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Ministry expects to save HUF 400 bln on long term through restructuring PPP commitments

The government expects to save around HUF 400 billion over the long term through the replacement or restructuring of the 100 public-private-partnership (PPP) projects, the National Development Ministry said.

54 educational institutions, 34 sports facilities, four sections of motorway, two prisons the Palace of Arts in Budapest and the Collegium Hungaricum in Berlin had been built as part of PPP projects.

Obligations on these projects over their total run will cost the state about HUF 3,000 billion, the statement on the matter said citing ministry state secretary Sára Nemes Hegmann.

An examination into the present value of government and local-council PPP projects revealed that the cost of these projects was only a third or fourth of the obligations undertaken over the duration of the commitment, the state secretary said, addressing a conference at the Budapest Corvinus University.

It is unfair that the public sphere undertakes all the risk in PPP projects, while the private sphere has multiple profit without taking risk, she said.

PPP projects are no more accounted as spending outside the general government, so this argument no more stands for them, Nemes Hegmann noted.

Nemes Hegmann asserted that the government should make investments as state investments, involving European Union funding in the first place, and should make the operation of completed projects rational.