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national highway network. As it turned out, the government’s hopes of being able to
speed-up highway construction through private-sector funded, build-operate-transfer
(BOT) concessions were ultimately gravely disappointed due to major problems with the
actual concession schemes. The M1/M15 concession disaster still serves as warning
example for other CEE governments. 25
As far as public reactions to the official Transport Policy were concerned, the
document received the predictable kudos from the infrastructure and construction sector
and the equally predictable criticism from environmental organizations and railway
enthusiasts (see e.g. Clean Air Action Group and Hungarian Traffic Club 1999).
The 1996 document is still considered the official Hungarian Transport Policy. 26
However, there have been major changes in Hungarian transport policy since 1996,
particularly in the wake of the 1998 and the 2002 national elections. Most importantly,
the first National ISPA Strategy for Hungary had to be prepared at a time when the
country was in the midst of political restructuring. Consequently, the preparations of the
25 During an ECMT expert seminar, KÖVIM representative Ferenc Szabó and EBRD representative Dr.
Andras Timar presented comparatively sympathetic accounts of the experience. Yet even they admit that
tolling motorways remains “a very sensitive issue” (Szabó 1999) and that under prevailing conditions in
Central Europe, the opportunity costs of the necessary substantial government contributions must be
thoroughly evaluated (Timár 1999:6). Meanwhile, Hook (1999:212) presents a much more outspoken
critique of the highly problematic M1 toll concession, which lost millions of Euros and eventually lead to a
costly government bailout operation at taxpayers’ expense. As he summarizes:
After the M1 was built, traffic and revenues were 50% below projections, mainly because most
Hungarian motorists elected to take slower, parallel untolled routes. … Unable to meet its debt
payments, in June of 1999 ELMKA [the concession company] was taken over by the Hungarian
Government. All of ELMKA’s assets were turned over to a fully-state owned ‘Replacement Company.’
Most of the initial investors lost their [substantial] equity investments. … The consortium of banks that
lent money to the concession company also lost US$31 million. [Yet] in the end the road will cost the
Government of Hungary some US$30 million less than if they had simply built the road as a public toll
road with EBRD loans. As a result of the experience, the EBRD’s new transport policy states that it will
only get involved in BOT highway projects in the future where the level of government subsidies to the
project are much greater or where the concessionaire’s rate of return is guaranteed by the
government…. This position fits uncomfortably with the EBRD’s policy of working to remove
subsidies in the public transit and rail sectors.
26 An English language version remains available for download on the website of the newly formed the
Ministry of Economy and Transportation (via the still-existing website of its legal predecessor). See
www.kovim.hu/Celok/Kozlekedes/EU-Integration/Transport_policy/Transport_policy_of_Hungary.doc