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Completion of M5 motorway gets EBRD support
Construction scheduled to be finalised by end-2005
Motorways are the arteries of a modern economy. The extension of the M5
motorway in Hungary to Szeged, near the Serbian border, is an important step
in the development of a nationwide network of high-quality roads which the
EBRD is providing up to €200 million to support. The loan is part of a €750
million financing package, with the remainder provided by commercial lenders.
The borrower is Alföld Koncessziós Autópálya Részvenytársaság (AKA), which
holds a 35-year concession to build and operate the M5 from Budapest to Szeged
(143 kilometres). The construction cost for the remaining 47 kilometres from
Kiskunfélegyháza to Szeged, which is scheduled to be completed by end-2005, is
€374 million.
The finance package will also be used to refinance Phase I of the M5. The
former toll road has been incorporated into the national Hungarian “vignette”
motorway payment scheme, which has led to a strong increase in traffic. The
government is compensating AKA for the loss of toll revenues with a
performance-based payment.
The project is expected to have a demonstration effect which goes well beyond
the specific investment and country context, said the EBRD’s Director for
Transport, Riccardo Puliti. This project should mark a turning point by
establishing a workable private-public-partnership structure.
Paul-Henri Aumont, CEO of AKA, pointed out that this transaction after 10
years of successful management of the project demonstrates the capacity of the
sponsors Bouygues TP, Bauholding Strabag and Colas to cooperate in the long
run with their client and adapt to changing needs with the continuous support
of the financial community led by EBRD.
The EBRD identifies the upgrading of transport corridors as a key goal for
Hungary. The Bank has made cumulative commitments of about €1.4 billion to
more than 60 projects in the country and has helped mobilise a further €4
billion from business partners.
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