The capital’s rail development project has taken a new direction midway through construction: construction of the Southern Circular Railway has been suspended, and authorities intend to terminate the contract with the current contractor. Index reported on Dávid Vitézy’s announcement on October 9.
The minister said V-Híd would be notified of the suspension. The company must first carry out the necessary works to secure the site and then leave it. The project would continue under a new tender, but Vitézy gave no information on how long this would take.
## The advance payment must be accounted for
The decision stems from a dispute over the construction contract and the advance payment. According to Vitézy, an advance of 101 billion forints was paid for the project, of which V-Híd has worked off 44 billion.
The minister claimed that in October 2024 the MFB stepped in behind the bank guarantee for repaying the advance. In his reading, if the advance were reclaimed because of irregularities in the contract and the contractor did not pay, then because of the state-provided guarantee the state would be claiming the money from itself. Vitézy said this raises the suspicion of a criminal offense.
The minister also mentioned that, according to the European Court of Auditors, Lőrinc Mészáros had influence over the design firm, which could have constituted a conflict of interest. This is the government’s position as cited by Index.
## Changing contractors mid-project
According to Vitézy, they had two options to choose from. They could have continued the work under the current contract, or they could have terminated the agreement with the contractor and issued a new call for bids. The minister believes that a significant portion of the EU funds can be preserved by choosing the latter option.
However, changing contractors is particularly difficult in the case of an ongoing, large-scale railway construction project. Vitézy said he could not cite any examples of a similar scale. According to him, the railway system is also vital from a national defense perspective, so further measures will be taken against the contractor if necessary.
According to the minister, V-Híd will also be excluded from the railway construction projects involving the group he called the “Kontúr group”. How long the Southern Circular Railway will be on hold is not yet known; the site only has to be handed over once the necessary works to secure it are done.
Source: Index
