Gov’t classifies feasibility study of USD 3.6 billion Belgrade-Budapest rail line

December 23, 2017

The government has classified the feasibility study of USD 3.6 billion Belgrade-Budapest rail line investment
Undersecretary with the Ministry of National Development János Fónagy | Photo:

The Hungarian government has classified for ten years the feasibility study of the USD 3.6 billion Belgrade-Budapest rail line investment, reports

Prime Minister Viktor Orbán announced the investment at the Central and Eastern European Countries and China (China-CEEC 16+1) summit hosted in Budapest at the end of November. The Chinese and Hungarian governments had agreed to move forward with the Belgrade-Budapest rail line investment project in 2015.

Originally projected to cost HUF 472 billion, it is now estimated to cost HUF 949 billion (USD 3.6 billion) with interest on the loan to be furnished by China. Numerous Hungarian media outlets have reported that even the most optimistic projections estimate the line between the Hungarian and Serbian capitals would take some 2,400 years to break even.

Former Hungarian Socialist Party (MSZP) chair and prime-ministerial candidate Attila Mesterházy addressed the Ministry of National Development to learn whether the mammoth investment is beneficial to Hungary. Among other things, Mesterházy asked:

  • Is it true that even with a significant increase in traffic, it would take 2,400 years for the investment to break even?
  • Did not it occur to the Ministry that instead of building a new track that avoids larger settlements, upgrading the Szabadka-Szeged-Budapest track would be more beneficial for public transportation?
  • Is there a guarantee that the Chinese will do the customs clearance in Hungary instead of Greece, as the line itself will generate no other income?
  • Regarding the renovation of the line, was there any agreement made according to which the Chinese party undertakes to provide constant cargo traffic on the line?

The Ministry of National Development’s official answer was delivered by undersecretary János Fónagy:

“Numbers included in your questions and the payback time you mentioned can be considered guesses at best, estimates published in the press are completely unjustified,” Fónagy stated. However, the undersecretary failed to provide meaningful answers to Mesterházy’s questions as the government has classified the feasibility study for ten years.

Fónagy also said the “infrastructure developments of the state should not be judged solely based on the private investors’ logic of financial return […]” This narrative harks back to an earlier statement by Prime Minister Orbán, namely that “[the investment’s] return in forints, I consider secondary.”

According to Fónagy’s answer, the Chinese did not guarantee to increase the traffic on the line, nor to do customs clearance in Hungary rather than Greece. Based on his answer, it is clear there is no guarantee that the Chinese will actually use the line since alternative routes exist for transporting goods to the heart of the EU.

The plans say the investment would be completed within 84 months of signing the contract. Although the construction duties will likely be undertaken by Chinese contractors, it is worth noting that businessman Lőrinc Mészáros’ family has recently purchased a railroad construction company.