Surprising announcement: will Hungarian motorway development completely stop?

The Hungarian government announced that they have “reviewed” the motorway concession contract. Due to the war and the sanctions against Russia, the government could reduce public expenditure.

In 2022, the Hungarian government announced that they have signed a concession contract with a development firm with close ties to Prime Minister Viktor Orbán’s friend, Lőrinc Mészáros. However, the government has now reviewed the contract and is ready to make changes, napi.hu reports.

The concession contract entailed that a private firm will be responsible for planning, operating, controlling, financing, and developing more than 2000 kilometres of the Hungarian highway system for 35 years for concession fees. Somewhat unsurprisingly, the tender was won by a private equity firm with close ties to Lőrinc Mészáros.

Motorway concession contract reviewed

However, out of the blue, the Hungarian government announced that they have reviewed this contract and decided to make some changes.

“As part of a number of other measures to strengthen financial stabilisation, the government has reviewed the 2022 concession contract for the operation and development of the motorway network, and as a result of the review, decided to amend the concession contract in order to reduce public expenditure,” the Prime Minister’s Office said in a short statement.

As napi.hu mentions, the statement does not explain what the modification of the concession contract and the reduction in expenditure actually mean, what it actually covers, or how that will affect traffic on Hungarian roads.

The statement once again refers to the fact that due to the war and high inflation, public infrastructure investments were stopped or indefinitely suspended. The Prime Minister’s Office also states that their priority is to “maintain the high quality of the public service and public service concession”. At the same time, no driver will be happy to learn that the development of public highways could get halted in the future.

The European Commission follows the topic with interest

Signing concession contracts in the case of infrastructure investment does not need the approval of the European Commission, unlike for example in the nuclear energy sector, where Hungary got the approval to build Paks II 6 years ago, in 2017.

But the Hungarian government’s 35-year motorway concession did attract the attention of the EU competition authority. According to Portfolio, an investigation could have been launched based on a complaint because some believe that the role of a subcontractor can be filled “only by a narrow circle”. The EU will also examine whether the 35-year duration for the Hungarian highway concession was justified.

It is also unknown how this statement will affect the largest-ever Hungarian motorway infrastructure upgrade, which already began last month.