Kolašin is moving into the implementation phase of one of the most important municipal infrastructure projects in northern Montenegro, with an €11.75 million contract including VAT signed for a new wastewater treatment plant, sewer network and upgrades to the town’s water-supply system. Construction is scheduled to start in early September and the contractual implementation period is 36 months, meaning that, if the timetable is maintained, the programme will extend well into 2029.
The contract has been awarded by the Municipality of Kolašin to an Italian consortium comprising JV Spiga, Ibi Idrobioimpianti and M.E.C. Meccanica Ecologica. The works contract is described as approximately €9.7 million before VAT, rising to €11.754 million including VAT. Financing combines €8.36 million of grant funding with an additional €4 million of credit financing, with the Western Balkans Investment Framework and European Investment Bank supporting the project.
The first phase will deliver a wastewater treatment plant designed for 4,000 population equivalents, around 9.2 km of sewerage network and priority measures to improve the water-supply system. Longer-term planning envisages expansion of treatment capacity to 6,000 population equivalents and a sewer network of around 23 km.
The numbers are relatively modest compared with Montenegro’s motorway, airport or electricity-grid investments. Economically, however, the Kolašin project illustrates one of the most important constraints emerging from Montenegro’s investment cycle: private development has often moved faster than the municipal infrastructure required to support it.
Kolašin has changed rapidly from a small northern town into one of Montenegro’s principal mountain-development locations. Hotel construction, apartment development, ski infrastructure and projects associated with the former economic-citizenship programme have created a much larger requirement for water, sewerage, roads, electricity and winter infrastructure.
That investment sequence has not always been aligned. Several hotel projects were already approaching completion this summer while parts of the required public infrastructure were still in procurement. Separate tenders launched in July covered snowmaking infrastructure at Kolašin 1600 and wastewater infrastructure serving the Kolašin 1450 and 1600 mountain centres, with the combined estimated value of those works exceeding €8.5 million excluding VAT. Investors have warned that completed accommodation cannot become fully operational without the corresponding utility connections.
The new wastewater contract therefore does more than solve an environmental problem. It begins to close the infrastructure gap between the scale of private development and the capacity of the municipality supporting it.
This is increasingly important for the economics of Kolašin’s tourism strategy. A new hotel can be financed and constructed relatively quickly when land, planning and capital are available. Wastewater treatment, water networks and public roads are different. They require planning, environmental procedures, public procurement, financing agreements, supervision and coordination between national and municipal authorities.
The 36-month implementation period illustrates the difference. The investment will not provide an immediate solution for every development waiting to open. Instead, it establishes infrastructure for the next phase of Kolašin’s growth.
There is also a wider Montenegro lesson. Tourism investment is frequently presented through the value of individual hotels, resorts and real-estate developments. But the real capital requirement is larger because every additional accommodation unit places demand on water supply, wastewater treatment, electricity distribution, roads, parking and waste-management systems.
This is particularly visible in mountain destinations, where seasonal peaks can create infrastructure requirements significantly above the demands of the permanent population.
For Kolašin, the wastewater project is therefore an economic-development project disguised as municipal infrastructure. Without adequate sewerage and water capacity, the value of surrounding hotel and real-estate investment is constrained. With it, existing projects can operate more reliably and future investment becomes easier to justify.
There is an environmental dimension as well. Mountain tourism ultimately monetises landscape and natural resources. Allowing hotel and residential construction to expand without equivalent wastewater infrastructure would undermine the environmental assets on which the destination depends.
Kolašin is consequently entering a more difficult stage of its development. The first phase was attracting private capital and building accommodation. The next phase is considerably less visible but economically more important: constructing the infrastructure required to turn new buildings into a functioning year-round destination.
The €11.8 million contract is therefore not simply another public-works award. It represents the bill Montenegro is beginning to pay for ensuring that rapid tourism and property development is matched by the public infrastructure needed to sustain it.
