Hungary to challenge $73 billion Orban-era motorway concession contract

Hungary's government will challenge a 23.196 trillion forint ($73.30 billion) motorway concession contract awarded under former leader Viktor Orban, it said on Friday, warning the ‌35-year deal shifted most of the risk onto the public. Following his landslide election win in April, Prime Minister Peter Magyar and his pro-European Union government have moved to dismantle the power and funding structures Orban built during his 16-year rule.

The previous government awarded ‌the motorway contract in 2022 to Hungarian infrastructure development company MKIF, whose owners Lorinc Meszaros and Laszlo Szijj saw their ‌business empires flourish under Orban. During a press conference with Prime Minister Magyar, Transport and Investment Minister David Vitezy described the contract as the largest public procurement contract in Hungary's history.

"No government in their right mind would award a concession agreement like this," Vitezy said, adding the size of the contract, which would ⁠span nine ​government cycles, made it the third-largest ⁠in the world. "No credible, genuine risk has remained with MKIF," he said.

MKIF REJECTS CRITICISM OF DEAL, ALSO UNDER EU SCRUTINY The government believes ⁠the contract, which has cost 870 billion forints so far, was not legally a concession agreement due to the way it was structured ​and subsequent modifications, Vitezy said.

"If it is not, then it was unlawful from the outset, unlawful in every respect, and ⁠cannot legally remain in force," he said. MKIF's press office did not immediately respond to a request for comment. But its CEO Tamas Nemeth pushed back ⁠against criticism ​of the deal in a July interview with business news website Vilaggazdasag.

Nemeth said MKIF shouldered significant risk related to increasing traffic volumes, design, construction, financing and maintenance as well as changes in the macroeconomic environment. The European Commission is also ⁠scrutinising the deal and launched a procedure against Hungary in 2024 over what it said was a failure to comply with ⁠EU rules on public procurement ⁠and concessions.

It has raised several concerns, including the contract's lengthy lifespan and its alleged failure to transfer a sufficient level of operating risk to MKIF. Subsequent modifications to the deal also appeared ‌to violate EU public procurement ‌rules, the Commission has said. ($1 = 316.47 forints)