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Cost of loan for M3 metro estimated at HUF 74.5 bln

Deals

In order to complete the refurbishment of Budapest’s M3 metro line, the state will be required to take out a loan for HUF 60 billion, the repayment of which could be as much as HUF 74.5 billion forints by the time the loan is fully repaid in 15 years, online news portal vs.hu reported yesterday.

Media reports suggest that the price is high by comparison to similar projects, and a bidder that said it gave a lower price has submitted an official complaint with the EC for being disqualified in the tender.

Budapest public transport company BKV and Metrowagonmash signed a €219 mln (HUF 9.006 bln) underground carriage renovation contract last Friday for the refurbishment of 37 trains on the capital’s M3 metro line, which according to BKV must be carried out as soon as possible given the dire condition of the line.

OTP, Erste , K&H, MKB and UniCredit have agreed to collectively guarantee the loan that would be used to renovate the metro line, the daily wrote. The government approved the financing despite an initiative by the city in May requesting the Competition Authority (GVH) to investigate why only one proposal was submitted to the tender, vs.hu noted, adding that this raised suspicion that the banks might be involved in cartel activity to increase interest rates. Since then no information has been made available on GVH’s website. 

In a price comparison, online news portal 444.hu reported yesterday that Saint Petersburg transport authority had ordered 15 brand new trains from Skoda for HUF 17 billion. Meanwhile, Estonian firm Skinest Rail, which reportedly submitted a more favorable tender, was disqualified from the tender and has since filed an official complaint with the European Commission. The refurbished trains provided by Metrowagonmash will not be equipped with air conditioning, only rooftop ventilation, vs.hu reported.

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