Tag Archives: geothermal power plant

Hungary as the Orbán family’s private estate

It was almost a year ago that I wrote a post about the then newly launched real estate business of Prime Minister Viktor Orbán’s son-in-law, István Tiborcz.  The young man, when he was barely out of law school, set out to become an entrepreneur. He became part owner of what would soon become a thriving, highly profitable business specializing in LED street lighting technology. His family connection to the prime minister practically ensured his success. One city after the other signed contracts with his firm to modernize its street lighting with funds that came from the European Union. All went well until OLAF, the EU’s anti-fraud office, started to investigate. Tiborcz quickly sold his share in the business and moved on to safer pastures. He and his foreign business partners, like the Saudi Gaith Pharaon and the Turkish Suat Gökhan Karakus, began buying up run-down but valuable pieces of real estate. They especially liked stately mansions.

One of their first purchases was the Schossberger Mansion in Tura, about 50 km from Budapest. Although Tiborcz tried to hide his presence in the company, within a few days 444.hu learned that he was one of the new owners of the mansion. Angelina Jolie so admired the mansion that she used it as one of the sets for her movie “In the Land of Blood and Honey.” Although the purchase price was low (280 million forints), fixing up the place will be a very expensive undertaking. Ten years ago the estimated price was 6 billion forints or $203 million. After seeing a 10-minute video tour of the interior, I’m convinced that the cost of renovating and modernizing the place will be much higher than this old estimate.

Of course, we have no idea of the size of Tiborcz’s stake in this business venture, but it is most likely substantial because sometime in the spring of 2016 Győző Orbán, father of the prime minister, showed up and spent a whole day looking around. As a young man from Tura told the reporter from Bors, “it took a long time because he was shown everything inside.” As far as the locals know, the new owners want to use the former mansion as a luxury hotel.

Work began in March 2016, first on the ten hectare park that surrounds the mansion. By September the workers began refurbishing the interior as well. The mansion, which used to be open to the public as a tourist attraction, had to be closed. Some of the locals were sorry that the castle will be transformed into a luxury hotel, but others were convinced that the Orbán connection will do miracles for the sleepy little town of 8,000 inhabitants.Until now Tura was forgotten by the Orbán government. As a local man told HVG’s reporter: “We will have something here only if Viktor Orbán wants it.”

It looks as if Viktor Orbán, now that his son-in-law is part owner of the Schossberger Mansion, wants it. Tura has hit the jackpot. According to estimates, in the next year or two perhaps as much as 20 billion forints’ worth of investment will arrive in Tura.

In May several online news sites reported that a 2.7 MG geothermal power plant will soon be built. It will produce electricity for 800 houses and will also eventually heat greenhouses on 11 hectares. The water temperature of the geothermal well is 129°C. After this incredibly hot water is used to generate electricity, it cools down to 70°C and will then be used to heat the greenhouses. The water, once it has finished its heating cycle, will be returned underground, an EU requirement. The power plant will cost 5.5 billion forints, half of which will come from the European Union and the rest from a consortium of domestic investors.

Tura until now couldn’t offer much to visitors, but its fortune will soon change thanks to the Orbán family.

By late June work began on the power plant. It is being built by KS Orka Renewables Pte Ltd. of Singapore using technology from Iceland, where 90% of the buildings are heated geothermally. The first greenhouses, which will most likely be ready within a year, will occupy 5.5 hectares at a cost of 2.3 billion forints. Again, half of this sum will come from Brussels. Later, other greenhouses will be built, occupying another 5.5 hectares. Altogether the greenhouse project will cost 4.5 billion forints. The greenhouses are expected to produce 6,300 tons of tomatoes, most of which will be for export. The hope is that the greenhouse businesses will be able to amortize the initial investment over six or seven years. The investors project an eventual annual profit of about seven billion forints. In addition, the greenhouses are expected to employ 170 people. It sounds like a terrific project, assuming the projections are halfway realistic.

But surely, it cannot be a coincidence that Tura suddenly became the recipient of all this largess. The investments were declared to be “priority projects,” meaning urgent and important for the national economy. I should add that most of the money comes from three banks: Eximbank, MKB, and Gránit Bank. The first bank is state owned; MKB is apparently owned by someone close to Fidesz and Orbán; and 49% of Gránit Bank belongs to the Hungarian state. Thus, projects that will make the Schossberger Mansion business venture of Orbán’s son-in-law more viable are being financed mostly by the Hungarian state. It is easy to become a millionaire this way.

January 3, 2017