METHODS AND ALTERNATIVES OF FINANCING TRANSPORT INFRASTRUCTURE DEVELOPMENT IN CENTRAL AND EASTERN EUROPE

Seven years ago the Hungarian Government decided to bridge the lack of public sources by involvement of private capital in the motorway construction and development area. In the forthcoming years the Ministry of Transport Communication and Water Management, acting on behalf of the State, awarded concessions to private consortiums to Finance Build and Operate certain motorway sections or river bridges. The financial closing was achieved successfully on the M1/M15 and on the M5, from which M5 is running well while the M1/M15 project has significant financial difficulties. Two of the following concession awarding procedures were cancelled by the government in the tender evaluation phase. Later a company owned by the state was established to implement one of those motorways, the M3, from budget and loans raised by the company guaranteed by the State and in the subsequent phases from the generated revenues reinvested in the project. The other motorway project, the M7, is still in the restarted preparation phase. A government resolution, issued last year, described new terms and conditions for private and public involvement and burden undertaking in a PPP deal. Specific requirements were formulated concerning the level of toll (acceptable or not to the public), the diversion of traffic from the motorway, the additional environmental problems on the parallel routes and political and economical goals (local and national). This paper analyses the present situation, the alternatives for the future and summarises the role of local governments, local and international investors and lenders. Hungary, as a typical Central European country with its advantages and difficulties, could serve as a useful pattern to other neighbouring countries in their policy and strategy forming process. The experiences gained in this area during the last seven years should not be neglected. For the covering abstract see IRRD E103890.