Gergely Gulyas – Photo: MTI

Household utility price caps to stay

The government has reviewed the energy situation in Hungary and said the resources are at hand to maintain utility price caps up to average consumption for households, the head of the Prime Minister's Office told a regular press briefing on Thursday.

At a cabinet meeting on Wednesday, the government reviewed the energy situation and concluded that the price caps could be maintained until end-2023 and even beyond, he said.

At the same time, high energy prices are a burden on the Hungarian economy, and harm its competitiveness and industrial performance, he said.

The government will also help some 14,000 companies, local authorities and churches, which under current legislation would pay for energy at last December’s prices as they failed to renew their contracts with the provider before that date. The government will enable them to renew those agreements at the current prices, Gulyas said. State-owned energy provider MVM will absorb the 20 billion forint (EUR 53.1m) loss, he added.

Gulyas also said the government welcomed the pro-peace resolution adopted by parliament last week, adding that the most important consideration was for there to be a ceasefire, peace talks and peace in Ukraine as soon as possible.

Hungary remains committed to peace, but it became clear last week in parliament that “not everyone on the Hungarian political stage agrees with this,” he said.

He said the government interpreted the outcome of last year’s general election as proof that the majority of Hungarian voters also wanted peace.

The resolution approved by parliament condemns the military attack against Ukraine and emphasises the importance of humanitarian operations “in which Hungary has had a significant share over the past year”, Gulyas said. He said the state and NGOs worked together “in exemplary fashion” so that Hungary, the first safe country they reached, could accept all refugees from Ukraine.

At the Wednesday cabinet meeting, the government also tasked Energy Minister Csaba Lantos with drafting a proposal on revamping Hungary’s water supply system and on uniform prices for water utilities. In view of current energy prices, the government has given the opportunity to local authorities to put water utilities into the hands of the state, he said.

The government said the reconstruction of the water pipelines was long overdue. Overall water loss in Hungary’s water system is 22 percent, but some regions see 60 percent of the water leaking from the system before reaching consumers, he said.

When introducing the utility price caps, the government capped the prices of water utilities at the prices at the time, leading to large regional price differences by today, he said.

Government spokeswoman Alexandra Szentkiralyi said consumer protection services had conducted a “price cap inspection” between January 23 and 29, and launched 334 procedures as a result. About half, 179 procedures have already been concluded, with shops fined to a total of 333.3 million forints. Most offences included cases where price-capped products were found in the shop’s warehouse but were missing from the shelves, she said.

The authorities will also launch an online price-monitoring system to look for unreasonable price hikes, and to ensure the sharpest possible competition among shops, she said.

Asked about price caps on basic foodstuffs, Gulyas said they are set to expire in two weeks’ time, and the cabinet will decide on them at its next meeting. The government’s aim is to push inflation into the single digits by the end of the year, he noted, adding that if that goal is reached, inflation could return to “a normal level” next year.

Asked why the government was not cutting the retail market price of gas and electricity, Gulyas said the fluctuations in gas and electricity prices were “hectic”, and the prices would have to be changed “every two weeks”. The government’s principle is to keep the price caps on utility bills in place in line with the new regulations, he said.

Asked to comment on the left-wing opposition’s refusal to support the government’s pro-peace resolution, Gulyas said the left’s positions on weapons deliveries “or sending troops to the war in Ukraine” had been rejected by an overwhelming majority of voters in the last general election.

Citing recent polls, he said the ruling parties would win again if an election were held today. He said the reason for this was that the left had been “bought off” but was “prepared to engage in childish confrontations”.

He criticised what he called “tragicomic” attempts by independent lawmaker Akos Hadhazy and the opposition Momentum party to disrupt Wednesday’s cabinet meeting by removing the barricades from in front of the Castle District premises of the Prime Minister’s Office, saying the opposition politicians had been there to “make a scene”.

Referring to the opposition’s campaign donations from the United States, Gulyas said that “if these MPs acted this way in the country from which they got their money for the election campaign, then — if they’re lucky — they would have been arrested, or something even worse would have happened to them.”

“This is the kind of infinitely tolerant country we are,” he added.

Meanwhile, Gulyas said Hungary could reach an agreement with the European Commission on its receipt of EU funds “at any time”, arguing that the deal was up to the commission. Though the EC keeps making more and more demands, the government is confident that an agreement will be reached on the issue around the judiciary, he said. Gulyas added, at the same time, that the EC “doesn’t even meet its own deadlines”.

Criticising the left-wing opposition for “working to prevent Hungary from accessing these resources”, he said left-wing MEPs should represent the interests of the country, but instead “they and their European Parliament groups are putting pressure on the European Commission” to withhold the funds.

Gulyas said opposition MEP Istvan Ujhelyi was incorrect in his assertion that Hungary had the funds it needed to raise the wages of teachers. Though Ujhelyi cited statements from the European commissioner in charge of employment and social affairs, “what the commissioner said can’t be verified”.

Gulyas said Hungary had yet to receive the cohesion funds it is entitled to from the 2021-2027 EU budget, adding that teachers would receive their pay hike retroactively from Jan. 1 once Hungary is promised that it will receive the funds.

Meanwhile, Gulyas criticised a recent statement by teachers’ union PDSZ suggesting that potentially thousands of teachers could quit the profession if a new law changing the status of teachers was introduced. He said the draft legislation had yet to be finalised and the government had yet to consult unions on it. He said teachers could benefit from having a special status.

The minister insisted that secondary school final exams would go ahead this year since, unlike teacher unions, “teachers themselves are committed to their students”. Gulyas said that everyone must comply with the regulations, and while protest had its lawful forms, anyone who stepped beyond these would be acting unlawfully. The government, he added, would respect whatever ruling the courts made on the matter of prospective strikes and demonstrations.

Asked about both Sweden and Finland joining the European Commission lawsuit over Hungary’s child protection law while seeking approval of their NATO accession, Gulyas noted that Finland has a caretaker government, but its intervention after Hungary’s parliament approved their NATO membership was “not right”.

He said Swedish-Hungarian relations had hit “a low point”, partly due to Sweden’s involvement in the European lawsuit, so confidence-building steps were required “as there is a debate within the governing parties about whether Hungary should support Sweden’s NATO accession”. NATO unity was paramount, Gulyas said, so it was unwise to import disputes between countries into the alliance. “It is up to the Swedish government to take steps to resolve this,” he said.

Gulyas said there is no agreement between Hungary and Turkey to coordinate their policies on the ratification of Sweden’s NATO accession.

Gulyas said the danger of nuclear powers of a military alliance getting involved in a war started by a nuclear power that violated international law was greater than it has been at any time since Hungary’s change of political system. The escalation of the conflict through the involvement of a NATO member state must be avoided because this would have to be interpreted as an attack against all NATO member states, the minister said.

Asked about Russia’s annexation of the Crimean peninsula, he said this contravened international law. Asked whether Hungary supported Ukraine’s efforts to regain Crimea, Gulyas said he “would not dissuade any country from a war of national defence”.

Meanwhile, addressing domestic matters, Gulyas said the complete revamp of the country’s water network would cost around 1,000 billion forints, and the government already contributed 150 billion forints each year for that purpose. No decision has been taken yet on how long and what resources that renovation would take, he said.

On the subject of campaign financing, Gulyas said Datanet, a company linked with former prime minister Gordon Bajnai, paid for the cost of the opposition’s campaign buses, and Datanet received funds for this from the United States.

Regarding the possible state purchase of Liszt Ferenc Airport, he said the government was in the midst of negotiating with the airport’s owners, and they trusted that the current owner “is thinking in terms of big investments”. He said all details would be published once an agreement was reached. He said it was possible that the airport would also have another owner beside the state as several parties were lined up as potential buyers.

On European plans to tighten rules for obtaining a driver’s licence, the minister said the government would consider all reasonable proposals but would not support the requirement for motorists over the age of 70 retake their driving tests time and again. He added that Hungarian traffic statistics did not suggest that senior citizens regularly caused accidents; rather, it was the other way round: accidents were caused by drink-driving and breaking the rules by drivers who had only obtained their licence a few years earlier.

Meanwhile, Guylas said that whereas the prime minister had made a friendly statement to Donald Trump in connection with his arraignment, Hungary did not interfere in the domestic affairs of the United States.

On the subject of an attempt by some municipalities to levy taxes on farmland, he said the government was engaged in talks on the land tax primarily with the Chamber of Agriculture, and legal options would be examined. He said this kind of tax was “harmful and misdirected”.

Regarding police investigations into the Brussels office of the European People’s Party (EPP) in connection with “corruption networks” operating in the European Parliament, he said it appeared that the police probe had also reached the EPP. “All such cases must be investigated,” he said.

Regarding the Hungarian postal service Magyar Posta, the minister said the government could not help the state-owned company since this was prohibited under EU rules, so the company must cut its expenses.

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