Hungary to Challenge $73 Billion Motorway Concession From Orban Era
Hungarian Government Moves to Overturn Controversial Motorway Deal
BUDAPEST, Sept 18 (Reuters) - Hungary's government will challenge a 23.196 trillion forint ($73.30 billion) motorway concession contract awarded under former leader Viktor Orban, it said on Friday, warning the 35-year deal shifted most of the risk onto the public.
Following his landslide election win in April, Prime Minister Peter Magyar and his pro-European Union government have moved to dismantle the power and funding structures Orban built during his 16-year rule.
Background of the Motorway Concession
The previous government awarded the motorway contract in 2022 to Hungarian infrastructure development company MKIF, whose owners Lorinc Meszaros and Laszlo Szijj saw their business empires flourish under Orban.
Significance of the Contract
During a press conference with Prime Minister Magyar, Transport and Investment Minister David Vitezy described the contract as the largest public procurement contract in Hungary's history.
Concerns Over Contract Terms
"No government in their right mind would award a concession agreement like this," Vitezy said, adding the size of the contract, which would span nine government cycles, made it the third-largest in the world.
"No credible, genuine risk has remained with MKIF," he said.
MKIF's Response and EU Scrutiny
MKIF Rejects Criticism
MKIF REJECTS CRITICISM OF DEAL, ALSO UNDER EU SCRUTINY
The government believes the contract, which has cost 870 billion forints so far, was not legally a concession agreement due to the way it was structured and subsequent modifications, Vitezy said.
"If it is not, then it was unlawful from the outset, unlawful in every respect, and cannot legally remain in force," he said.
MKIF's press office did not immediately respond to a request for comment. But its CEO Tamas Nemeth pushed back against criticism of the deal in a July interview with business news website Vilaggazdasag.
MKIF's Defense of the Deal
Nemeth said MKIF shouldered significant risk related to increasing traffic volumes, design, construction, financing and maintenance as well as changes in the macroeconomic environment.
European Commission Investigation
The European Commission is also scrutinising the deal and launched a procedure against Hungary in 2024 over what it said was a failure to comply with EU rules on public procurement and concessions.
It has raised several concerns, including the contract's lengthy lifespan and its alleged failure to transfer a sufficient level of operating risk to MKIF. Subsequent modifications to the deal also appeared to violate EU public procurement rules, the Commission has said.
Additional Information
($1 = 316.47 forints)
(Reporting by Gergely Szakacs; Editing by Joe Bavier)
