Economy 20 June 2023, 2:47pm

Launch of Hungary's waste management concession could be delayed to September

Portfolio

The launch of Hungary's revamped national waste management system, scheduled to start on 1 July, has been thrown into doubt as the Budapest Public Utilities Ltd. (BKM) and Mol have not yet signed the contract. BKM is responsible for waste transport in Budapest and the agglomeration, and Mol has mandated it to act as a regional coordinator. However, the government is already looking into compensation possibilities should the system fail to be launched on time. According to Radio Free Europe / Radio Liberty, the launch of the system could be postponed until September.

újrahasznosítás, körkörös gazdaság, fenntarthatóság, hulladékkezelés

According to two sources who spoke to the portal, the chances of a 1 July launch are getting every slimmer and the launch date could be pushed back to September or even December. Although it is considered more unlikely for the time being that the government and Mol would make such a decision, as the whole concession contract would be at risk, a proposed law amendment on Monday would provide Mol with compensation if the system does not start on 1 July, as 24.hu has spotted.

The delay is allegedly due to the failure to implement the waste management system and the transfer of the household and municipal waste collection companies is not progressing as planned.

This suggests that the launch date will be put off for one reason or another.

Mol is only to take over the waste division, but the transaction has not yet taken place. BKM, owned by Budapest Public Utilities, will also have to transfer other services, such as the operation of incinerators. The terms and value of the asset transfer have not yet been agreed.

Following the establishment of MOHU Budapest Zrt., it appears that this company will be a joint venture between BKM and MOHU. However, at present the CEO of BKM has been given a senior position in the Mol-owned company, which may present a conflict of interest. Negotiations on the asset transfer are taking place without a preliminary agreement, according to the paper.

The inventory and valuation of the assets have not yet been carried out and the transfer of some assets still requires a decision by the Municipal Assembly. According to RFE/RL, the owner does not seem to have an interest in keeping these high-value assets.

The paper says that Mol, together with BKM, intends not only to take over the waste transport in the capital, but would also be active as a kind of regional coordinator in the Budapest agglomeration. The waste concession under Mol's leadership would start on 1 July, but there is little chance that the outstanding issues will be resolved in ten days.

the government initiated a public consultation on the rewriting of the concession rules back in May, which clarifies a number of details of the division of tasks, with several elements defined as public tasks.

The waste concession is off to a slow start, and the European Commission may also investigate the 35-year service concession granted to Mol by the Hungarian government and the legality of the monopoly. The Commission will be looking into whether it is justified to close an entire market to free competition for such a long period of 35 years.

Previously, before Mol set up its concession company, waste from industry was transported and recycled by competing companies, which paid the producers for the recycling. In the case of metal, paper and plastics, the waste has value and, after proper treatment, is returned to the market as raw material.

In addition, experts say the new waste management and Extended Producer Responsibility (EPR) charges could lead to significant price increases for many products, including food and household goods.