTACT
DISCLOSURE

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THE PROJECT
The Government of Montenegro is seeking a private operator to construct and
operate a new cable car from Kotor to Cetinje over the Lovcen Mountain
in Montenegro on a DESIGN, BUILD, FINANCE, OPERATE, TRANSFER
(“DBFOT”) basis, with the Concessionaire to be selected through an open
international tender. The European Bank for Reconstruction and Development
(EBRD) is considering to contribute to the Project by financing the
concessionaire with a loan of up to €15 million Euro.

The main aim of the Project will be to foster tourism growth in the area of
south-western part of Montenegro and to collect those tourist flows from the
coastal area that today do not visit the Lovcen Par Mountain Park and the
historic Royal Capital of Montenegro: Cetinje.
The Project involves the construction of a cable car as an alternative to the
present bus and car based transport solutions. The route will run from Kotor to
Cetinje via the Lovcen Mountain National Park and close to the Njegos
Mausoleum, an important national monument erected in memory of the poet
and ruler of Montenegro, Njegos Petrovic II.

The Project foresees the establishment of a Public-Private Partnership (“PPP”)

with the Government of Montenegro, that is considering various alternatives for
supporting the Project, including an availability payment.
The Project will help to fulfil one of the main objectives of the Government of
Montenegro and the municipalities of Kotor and Cetinje, which is to develop
high-quality tourism amenities. The overall impact of the Project will be to
further open this area to both regional and international tourists, drawing on
the significant cruise ship activity in Kotor, as well as local and regional visitors
to the Adriatic Coast, such as Dubrovnik, which is only 50 km away. The other
impact will be to reduce car and bus traffic on the 55 km long main road
between Kotor and Cetinje that goes around the Lovcen National Park.

The Project is expected to have several, significant, positive economic effects

due to the high economic multipliers associated with cable car projects. It is the
Government’s intention to foresee a Project structure which encourages private
sector participation.

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BACKGROUND
MONTENEGRO AND ITS TOURISM
TOURISM IN MONTENEGRO

The Tourism in Montenegro is fundamental for the Project as the new Cable Car
will primarily serve tourists, linking the bay of Kotor with the Lovcen National
Park and the Old Royal Capital of Cetinje. The two municipalities linked by the
new Cable Car, Kotor and Cetinje, recorded approximately 550,000 and 80,000
tourists in 2012, considering both daily visitors and visitors spending at least one
night in the municipality.
Moreover, one target of the project will also be to bring to the old Capital of
Cetinje tourists that currently remain in the coastal area. Only in the town of
Budva on the coast there have been 690,000 tourists in 2012.

According to the World Travel & Tourism Council (WTTC), Montenegro is

currently the fastest growing tourism destination in Europe and
worldwide. Hence, tourism is a primary contributor to the country’s economic
growth. In 2012, over a million tourists visited Montenegro, making over 9
million overnight stays (+13% increase from 2010). In particular, arrivals have
grown by 9.1% per year and overnight stays have increased by 7.8% per annum.
Figure 1: Map showing Lovcen, Kotor, Cetinje and indicative route

Herceg Novi

Kotor
Tivat
Cetinje
S1
S2
S3
S4

Budva

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The new cable car will improve the connection between those three important
touristic centers and will also be a tourist attraction in itself, being the longest
passenger cable car in the world, providing a spectacular view of the bay to
its passengers.
The expected result is an increase in domestic and foreign visitors to the area of
the project. This in turn will lead to direct and indirect benefits for the economy
of the area including increased tourist expenditure, development of new
commercial activities, increased employment possibilities for the local
population, etc.

THE CABLE CAR

ROUTE DESCRIPTION

The “idea design” (in Montenegrin: idejni projekat) is based on the original
spatial plan, by the Ministry for Sustainable Development and Tourism and the
Environmental Impact Assessment Study.
The route starts from Dub, on the outskirts of Kotor (close to the entrance of the
road tunnel linking Kotor to Tivat), it then reaches Kuk on top of the mountains
surrounding Kotor. From here a stretch reaches Ivanova Kurita before
descending to Cetinje as indicated in Figure 2 and Figure 3.

The project is divided into 3 sections with 4 specific terminal locations.

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Figure 2: The route Altimetry (AG = altitude gap; LL = line length)

Figure 3: The route aerial view

The cable car should use a modern design cable car with at least 8 place cabins
and automatic clamping. The total route will be divided into three sections and
would be characterized by high cabin speeds when in line (speed of 6m/s) and
by low speeds when in the stations (speed of 0.3m/s) to ease passengers
boarding and alighting operations.

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 The three sections should be mechanically independent, they would individually
be equipped with their own engines, but the terminal stations should be
connected to each other to ease passenger access.
The first two sections (from Dub to Kuk and from Kuk to Ivanova Korita) should
be connected through intermediate stations that should allow the automatic
transfer of the cabins from one rope ring to the next allowing, but of course not
requiring, passengers to remain in their cabin without them being required to
alight. The third stretch (from Ivanova Korita to Cetinje), instead, would not be
connected directly to the preceding ones and passengers would be obliged to
alight from the cabin.
The proposed system is extremely flexible and able to satisfy passenger needs in
both travel directions. In case of failure of one of the three sections the
remaining two will remain operational to ensure continuity and reduce
passenger disruption.
For each section a warehouse will be realized to shelter the cabins during non
operation periods or in bad weather conditions.

MAIN TECHNICAL SPECIFICATIONS

Type of plant: monocable

Type of gondola: detachable gondola lifts, 8 place cabin (alternative: 10

place cabin)

Number of vehicles: 59 + 51 + 90 = 200

Number of sections : 3 independent sections

Location of the motorized station Upper station

for each independent section:

All covering types: Metallic carpentry

Driving winch type: To be defined by the designer

Electric drive type: DC

Electric drive – required power for 2x470 kW / 2x290 kW / 2x440 kW

each section:

Location of the return station fro Lower station

each independent section:

Intermediate station type: Both sides

st
Corner: 1 station ( 14°) –
nd
2 station ( 17°)

Vehicles warehouse – location and Lower station at ground level; Automatic

functioning:

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Horizontal length among the 3616.97 m / 3301.17 m / 7434.46 m
station entries:

Altitude gap for each independent 1314.0 m / 95.30 m / 614.15 m

station:

Average inclination within the 3905.29 m / 3360.09 m / 7510.86 m

stations:
st nd rd
Sections links: 1 +2 are linked; the 3 one not. (not compulsory)
st
Number of pylons for each section: 1 section:
n. 16 of support, n. 3 of deduction, n. 3 of double effect
pylons heights: 5.55 m ÷ 22.23 m
nd
2 section:
n. 13 of support, n. 2 of deduction, n. 2 of double effect
pylons heights: 5.55 m ÷ 39.05 m
rd
3 section:
n. 29 of support, n. 4 of deduction, n. 2 double effect
pylons heights: 5.05 m ÷ 24.23 m

Crossings: Roads; Power lines; Houses

Vehicles type: Air conditioning is suggested; other improvement to the

Air conditioning; wi-fi; heating, feasibility project will be well considered
radio (…)

Rescue: evacuation Given the line length, it must be provided a correct

number of equipment to climb down. The duration of
climbing down of passengers has to take less than 3
hours.
rd
The recovery for the 3 section (the longest) has to be
: recovery set for a speed =1.5 m/sec.

Alternative way of rescue The gondolas can be set with redundant system, in
order to always grant the rescue of stopped vehicles on
the line, to avoid the operation of rescue of passengers
still on the line.

 Please note that these technical specifications have been defined

in the Feasibility Project, hence they will be more detailed during
the tender process in defining what is mandatory and what is
modifiable; the required performances could be reached also with
different proposed technological parameters.

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TERMINAL LOCATION

The locations of the terminals and intermediate stations will be in Dub, Kuk, Ivanova
Korita and the town of Cetinje:
 Dub station and its surroundings are of fundamental importance as a
number of shuttle buses will arrive here from the port of Kotor and Budva,
for that reason a large parking area as well as a cabin storage facility are
provided for in the project.
 The area at the Kuk station is on public land but has some environmental
constraints being inside the Lovcen Park. As the area immediately adjacent
to the mausoleum is not to be altered in any way, the station could not be
placed too close to the mausoleum. The intermediate station can also serve
as access point for other leisure activities such as hiking, hang-gliding etc.
 Ivanova Korita is on public land with no development constraints. It has
already an access road but private transit in this area is to be forbidden. This
station could became the focal point of Lovcen National Park.
 Cetinje station is on a public land within walking distance from the town
centre, thus allowing the visitors to enjoy the cultural and touristic offers of
the city. In the nearby there is a parking area that will need to be enlarged.

APPLICABLE TECHNICAL REFERENCE NORMS

The design of the cable car will meet the requirements set out in Directive 2000/9/EC.
Safety components and subsystems shall be certified by Notified Bodies. Infrastructure
will be designed and approved according to harmonized CEN Norms.

OPERATION

Operation will take place at least over the period from April to October, 7 months in
total. The summer peak time will see all three sections operate at top capacity and the
system should be designed to reach a maximum transport capacity of 1,200Pax/h for the
first two sections, a speed of 6 m/s and a total transit time of 11.5 minutes for Section 1
and 10 minutes for section 2 and a transport capacity of 1,000Pax/h for the third section
with a speed of 6m/s and with a total transit time of 21.5 minutes.
The overall transit time for all three stretches, considering also passing through the
intermediate stations, will be about 45 minutes.
Considering the long transit times and the climatic conditions in Montenegro during the
summer, it will be recommended to equip the cabins with appropriate HVAC system.
During spring and autumn there will be the possibility to reduce the number of cabins
and hence reduced operating costs.

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MAIN ASSUMPTIONS
Hereafter the main assumptions of the Project:

Table 2: Summary of the main assumptions

DEMAND

Assumption Comment

In-Scope demand Based on arrivals and overnight

stays in costal municipalities
and other attractions (Lovcen
Park, Cetinje) + Cruise
passengers

Tourist profile Based on monthly profiles and

the individual source markets

Cable car capture Two scenarios (Low and High The optimistic scenario
rate cases) based on the available takes into account
alternatives presented by tour higher capture rate for
operators Budva tourist

Fare strategy €30 return ticket between Dub- Integrated ticketing

Cetinje, €20 up to Lovcen Park strategy and/or
for International tourist and flexible options can be
€22/€15 for local tourists introduced

Demand Growth International tourist growth

based on WTTC
Domestic growth linked to GDP
per capita growth forecasted
by Global Insight

SCHEME CHARACTERISTICS

Assumption Comment

Scheme Length and from Dub to Cetinje – 4/5

Terminals Stations

Opening Period 7 Months (April-October)

Opening Hours 10 hours, from 9.00-19.000 During peak months

flexible opening hours can
be considered (9.00-

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 21.00)

System Capacity 1,000/1,200 passengers per

hour per direction (pphpd)

Based on the fare strategy, set on a benchmarking exercise on similar projects in

other parts of the world, and on analysis of peak day and peak hour, a forecast
for annual revenue is shown in the table below.

Table 1: Annual revenue – year 2014

Annual Passengers Annual Revenue (€)

Low Case 117,907 2,566,474

Dub-Lovcen
High Case 164,209 3,661,822
Park-Cetinje
Optimistic Case 215,175 4,724,422

COST ESTIMATES
CONSTRUCTION COSTS

The cost estimate are for all the equipment necessary to build an 8 person
automatic clamping cable car. Please note that these costs relate exclusively to
the equipment, construction of the Cable Car route and structural parts of the
station and they do not account for the civil works needed to build the station
buildings which are discussed separately.
Costs cover:
 design
 machinery at the engine stations at the bottom of the route
 recirculation and tension systems in the station at the top of the route
 electric and hydraulic drivers
 cables
 line pylons
 roller conveyors
 vehicles
 emergency devices
 structures in the stations
 metallic carpentry for supporting and moving the vehicles to the storehouses

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The total investment costs for all sections is € 36,700,000.

To the above mentioned total costs, additional costs might be considered for such
things as deforestation, for expropriation (estimates a specific cost of €30 per m2
and 15% of the terminal stations areas to be expropriated being the remaining
areas property of the Municipality or the Government), for roads and utilities
works as well as for the construction of high quality buildings at the terminal and
intermediate stations with attached services (ticket-office, personnel offices,
toilets, electric cabins, etc.)
These costs also exclude the connection to the electricity, drainage and water
networks.

The following table shows all the estimated costs, also for building the stations in
Dub, Kuk, Ivanova, Cetinje:

ITEM CAPEX

Dub station 4,140,000

Kuk station 2,050,000

Ivanova Korita station 1,540,000

Cetinje station 1,980,000

Cable car construction 36,700,000

Expropriation costs 140,000

TOTAL € 46,550,000

The total investment costs for all the project is € 46,550,000.

The amounts above include all the works needed (e.g. architecture activities,
civil works and plants) to realise each station except for the Cable Car related
structural part of the stations that are already accounted for in the CapEx for the
Sections.
More specifically the amounts include the following tasks:
 Excavations and embankments

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  Civil works (concrete foundations, walls and floors, steel structures, roofs,
windows, plastering, asphalting for the Dub parking area and finishing
works)
 Electrical installation High Voltage (HV)
 Electrical installation Low Voltage (LV)
 Water and waste water (sewerage system)
 HVAC (air conditioning system)

OPERATIONAL COSTS

Annual general cost for management is estimated at: € 840,000.

This general cost includes costs for staff and monitoring, maintenance,
controls and revisions, electricity, insurance and contingencies.
This category excludes costs related to administrative and to marketing
aspects and depreciation.

 Please note that all operating costs are estimated on the base of 7
months of opening p.a., estimated forecasts on tourist flow and a
standard maintenance.

THE LEGAL FRAMEWORK

THE PPP ARRANGEMENT: THE CONCESSION

The structure of the Concession would be as follows:

 a long-term concession contract between the public contracting
authority (the “Authority”) and a private sector company (the “PPP
Company”) in accordance with the Montenegrin Concessions Law based
on the Concession Act to be adopted by the Government of Montenegro;
 transfer of certain project risks to the private sector notably with regard
to designing, building, operating and financing the project;
 focus on the specification of project outputs rather than project inputs,
taking into account the whole life cycle implications for the project;
 the application of private financing (often “project finance”) to underpin
the risks transferred to the private sector;

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  payments to the private sector which reflect the services delivered:
 The Montenegrin Government has decided to support the PPP
Company through availability payments.
 The EBRD (European Bank for Reconstruction and Development) is
available to financially support the Project with a loan of up to €15
million to the Concessionaire.
DESIGN, BUILD, MAINTAIN AND OPERATE

 The infrastructure is designed, constructed and/or elements

refurbished;
 The concessionaire then maintains that infrastructure to a defined
level so that it is available for use for a specified term;
 The concessionaire also operates the services on the infrastructure to
a defined level (service levels and performance).

THE TENDER
The tender is likely to be divided into two phases:
1. a Pre-Qualification Process to ensure potential bidders will meet
technical and financial criteria.
2. A Tender process for the selected bidders.

DOCUMENTS AVAILABLE FOR THE BIDDERS

 Legal instructions for bidders

 A Feasibility Study
 A Preliminary Design

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INDICATIVE TENDER STEPS

 ACTIVITY

 Publish Pre-qualification Tender

 Bids Submission Period

 Selected Bidders

 Publish Tender

 Bid Submission Period

 Preferred Bidder selection

DISCLOSURE

Please note that the information contained in this document are for information
purposes only and that neither the Government of Montenegro, nor the authors
of this document, nor Cetinje Municipality are assuming any kind of liability for
the contents of the document.

REFERENCE CONTACTS

Mr. Drazen Blazic

Office:+382 41 231 755
E-mail: kabinet@cetinje.me

Mr. Milo Vujanovic

E-mail: milo.vujanovic@cetinje.me

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