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Budapest mayor shocked to see gov't “water down” BKV bailout contract

Budapest Mayor Gábor Demszky was shocked to see a watered down version of the government's earlier promises to help straighten out the finances of ailing Budapest transport company BKV, the daily newspaper Népszava reported on Tuesday.

According to information obtained by the paper, Demszky received a draft contract on Friday, which contained “weakened” elements compared to a preliminary agreement on the bailout between the city and the government sealed in December. Demszky initiated modifications to the contract in a letter to Finance Minister Péter Oszkó on the same day, Népszava was informed.

In December, the government promised extra funding of HUF 5 billion (€18.8 million) for BKV, which it has recently transferred. Further commitments of another HUF 5 billion and HUF 7.4 billion were due in April and July, respectively. The government, which is facing general elections in April, has deferred the pledge of an additional HUF 5 billion credit line due at the end of 2010, the paper said.

The draft contract also set new conditions to the promised funding, stipulating that the government will only guarantee these if “certain conditions in the Budget Act are met,” the paper said. Another new element is that either party can terminate the contract within 30 days without reason, the paper added. (MTI-Econews)