The Experience of the M5 Motorway Project As a Private Sector Investment in the Central-Eastern European Region



The Experience of the M5 Motorway Project As a Private Sector Investment in the Central-Eastern European Region

Authors

MURANYI M, National Motorway Company, Hungary

Description

In the 1980's the Hungarian Government compiled a development program for motorway and expressway implementation. The National Highway Development Program, as it was called envisaged the construction of motorways in directions, where the structure, volume

Abstract

In the 1980's the Hungarian Government compiled a development program for motorway and expressway implementation. The National Highway Development Program, as it was called envisaged the construction of motorways in directions, where the structure, volume and foreseeable growth rate of traffic justified technically as well as economically the increase of road capacity and an improved level of services. The Program scheduled the construction of M0, M1, M15, M3, M4, M43, M5 and M7 Motorways, as long term, by 2030, which represent about 1.159 km of new motorways. The construction of 422 km motorways and 453 km semi-motorways was contemplated for the 1995-2000 period. However, the growth of traffic (especially international one) on the main roads exceeded all forecasts, and the level of motorization forecasted for 1995 (200 cars/1000 inhabitants) was already reached by 1991.

Although the road transport demand grew steadily, not only road developments slow down, but even the preparatory efforts (work on preliminary design, technical and feasibility studies) did so during the eighties. Under very severe budgetary constraints road expenditures were dedicated first of all towards maintenance and operation. So by 1990, when urgent developments were needed after the revolutionary political changes, the plans, made earlier were no longer pertained, but there were no new plans available either.

The Ministry of Transport, Communications and Water Management commissioned a Development Program for National Public Road Network, and the Program was approved by the Government in 1991. This Program contemplated a HUF 320 billion investment (1991 terms), nearly half of which was to be spent on the construction and completion of the motorway network.

The program raised the question of financing. As the State budget, described by Law being responsible for financing road construction and operation activities, was overburdened and there was no intention by the State to fund development activities by raising loans again, the involvement of private capital seemed to be the most appropriate solution. Consequently the projects to be implemented, to assure desirable return of the invested capital, were the tolled infrastructure facilities.

The mentioned program included the award of concessions to finance, build and operate six new motorway sections (M1-M15, M3, M5, M7-M70) and two toll bridges on the Danube river.

Publisher

Association for European Transport