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The announcement came after the group offered to redeem USD 400 million in bonds subscribed by Hungarian state banks and finance the development from its own resources, according to a report by G7.
The project drew increased scrutiny after Prime Minister Péter Magyar said on July 23 that the government would file a criminal complaint over the bond financing, alongside several other transactions involving state development banks.
In response, Duna Group owner László Szíjj said the company would initiate redemption of the bonds, worth HUF 113 billion at the exchange rate prevailing when they were issued, from Eximbank and the Hungarian Development Bank (MFB).
The company said it could continue financing the project from its own resources, but has not ruled out bringing in other investors later.
It also remains open to the Hungarian state participating directly in the project, including through an equity stake.
The central controversy surrounding the project has been whether state-backed financing supports a commercially promising infrastructure development or exposes the Hungarian state to excessive risk while most of the potential upside accrues to a private investor.
Government criticism has focused in part on the high sovereign risk associated with the Democratic Republic of the Congo and Zambia.
Duna Group project executive Tamás Jászberényi argued, however, that the financing risk for MFB and Eximbank was lower because the bonds were issued by Duna Aszfalt Zrt., rather than the African project companies, with Duna Aszfalt responsible for repayment.
The concession is also designed so that future revenues would come directly from road users rather than the two African states.
Duna Group has substantial financial resources of its own. At the end of last year, the group held HUF 214 bln in cash, including HUF 108 bln in advances, while its consolidated balance sheet total stood at HUF 757 bln.
The company said this asset base stands behind the bond obligations.
The project would connect mines in Congo’s Katanga region with Mwenda in Zambia, from where an established paved road leads toward the Tanzanian port of Dar es Salaam.
The new route would cut roughly 500 kilometers from journeys from the Lubumbashi region toward seaports.
Transport infrastructure in the area remains limited, with some sections still consisting of dirt roads. The Luapula River currently has only one road bridge linking the two countries around Chembe, while a ferry operates at the location of the planned new crossing.
During the rainy season, journeys of only a few hundred kilometers can take several weeks.
Duna Group expects substantial demand from copper and cobalt mines, while Jászberényi said the route would also be important for goods moving inland from ports toward Congo.
The PPP project was approved by Zambia’s Parliament in 2021.
Duna Group expects toll revenues to be relatively predictable during the planned 25-year operating period because freight operators have few practical alternative routes.
The precise interest rate and other terms of the state-bank bonds have not been disclosed, with Duna Group and the financing banks citing securities and banking secrecy.
The company has said the interest rate is well above the market average.
Under the original agreement, higher project revenue and profit could also trigger accelerated repayment of the bonds, reducing the time over which interest would accrue.
Another point of contention has been an 80% state guarantee covering the value of the bonds.
Duna Group said the guarantee was requested by MFB and Eximbank, not by the company, and that it carries a significant cost for the borrower.
The company also agreed that ownership of the project companies would remain unchanged while the bonds were outstanding.
Duna Group said independent credit rating institutions also assess Duna Aszfalt and that failure to meet minimum requirements would have triggered immediate repayment of the full bond amount.
The company said it originally opted for external bond financing because it was preserving capital for other transactions, including investment related to Hungary’s motorway concession network.
Offering to redeem the bonds would therefore represent a shift in priorities toward the African project.
Earlier estimates put the project cost at USD 473 mln-500 mln. Jászberényi said the current total cost had risen to around USD 600 mln, meaning the USD 400 mln bond financing would cover roughly two-thirds of the investment.
Publicly available information indicates the project is currently around 25%-30% complete, suggesting that much of the bond funding has not yet been spent.
Duna Group said it had spent years negotiating unsuccessfully with commercial banks before turning to Hungarian state financing.
According to the company, commercial lenders generally preferred a single general contractor structure to reduce construction risk, which Duna Group believed would have made the project more expensive.
The group instead sought to tender the main construction elements separately and manage them with its own technical expertise.
Duna Group also argued that infrastructure developers active in Africa commonly rely heavily on external financing, although international projects often use a broader mix of commercial banks, development institutions and export credit agencies.
The Hungarian structure differed in that financing came from two state development banks without a parallel independent commercial lender sharing the risk.
Jászberényi said Duna Group had previously been open to the Hungarian state taking an equity stake and remains open to that possibility, although the state had not sought ownership earlier.
Such an arrangement could potentially give the state direct exposure to the project’s profits rather than only interest income from the bonds.
Duna Group also sees the project as a possible first step toward a broader African expansion. The company is examining further road concession opportunities on the continent and argues that successfully completing the current development could demonstrate Hungarian expertise in large-scale African infrastructure projects.
The immediate decision now rests with the government and state banks: whether to accept Duna Group’s bond redemption offer, retain the existing financing structure, or consider a different form of participation, including direct ownership.
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