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European PPP Center

M5 Motorway

The M5 Motorway Project in Hungary: Successful Public-Private Partnership

The M5 motorway runs southward from Budapest to the State border. The route forms part of the historic main international trade corridor linking Western Europe to the Balkan and Black Sea region. It is part of the UN-ECE promoted Trans-European North-South Motorway (TEM) Project and lies in the Pan-European Transport Corridor No. IV. (Berlin – Praha – Bratislava – Budapest – Bucharest – Thessaloniki -Istanbul). The Ministers of Transport at the Pan-European Transport Conferences (1994 Crete, 1997Helsinki) approved these corridors of international traffic as extensions of the EU Trans-European Network.

The 173km (108 mile) long M5 motorway connects Budapest, the capital city of Hungary with the south-eastern region of the country, the cities of Kecskemét, Szeged and finally Röszke at the Sebian border. The motorway reached the city of Szeged in December 2005, while the remaining 15km (9 mile) portion of the motorway (between Szeged and Röszke) was completed in March 2006.

Based on the positive results of a feasibility study executed by Hungarian consultants, an international tender was launched in 1992 to finance, build and operate the M5 Motorway. Finally a French-Austrian-Hungarian consortium lead by Bouygues and Bau Holding won the tender in February 1994. The concession company: Alföld Koncessziós Autópálya Rt. (AKA) was duly registered in December 1994.

Construction works started in March 1996. Stages 0+1A were opened at the end of December 1996, Stage 1B in December 1998, finally Stage 1C on 9th of June 1998.

In March 2004 the modification of the project took place by the sale of 39,48 % of shares to ÁAK Rt.(State Motorway Management Company); Parallel the motorway tolls cancelled with the introduction of an availability payment mechanism as well the parties signed the Construction Contract of Phase 2. (Kiskunfélegyháza - Szeged). In September 2004, after the Hungarian Parliament’s approval, the Minister of Economy and Transport signed with AKA Rt an amendment to their Concession Contract for the M5 Motorway. The main change relates to the availability fee - introduced in March when toll collection was abolished. The amount to be paid by the Hungarian State was set to 92,5 MEUR/ year from which deductions are made depending on the actual availability of the road to motorists, the performance and safety of operation. Payment of this modified amount started after the construction of motorway section between Kiskunfélegyháza and Szeged had been completed, i.e. from 01 January 2006, and until the end of the concession in January 2031;

The Company also signed a Credit Agreement for an amount of 750 MEUR, with 5 mandated banks (EBRD, CIB, Banco Espirito Santo, West LB, and MFB); Negotiations about construction of phase 3 between Szeged and the border in Röszke also had been concluded and an additional amount of 150 MEUR has been agreed and drown. Accordingly in December 2005, Phase 2 between 113,8 - 159,2 km /(Kiskunfélegyháza South– Szeged North interchanges) had been opened and soon in March 2006, Phase 3 between 159,2 - 173,895 km (Szeged North – Röszke border) had been opened to the public.

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