Is Budapest transport in trouble? Suppliers are leaving
The war between Russia and Ukraine also has an impact on this area. Parts for Budapest’s metro line M3 still have not arrived from Russia. One by one, suppliers of the Budapest Transport Company (BKV) are leaving. By the end of April, 36 contracts had already been cancelled.
BKV in trouble
BKV’s board is meeting more and more frequently because many suppliers want to modify their contracts. The company responsible for Budapest’s transport aims to reach an agreement with all suppliers within the financial limits of the previous contract. A new tender would probably involve much higher costs, writes Népszava.hu.
The majority of suppliers want to increase their costs by 30–50 per cent.
The Budapest Transport Company can only afford a 10 per cent increase due to budget constraints. The suppliers’ explanation for their price increase includes the rising cost of raw materials and the Russian-Ukrainian war.
BKV commented on the case, saying that “the number of claims for contract modifications has multiplied due to the indirect economic effects of the war – exchange rate fluctuations, manufacturer price increases, delivery deadlines, shortages of raw materials, transport capacity, etc.” They added that “The number of contract terminations is also increasing steadily, in line with the number of requests for price increases, with 36 contracts terminated by business partners by the end of April this year. This represents an additional annual expenditure of tens of billions of forints.”
How big is the problem?
“Based on feedback from suppliers and manufacturers, manufacturers may experience disruptions and problems with raw material supply, supply chains, and transport, and the effects of these are expected to be felt in the supply of materials and parts to BKV.” BKV says that it is in constant discussions with suppliers and is doing its best to ensure that users of its services experience as few problems as possible.
No spare parts or technicians are coming from Russia for the trains of metro line M3.
BKV’s budget is still facing a huge deficit even without supplier price increases. The company plans to cover the deficit of several billion forints from municipal and government subsidies and loans.
There will be no fare increases or reductions in the number of routes.
This was said by Tibor Bolla, the CEO of BKV Zrt., in an interview with index.hu.
Source: index.hu, Népszava