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07/12/2016

Hungary plans further cuts to household energy prices

Energy

Hungary plans further cuts to household energy prices

Development Minister Miklós Seszták [Jobbik website]

Hungary’s government is looking for ways to continue a household energy price cut programme, Development Minister Miklós Seszták told the weekly Figyelő in an interview published today (18 August).

The energy price cuts, which have cut more than 20% off natural gas and electricity bills in recent years, contributed greatly to a repeat two-thirds victory for the Fidesz party at the last election, in 2014.

Orbán wins elections, far right gains ground

Hungarians handed their maverick Prime Minister Viktor Orbán another four years in power, election results showed today (7 April), while one in every five voters backed a far-right opposition party accused of anti-Semitism.

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Prime Minister Viktor Orbán’s government is facing elections in 2018 at the latest, and Seszták said the government was again exploring the energy price cuts.

“The primary goal is to preserve the results of the energy price cuts executed so far,” he said. “We need to look into whether, in a more efficient system, taking advantage of synergies, we can cut more. I think that is possible.”

Hungary’s government has transformed the energy sector by purchasing assets from foreign companies such as Germany’s E.ON and RWE, and creating a state-owned, not-for-profit national energy holding. The firm, ENKSZ, says it expects to be supplying natural gas to all Hungarian households by 1 October.

Seszták declined to say how large the new energy price cuts may be, adding that the outcome of ongoing European Union infringement procedures about the previous round of price cuts would affect that decision, as would the development of natural gas prices and domestic synergies.

The government says energy should not be a profit-oriented sector, but rather a domestic asset that boosts Hungary’s competitiveness by providing affordable energy to households and cheap energy for industry.

Background

Hungarian Prime Minister Viktor Orbán, leader of the Fidesz party (EPP-affiliated), has clashed repeatedly with the European Union and foreign investors over his unorthodox policies.

In the past four years, Orbán's policies have included a nationalisation of private pension funds, "crisis taxes" on big business, and a relief scheme for mortgage holders for which the banks, mostly foreign-owned, had to pay.

His policies helped Hungary emerge from recession, but some economists say Orbán may have scared off the kind of investment Hungary needs for long-term growth.

Orbán has stated that Europe has "shot itself in foot" by imposing sanctions on Russia, and that he would seek support from other EU countries to improve relations with Moscow.

Foreign supermarket chains threatened by Hungary

Multinational supermarkets could be driven out of Hungary, a trade lobby said yesterday (29 November), after the government raised their inspection costs and threatened to shut them down if they fail to make a profit for two years.

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