Regionalni vodovod has started a roughly €17 million expansion of Montenegro’s regional coastal water-supply system after deliveries exceeded 11 million cubic metres in 2025, with volumes expected to rise further in 2026. The second phase comes as summer demand approaches the capacity of the system’s original first phase and coastal tourism, hotel investment and residential development continue to increase water consumption.
Rising Summer Demand
Average August deliveries increased from around 600 litres per second to almost 900 litres per second over the past three years. That level is approaching the approximately 1,000 litres-per-second capacity associated with the first phase of the regional system.
Demand rises particularly sharply during July and August as coastal municipalities experience large seasonal population increases. Hotels, restaurants, private accommodation, swimming pools and residential developments all contribute to consumption. The regional system was developed partly to address chronic summer shortages along the coast and has become an important part of the infrastructure supporting tourism.
Municipal Network Losses
Regionalni vodovod has warned that water losses at some municipal utilities exceed 70%. Leakage, ageing pipelines, inadequate metering and unauthorised connections can contribute to losses, meaning substantial quantities of treated and transported water do not reach consumers or generate revenue. Reducing losses could increase the volume of usable water without requiring equivalent investment in new supply sources.
Lower losses could also improve municipal utility finances because water that is produced but not billed increases operating costs without generating income. The regional expansion will therefore need to be accompanied by rehabilitation of local distribution networks.
Investment and Coastal Development
The capacity expansion is relevant to Budva, Tivat, Kotor, Bar, Herceg Novi and Ulcinj, where seasonal populations increase substantially. Regionalni vodovod operates the bulk-transfer system, while water is distributed to consumers through municipal networks with different technical and financial capacities. Reliable water infrastructure is also relevant to new hotels and residential developments, where access to water, wastewater, electricity and roads forms part of project planning.
Slower construction activity has recently reduced some of the special-fee income used to finance Regionalni vodovod, creating additional pressure on the investment model. The company must therefore combine tariff revenue, development-related fees and external financing to fund expansion.
Wider Water Infrastructure
Montenegro is also discussing a World Bank-backed water security and climate-resilience programme, while projects supported by the European Investment Bank and European Union form part of the wider investment pipeline. Climate conditions add pressure to the system. Regionalni vodovod said record deliveries were maintained despite difficult hydrological conditions.
Long dry periods can reduce natural water availability while temperatures and consumption increase, making historical demand assumptions less reliable and increasing the importance of reserve capacity. Wastewater infrastructure represents another constraint. Higher water supply and consumption also increase the volume of wastewater requiring collection and treatment, while several municipalities still need major investment in sewage and treatment systems. Expanding water supply without corresponding wastewater capacity could shift the infrastructure bottleneck.
Tourism and Property Market
The reliability of utilities is increasingly relevant to Montenegro’s tourism and property sectors, particularly as the country develops higher-value hotels and resorts. Water interruptions or pressure reductions can have a greater impact on premium tourism operations, while foreign buyers of coastal residential property expect reliable infrastructure. The €17 million second phase is intended to increase regional supply capacity as demand continues to grow, while losses within municipal distribution networks remain a separate infrastructure challenge.
