Newsroom / News / Media / Info Magazine LGP NEWS 01/2021 / Investments in Infrastructure in North Macedonia

Investments in Infrastructure in North Macedonia

Investments in Infrastructure in North Macedonia

In the Western Balkans region, there is a massive investment backlog in trans-European transport infrastructure and cross-border energy projects. Increased EU funding now also offers good opportunities for construction companies and investors in major public contracts in North Macedonia. 

The Western Balkans are not only a strategically important transit zone for goods and people, but also a booming tourist region. Nevertheless, both transport infrastructure and other public works throughout the region remain underfunded and in urgent need of investment. Ambitious international programs are now aimed at solving this problem. In order to finance costly infrastructure projects in the transport sector, for example, the Western Balkans continue to depend on loans granted by the European Union and international financial institutions as well as groups of individual donor states. 

As the southernmost and largely rural constituent republic of the former Republic of Yugoslavia, North Macedonia was neglected in this regard for a long time. After gaining independence in the early 1990s, infrastructure investment in North Macedonia remained relatively low, with the few projects that were realized being marked by construction delays and scandals. In recent years, however, considerable efforts have been made to modernize the existing infrastructure with new, efficient projects to ensure the country‘s own competitiveness and support the local economy. 

This push for modernization is actively promoted by the European Union and other entities and country groups. North Macedonia is a very important transit hub for goods moving from Greece‘s major ports to Central and Western Europe and between Albania‘s Adriatic port of Durres and Bulgaria‘s Black Sea ports. Two of the ten major pan-European transport corridors, which run through Central and Eastern Europe and require major investment, also pass through the country. 

Several road construction projects are currently underway along highway corridor 10, which crosses North Macedonia on a north-south axis. Other major projects are scheduled to go out to public tender this year, with work expected to continue for the next decade. 

Along Rail Corridor 8, which crosses the country from east to west and connects Bulgaria with Albania, the North Macedonian government plans to soon invest more than €600 million in the renewal and modernization of rail infrastructure, rolling stock and safety. In addition to trans-European transport infrastructure projects, transnational energy projects such as the Greece-North Macedonia gas interconnector and other major public works worth several hundred million euros are also planned. 

In total, the partly EU-funded transport infrastructure projects mean a bidding volume of around five billion euros by 2025, which opens up enormous opportunities for international bidders in cooperation with expert local partners. 

LGP Skopje, together with LGP‘s offices in Vienna and Bratislava, is ideally positioned to assist both local and international investors in finding the right project partners. Legal advice covers all phases and aspects of such projects – ranging from the formation of consortia, tendering and procurement law, due diligence, contract law including specialized FIDIC contracts, and litigation before national courts and international arbitration tribunals. 

RECENT INFRASTRUCTURE PROJECTS

Corridor 8 Railway – Connection with Bulgaria 

  • reconstruction of the railway line from Kumanovo to Beljakovce – the project is worth EUR 45mil 
  • construction of a new railway line from Beljakovce to Kriva Palanka – the estimated cost is EUR 145 mil, about half of which is a grant; 
  • new railway line from Kriva Palanka to Deve Bair (third phase of Corridor 8 from Kumanovo to Bulgaria) – the project will cost around EUR 370 mil; 
  • rehabilitation and expansion of the road section on the Orient/East-Med Core Network in North Macedonia, from Kriva Palanka to the Deve Bair border crossing point with Bulgaria. 

Corridor 8 Railway – Connection with Albania 

This corridor includes a railway connection between Kicevo, North Macedonia and Lin, Albania and shall pass through Ohrid. With this railway the Western Balkans will be directly connected to the Black Sea, crossing from the Adriatic Sea. It will be 62,5 km long according to the preliminary estimates and the preparation for the project cost approximately EUR 8 mil but the financing is not yet secured. 

Airport Railway 

The rail link from Skopje to Skopje International Airport is one of the first priorities of the Ministry of Transport and Communications. The cost estimates are around EUR 30 mil. This project requires a construction of a new railway from Ilinden or Miladinovci station, as well as a train station at Skopje International Airport. 

Gas Interconnection Greece – North Macedonia (IGNM) 

The National Energy Resources of North Macedonia (NER) became a signatory to the MoU on a common approach to address the natural gas diversification and the challenge of security of supply within the Central and South-eastern Europe Gas Connectivity Initiative (CESEC). The section in North Macedonia is expected to be 80 km long, while the Greek will be 60 km long. 

GrCF2 W2 – Skopje Wastewater Project 

For this purpose, EBRD envisages the provision of a sovereign loan of up to EUR 60 mil to North Macedonia, co-financed by a EUR 60 mil sovereign loan from the EIB for the construction of a WWTP in Skopje. Additional grant funding for the Project is also being considered. The Project will be the second investment in Skopje under the Green Cities Framework (“GrCF”) and involves the construction of a new Wastewater Treatment Plant for Skopje to be situated in the south-east part of the Skopje Valley, within the Municipality of Gazi Baba. The total cost is estimated to EUR 120mil. 

Other planned infrastructure projects: 

  • Feasibility study for construction of railway branch to Strumica and Bulgaria
  • Reconstruction Veles–Bitola and completion of reconstruction Bitola–Kremenica
  • Solar railway stations–reconstruction and modernization of railway stations along Corridor 10 and 10d 
  • In the third quarter of 2021, the international tender for selection of a contractor for the second phase of the Skopje-Blace highway, about 10.5 km long, is expected to be announced.

AUTHORS:

Arlind Zeqiri, MA., Managing Partner at LANSKY, GANZGER + partner Skopje
Suzana Anchevska, Business Development at LANSKY, GANZGER + partner Skopje
Philipp Freund, MA. BA., Head of Business Development and Policy Advisor at LANSKY, GANZGER + partner

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