The Association of Sea Captains of Montenegro (UPK) based in Kotor is confident that the Ministry of Maritime Affairs has a clear direction with its “Rescue Plan” for the shipping company Crnogorska plovidba from Kotor. They have urged the ministry to disclose the analyses that led to this initiative.

The association expressed disappointment over the Ministry of Maritime Affairs (MoMA) dismissing their proposal, made over six months ago, which called for hiring a competent and independent maritime firm—either domestic or foreign—to evaluate the status of Montenegro’s maritime companies and offer recommendations for their preservation or closure.

Recently, the government endorsed the “Information on the urgent need to address the insolvency issues of the joint-stock company Crnogorska plovidba – Kotor.” This acceptance reflects a strategy leading to the gradual winding down of “Crnogorska plovidba” (CP), which is entirely state-owned, alongside transferring two of its vessels to the Barka plovidba fleet, where the state co-owns shares with minority partners.

This decision stemmed from CP’s debt of 400,000 euros owed to the First Bank of Montenegro. This debt was accrued by the previous management during Prime Minister Dritan Abazović’s administration to maintain liquidity. Due to adverse conditions in the global shipping market, CP is unable to meet the repayment deadline. Consequently, the Ministry of Justice suggested that Barska plovidba (BP) enter a long-term lease for both CP vessels, providing an upfront payment of one million euros to the Kotor company. This payment would help CP in repaying its loan to the First Bank and stave off immediate bankruptcy. However, the Ministry has not clarified the execution of this plan, which involves BP leasing the vessels CP “Kotor” and “Dvedesetprvi maj” in what is known as a bareboat charter. Given the scale of investment and seriousness of the transaction, it is essential for all shareholders of the Bar-based company to reach a consensus first. Additionally, the government’s public declaration complicates CP’s current management in finalizing employment contracts for the vessels before BP’s acquisition.

Yesterday, UPK stated they are “unclear” as to why the Ministry of Justice did not accept their suggestion for hiring a reputable maritime consulting firm to evaluate both companies’ situations and propose effective solutions to their challenges.

“We also understand that the Ministry of Justice enlisted one of Montenegro’s professional accounting associations for this task, even though Minister Filip Radulović previously claimed that the Faculty of Economics was conducting such an analysis—a fact later denied by the faculty,” explained Janko Milutin, a senior captain and board member of UPK.

He stressed that the official reasoning for the recent actions by the MP was CP’s 400,000 euro debt to Prva Banka, and that negotiations between the management and the bank regarding debt repayment have not yielded results.

“As this is a bank that has had a vested interest in the CP project from the outset, we believe it would be open to negotiations regarding establishing a mortgage of 400,000 euros against one of the two vessels to address the liquidity issue raised by the Ministry of Justice. Thus, we pose an open question to the Ministry: Did the Board of Directors and the bank consider this option, which would effectively render the agreement with BP moot?” UPK asserted.

They urged the MP to explain why CP has not secured new long-term or more favorable time charter agreements for its vessels, questioning whether this resulted from market conditions or the management’s inefficacy.

“If it is the latter, then why hasn’t the Ministry of Justice held the Board of Directors accountable?” UPK inquired.

They emphasize that the measures proposed by the Ministry of Justice in the Information and the model of business-technical cooperation between the two firms are “mutually contradictory.”

“The first suggests that BP will lease the vessels, with CP covering the rent. The second component of the same ‘rescue’ plan implies that BP will also lease the vessels, yet CP is still expected to pay rent. The Information clearly indicates that the Ministry of Justice, along with those processing the analysis which formed the basis of this ‘rescue’ strategy for Crnogorska plovidba AD, lacks understanding of the differentiation between lease and charter of a vessel. For clarity, in a bareboat charter, the charterer leases a vessel, typically without crew, supplies, or equipment, assuming total responsibility for crew hiring, vessel maintenance, and all operational costs, including commercial engagement of the vessel. Conversely, in a ship charter or time charter, the vessel owner provides the ship with crew and equipment, while the charterer manages commercial operations. The charterer pays for fuel and port fees, but is not responsible for other operational expenses, such as crew salaries, maintenance, or insurance. Ultimately, the charterer pays a rental fee rather than a lease fee for vessel chartering,” UPK elaborated.

They believe that the Information—or more accurately, the plan for covering future expenses—once again illustrates that the Ministry of Maritime Affairs does not grasp the basic business models of shipping companies or the commercial exploitation models of vessels.

“It is important to note that both ship charter and rental agreements fall under Montenegrin legislation. Hence, a question arises regarding how the Agreement on Business and Technical Cooperation could pertain to the lease or rental of CP vessels. These agreements are also regulated by English law, which aligns closely with Montenegrin legislation, and there exists a clear template for such agreements developed by BIMCO, compliant with English law,” the UPK stated.

They stressed that the Information accepted by the Government raises significant confusion regarding how BP will take over the lease or rental of CP’s ships, which remain under a time charter agreement until August 2025 and are affected by “current market conditions.”

The UPK is calling on Minister Radulović’s office to publicly clarify the nature of this “business-technical cooperation agreement” and what kind of hybrid “lease or rental of ships on market terms” is being referred to.

They also demand the Ministry of Justice release “the analysis conducted by experts in accounting, not maritime affairs” for scrutiny by both professionals and the general public, particularly the citizens of Montenegro, who are both owners of CP and the majority stakeholders in BP.

“We hope to be proven wrong; however, given the circumstances outlined, we express our skepticism regarding the Ministry of Maritime Affairs’ awareness of its actions, fearing that the proposed solution may signal the closure of maritime activities in the Bay of Kotor and, indeed, Montenegro as a whole,” concluded the Association of Sea Captains of Montenegro from Kotor.

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