The Budapest Közlekedési Vállalat (BKV), or Budapest Transport Privately Held Corporation as it is called in English, is facing serious financial difficulties as of 2022. If Budapest and the company cannot find a working solution, the company as a whole might cease to function, and it could go bankrupt.
The budget seems problematic, and there is a possibility that the planned sources of income are not guaranteed, but the continuous increase in energy and gas prices has also put the company in a bad spot.
According to Világgazdaság, BKV estimates the budget deficit of 2022 to rise to a whopping 26 billion forints (€68.4 million) by the end of 2022, and this number is calculated with a 14-billion-forint (€36.8 million) subsidy which has not yet been granted to the company.
While underfinancing is not necessarily uncommon at BKV, owned completely by the local government of Budapest, the expected budget deficit for this year is drastic.
Mfor reports that the company’s business plans for 2022 should have been already discussed at the previous meeting of the Budapest General Assembly. However, it was postponed, albeit it was already in the second quarter of the business year.
Gergely Karácsony, the Lord Mayor of Budapest and the adducer of the company’s 2022 business plan, suggested it be accepted by the General Assembly; however, the matter was taken off the agenda despite the decision having been made about last year’s business plan in March.
According to the Mayor, it will be one of the most important parts of the agenda of the Budapest General Assembly on April 27th. As to why it was postponed, Vice Mayor Ambrus Kiss told Vg that they needed to re-evaluate the risks and the business plan in light of the increasing energy prices. He added, however, that Hungary’s capital will have no more budget in a week’s time, and it cannot produce 50 billion forints (€131.6 million) out of thin air.
The Vice Mayor also highlighted that “if not that much [€131.6 million], BKV is in dire need of a few tens of billions of forints (€26.3 million) for its operation not to be endangered”.
Világgazdaság writes that, originally, the company did not calculate with that much of a loss, but due to the financial limits of the local government of Budapest, the company’s subsidies had to be cut.
While BKV received 162 billion forints (€426.3 million) in public service payments from the capital in 2021, this number had to be cut due to the worsening financial situation of the Hungarian capital to 141 billion forints (€371 million) for the 2022 public service payments.
Unfortunately, in order to mitigate the running costs of the company, it took on a loan of 10 billion forints (€26.3 million), but this has to be repaid by the end of 2022.
Currently, the Budapest Transport Company’s business budget plan includes a 14-billion-forint (€36.8 million) government subsidy for the increase in prices of energy carriers. However, this money is fictitious as it has not been granted by the government officials to the company yet.
If this is true, then, according to the worst-case scenario, Világgazdaság expects the Budapest Transport Company to possibly have a budget deficit of 40 billion forints (€105.2 million) by the end of the 2022 business year.
Source: vg.hu, mfor.hu