Hungary's government is expected to decide by July 31 on the consolidation of the debt of state-owned railways MÁV, MÁV CEO Ferenc Szarvas said on Saturday.
The decision on debt is an important prerequisite to implementing the developments planned at the company, he said, addressing a meeting at the 150th anniversary of the southern railway Déli Vasút.
MÁV has about HUF 300 billion debt of which HUF 120 billion is covering operating expenses, while the remainder was borrowed to purchase equipment, Szarvas said. MÁV's operating costs include HUF 15 billion annually in interest paid on its debt, he said.
Consolidating the debt of state-owned Hungarian railway MÁV and Budapest mass transit company BKV this year are part Hungary's Széll Kálmán plan, a structural reform plan announced early March. In April the National Economy Ministry estimated that taking over part of the two companies' debt would cost the budget about 1.3% of GDP.
In addition of debt consolidation, consolidating the financial position of the company will also require enhancing efficiency, cutting operating expenses, restructuring and drawing on additional resources, the MÁV CEO said on Saturday. The latter would also require the approval of MÁV’s already prepared development plans, Szarvas said.
Debt consolidation will allow MÁV to borrow on the financial market without a state-guarantee, the CEO pointed out. MÁV is also to draw on European Union funds.
The government is expected to decide within the next few weeks on a national public transport concept, Szarvas said. MÁV will be able to adapt its own strategic work plan to this concept, which will include the creation of a national transport holding, including MÁV, by the end of this year. The creation of the holding is also part of the structural reform plan.
MÁV’s planned developments include railway renovations as well as vehicle purchases. The latter plans include the purchase of 70 suburban trains and 18 multiple-unit trains as well as the renovation of an additional 50 third generation multiple-unit trains.