The government will terminate the contract for Budapest’s Southern Railway Ring and order Lőrinc Mészáros’s V-Híd to leave the construction site, citing suspected collusion in the tender process that could put HUF 320 billion (EUR 0.88 billion) in EU funding at risk.

Hungary’s government has announced plans to terminate the construction contract for Budapest’s Southern Railway Ring following alleged irregularities in the public procurement process. Transport and Investment Minister Dávid Vitézy announced the decision at a joint press conference with Prime Minister Péter Magyar on Friday.

The government also intends to exclude companies owned by Hungarian businessman Lőrinc Mészáros from state railway construction tenders over alleged conflicts of interest.

Photo: MTI

The Southern Railway Ring project aims to expand the railway line between Kelenföld and Ferencváros from two tracks to three or four, improving capacity and introducing new stops. The route is particularly important for domestic rail traffic and European transport corridors.

Mészáros’s company V-Híd won the largest construction package in 2021 with a bid worth HUF 337 billion. The wider project has received substantial EU funding, but the European Court of Auditors reportedly identified suspected collusion in the procurement process, threatening the availability of up to HUF 320 billion in support.

Photo: MTI

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According to Vitézy, the concerns centre on the Kontúr Group, a company involved in preparing the project’s estimated costs, and its alleged links to V-Híd. The minister said similarities between the cost calculations and the winning bid, alongside other connections between the companies, raised serious questions about whether the tender was conducted fairly.

These allegations have not, in the information provided, been established as criminal wrongdoing by a court.

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Vitézy said the project is approximately 42 per cent complete. The state has reportedly paid V-Híd around HUF 100 billion in advances, while work worth HUF 44 billion has been completed. Terminating the contract could allow the state to seek repayment of more than HUF 50 billion, although recovering the money may prove difficult.

The government plans to assess the completed structures, materials and outstanding work before deciding how to proceed. If necessary, it will launch a new public procurement procedure in an effort to preserve the EU funding.

Photo: MTI

The decision could significantly disrupt construction. Vitézy warned that the railway project could be delayed by months or even years while the government takes over the site and arranges a new contract.

The authorities say they will seek to maintain existing rail services and protect completed structures during the interruption. The project must also meet the relevant EU funding deadline, with completion required by the end of 2030.

The government has also announced plans to report suspected budgetary fraud to Hungary’s National Tax and Customs Administration. The next steps will depend on the assessment of the construction site and whether the project can be restarted under a new, compliant tender.