Pressure on Budapest’s suburban railway upgrade: deadline is approaching

The suburban railway (HÉV) upgrade is currently on hold due to a prioritisation agreement struck within the framework of the ‘travel-pass deal’ between Construction and Transport Minister János Lázár and Budapest Mayor Gergely Karácsony. Under this agreement, priority has been granted to the capital’s public transportation project on the EU list, relegating the suburban railway upgrade. Consequently, the looming 2026 deadline exerts pressure on the HÉV upgrade’s advancement.

Mayor Gergely Karácsony revealed that the capital will secure HUF 172 billion (EUR 443,572,864)  from the EU for convergence investments, while the state’s commitment to spend on similar projects in and around Budapest far surpasses this figure. The Fidesz Government is planning to allocate HUF 1,000 billion (EUR 2,578,912,000) for these projects. To align with the government’s HÉV renovation programme, Budapest’s administration has consented to reallocate certain projects from the EU Cohesion Fund list to the reconstruction fund. Despite their transfer to the reconstruction fund, these capital projects will maintain their EU funding and will face stricter deadlines. This replacement held significant importance for the ministry given that the HÉV vehicle replacement programme was slated for implementation using EU funding. Initially, the Burssels-approved recovery fund (RRF) was designated for this purpose. The approved project plan encompassed a HUF 289 billion (EUR 745,305,568) refurbishment, fully subsidised, aimed at modernising 56 kilometres of HÉV lines in and around Budapest.

Navigating the delays

Ongoing disputes between the government and the EU have resulted in a sluggish inflow of funds, with much of the recovery fund still inaccessible. Hungary’s failure to meet the 27 conditions concerning the rule of law and anti-corruption measures lies at the crux of this issue. This becomes problematic as funds are only accessible until August 2026 under current regulations. In the present year, Hungary anticipates receiving a meagre 920 million euros out of the total budget of 10,4 Billion euros, including loans. This situation poses a challenge as it appears unlikely that the HÉV vehicle replacement will be completed by 2026. Urgent refurbishment is imperative given that the trains are 50-60 years old and present operational challenges despite repairs. In 2021, MÁV sought to refurbish the HÉV by issuing a vehicle procurement tender, but the government deemed the cost excessive, exceeding the estimated amount by 30%. Consequently, MÁV has had to scale back train services this year due to insufficient operational vehicles. In light of this issue, Minister Lázár and his team proposed a solution whereby swapping the two projects could resolve the HÉV refurbishment, classifying it under the later concluding IKOP programme.