Hungarian railways in trouble, operation could become unfundable
Hungarian Railways MÁV Zrt. is in great difficulty, its operations could become unfinanceable in the fall.
MÁV asks for help from the government
MÁV has requested help from the Ministry of Transport to raise funds for its additional expenditure of up to 200 billion HUF (498 million euros) this year and in 2023, Reports from VG.hu. The public company’s expenses have increased mainly due to soaring electricity prices. Without government assistance, its operations could become unfundable by early fall.
The MÁV Group had already calculated an increase in its electricity and fuel costs in last year’s planning, napi.hu reports. However, the actual data shows a more dramatic increase than expected. VG.hu understands that the actual energy costs of the passenger transport subsidiary MÁV-Start Zrt. in the first half of the year were almost four times higher than a year earlier.
The railroad’s problems are exacerbated by the waning but still noticeable impact of the epidemic on defense revenues and spending, or by rising interest charges due to the prolongation of the war.
The company has made savings but they are not enough
Although the company has achieved significant savings by reducing and rescheduling some of its developments and investments while rationalizing its operating costs, these measures cannot compensate for the explosion in energy prices, writes VG.hu . Relying solely on the resources at its disposal could, according to the news portal, make the railway company’s operations unfundable by early fall.
The group is calling on the ministry to step in to raise up to HUF 200 billion in additional funding this year and next. Further uncertainty is being introduced into the system by the train drivers’ strike initiative, with the union trying to force a pay rise to offset the effects of last year’s inflation.
Last year, MÁV Zrt. and its three major subsidiaries were still profitable. At that time, it was able to cope with the difficulties caused by the coronavirus epidemic and the business environment, but in 2021 it still relied heavily on state support.
Source: napi.hu, vg.hu