Consortium led by Hungary’s richest man wins 35-year motorway concession

Consortium led by Hungary’s richest man wins 35-year motorway concession
Lorinc Meszaros has become a billionaire during the rule of his friend Prime Minister Viktor Orban.
By bne IntelliNews May 9, 2022

A consortium led by private equity fund Themis Magantokealap, owned by billionaire Lorinc Meszaros, has won a 35-year concession to manage nearly 2,000km of Hungarian motorways in a competition apparently without other bidders, it was announced on May 6.

Cabinet minister Antal Rogan, who also heads the office that is in charge of handing out concessions, said the two-phase negotiated procurement procedure was open and transparent and met EU guidelines. At the press briefing, only representatives of government-friendly media outlets were invited.

Rogan refuted questions by independent media when asked about Meszaros winning another major tender, by saying that it is still better to have local companies granted long-term concession rights than foreigners. There is no report of other companies running in the tender.

The government announced a tender for handing nearly 2,000 kilometres of motorways in concession in July. The tender entailed the planning, renovation, construction, control, operation and financing of the network for an annual fee.

The winning bidder will be responsible for the operation and maintenance of the motorway in return for an availability fee and a service fee.

Themis will also finance the construction of 317km of new roads by 2032 and add lanes to 265km of existing ones in the first 10 years of the contract, Rogan told reporters. The concession involves the maintenance work of 1,044km of the motorway.

The state will pay Themis an annual concession fee of HUF96.2m (€0.25) per kilometre, but will not transfer its right to collect motorway tolls.

Motorway development has been rapid in Hungary, with more than 700km constructed in the last 10 years.  The government wants to provide motorway access of fewer than 30 minutes from any part of the country.

"Like several other European countries, the government has decided to carry out motorway upgrades through a concession procedure in Hungary, given that the EU negotiations are expected to result in Hungary being unable to build motorways on its own, either through the RRF (post-epidemic recovery package) or the seven-year budget (MFF)", the Government Information Centre said in a statement after the final results were unveiled.

After the call for tender, opposition parties said the government wants to "slyly sell out" the country’s motorway system, which will eventually lead to higher fees for motorists.

On Friday, a government body recommended the government to re-negotiate parts of "extraordinarily unfavourable" concession contracts for the M5 and M6 motorways signed before 2010 to save costs. Exchange-rate risks are shouldered entirely by the state, which pays stand-by fees in euros. The weaker forint has put an extra burden on the budget.