Attracting private capital to finance toll motorways in Hungary

Abstract

After a general description of the poor legacy left behind by long years of central planning, characterized by decaying transport facilities, it is shown that a persistent shortage of capital is curtailing transport infrastructure projects. In the wake of political changes, during the transition toward a market economy, there is now an opportunity to diversify sources and mechanisms of transport infrastructure funding. Strong budgetary constraints are limiting public financing or borrowing. As a result, Hungary seeks new forms of public/private partnership in financing tolled transport facilities, first of all motorways and bridges. On the basis of a recently enacted law of concession, tendering procedures are under way aiming at an award of motorway concessions to entirely private companies. The concession is documented in a concession contract that specifies the rights and responsibilities of the sponsoring government entity and the concessionaire and allocates the risks. These latter are identified and...