EBRD supports modernisation of Budapest public transport with €54.5 million loan

The EBRD is supporting the development and implementation of a modern automated fare collection system for public transport users in Budapest, with a €54.5 million loan to Budapesti Közlekedési Központ Zártkörűen Működő Részvénytársaság (BKK).

BKK is fully owned by the City of Budapest, and is institutionally placed between the municipality and individual transport providers and operators. In this set-up BKK is responsible for transport regulation, for the implementation of the Budapest transport strategy, and for determining and contracting for public transport services and road transport.

The proceeds of the EBRD loan will co-finance expenditure related to the implementation of the automated fare collection system. The automated fare collection system will include the introduction of gates in the metro, providing cards and ticket validators in buses, trams and railways, and a back office processing centre.

The project will integrate various transport service providers, improve overall service quality, and improve the efficiency of the public transport sector. The project contract will be signed between BKK and a private operator, which will be selected by the company through competitive tender.

Jean-Patrick Marquet, EBRD Director, Municipal and Environmental Infrastructure, said: “We are pleased to support the City of Budapest and BKK with the implementation of this strategic project. It is an important step in Budapest’s urban transport strategy, with the aim, among others, of attracting people to public transport and away from using private vehicles.”

The City of Budapest and BKK management are committed to modernising public transport in the Hungarian capital. The introduction of automated fare ticketing is seen as a significant step forward, as it will modernise ticket purchases. In parallel to the EBRD loan, the Municipality of Budapest is providing more than HUF 8 billion (€26.5 million) for the implementation of this project, resulting in reduced long-term operational expenses for the City’s budget.

The agreement is a “design, build, operate and maintain contract” – a form of public-private cooperation in which a specialised private party assumes the construction, technical, operations and maintenance risks of a project, and guarantees operational performance to its public client in exchange for a fee which is determined competitively at the time of tender.

The Budapest project has been functionally designed by BKK and its advisors to place a large portion of the technology and operational risk and responsibility on the future private supplier. Under this approach, the publicly owned automated fare collection system will be technically operated by a private sector company.