Hungary nixes 244 mln euro contract for Alstom metro cars

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The Budapest Transport Authority (BKV) said Wednesday it was cancelling a 244-million-euro contract with France's Alstom for 22 metro cars after an appeal to obtain their safety certification failed.

"Alstom has not met the requirements of our contract and did not receive the final permit to operate their trains in Hungary, therefore we had no choice but to annul the contract," BKV said in a statement.

Alstom was due to deliver 22 carriages for Budapest's M2 underground line by February this year, but failed to obtain the necessary permits from the National Tranport Authority (NTA), after which the BKV announced it was cancelling the contract on July 30.

Alstom appealed the decision, but the NTA rejected it on Monday. This decision is now final with no more appeal possible.

"The main reason for the rejection is that Alstom used a brake system different from Hungarian standards, and they could not prove the brakes would be safe," the National Tranport Authority said in a statement.

BKV also said Wednesday it had withdrawn a 108-million-euro deposit placed in a common account with Alstom until completion of the 65-billion-forint (244.3-million-euro, 333.2-million-dollar) contract.

BKV said it also wanted Alstom to pay a penalty for late delivery.

Another metro project, the over-budget M4, which was due to receive 15 Alstom cars, will now also be delayed as BKV finds a new manufacturer, the BKV said.

"We expect a delay of three to five years now because we have to make sure the new carriages will be compatible with security systems and the infrastructure," BKV said in a statement.

Until then, BKV will have to renovate its crumbling Soviet-era carriages, which have been in operation for over 30 years at a cost of three billion forints (10.8 million euros) to avoid travel disruptions.

© 2010 AFP

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