Gergely Gulyas – Photo: MTI

Gulyas: Hungary’s energy supplies secure

Hungary's gas and electricity supplies are secure, the head of the Prime Minister's Office told a regular government press briefing on Tuesday. Suppliers are able to meet all household and market demand, while talks concerning further purchases are under way, aimed at increasing strategic reserves, Gergely Gulyas said. He noted, however, that "energy prices have increased considerably due to the war and [EU] sanctions", and the government would maintain its price control for households up to the average consumption levels.

Gulyas said the definition of average consumption would be included in a government decree because the thermal values of gas from Russia, from the West and from domestic production were different.

Average consumption was now defined at 63,645 megajoules, “well above the figure in the earlier decree”, the minister added.

The government will establish a stricter and more transparent system for the utilisation of European Union funds and the monitoring of EU public procurement procedures, Gulyas said.

Hungary had until midnight on Monday to respond to the European Commission’s questions concerning its conditionality mechanism procedure, he said. The government and the EC have been engaged in “intensive consultations”, holding talks on a daily basis over the last two weeks, he added.

The government has sent the commission a response that establishes a common position on all of the EC’s recommendations, Gulyas said.

He expressed hope that the conditionality procedure could be concluded and Hungary and the EC could sign the agreement on funding from the bloc’s recovery fund and seven-year budget. He also expressed hope that the “constructive attitude that characterised the EC in the past month” would be maintained.

Answering a question concerning the recent dismissal of the national weather service (OMSZ) leaders, Gulyas said the government had “accepted and supported” a proposal by Technology and Industry Minister Laszlo Palkovics. He said “changes in management positions would have been made irrespective of (OMSZ’s) forecast” for the August 20 national holiday, which had “proven spectacularly wrong”. The dismissals were due to “long-term dissatisfaction”, he said, and insisted that the forecast, which had caused the August 20 fireworks to be postponed, had been “not the last but the one after the last drop”.

He also said that there was no political pressure on OMSZ staff.

In response to a question, Gulyas said Prime Minister Viktor Orban was on holiday and his deputy Zsolt Semjen had chaired Tuesday’s cabinet meeting.

In response to a question about pension premium to be paid this year, he said a similar amount can be expected as last year, of up to 80,000 forints (EUR 200).

In connection with an agreement with the EC, he said amendment proposals needed for a deal had already been submitted to parliament and “several further legal amendments” had been promised if an agreement is reached.

In response to a question about EU resources, he said Hungary had nothing to hide from the EC and “additional guarantees” had been given. He added that joining the European prosecutor’s office was not requested by the EU among additional guarantees.

Regarding a question about EU funds, Gulyas said the European Commission had 30 days to respond to the Hungarian government’s letter. He expressed optimism as regards the EC’s possible response, saying that every recommendation put forward by the commission had either been accepted or a consensus had been reached.

Answering a question, Gulyas said over ten relevant law amendments would be submitted if an agreement with the commission is reached.

He said it was inappropriate from Brussels to raise any criticism over Hungary’s asset declaration system because “exactly the same system has been introduced by the country which applies to Members of the European Parliament”.

Asked about the recent announcement on the Hungarian state’s plan to purchase a stake in Vodafone and criticism concerning the price as too high, Gulyas said that before any such deal, a comprehensive due diligence is carried out which covers the price. He said “the Hungarian state cannot carry out a purchase without big international companies approving the price”. He said the state would acquire a minority stake, 49 percent and the next step to take is to first conduct a detailed audit of the company which would take months.

Gulyas said talks with the telco company had been started by IT company 4iG and the Hungarian state joined afterwards. He said obtaining a stake would be “a good deal” for the Hungarian state and the deal “can stand on its own feet”, adding that planning the Vodafone deal had already begun in 2010.

Commenting on the coronavirus situation in Hungary, Gulyas said it had not mandated any restrictions to be introduced by the government. The number of Covid infections has dropped by more than 30 percent since the end of July and cases go with lot milder symptoms, he said.

Answering a question, Gulyas said that a military plane that had landed in Moscow on Sunday evening had [Economic Development Minister] Marton Nagy on board and he held talks on energy related matters in the city. Asked about the talks, Gulyas said they were successful.

In response to a question about the weakening of the national currency, the forint, Gulyas said the strengthening of the US dollar “hurts not only the euro, but the forint as well,” and called it important that “exchange rate changes should not be this hectic”. “The intention of the government and the central bank to preserve the strength of the forint is an important message to the markets,” he said, adding that this is why a “sustainable” budget had been planned and substantial deficit reduction target for 2023.

Hungary’s gas storages now contain a sufficient amount of 3.8 billion cubic metres, which is enough for 76 winter days, taking into consideration both household consumption and industrial consumption, Gulyas said.

Food supplies for the Hungarian population are not threatened despite the severe drought hitting the country this summer, he said. Hungary’s agriculture can supply food to 22-23 million people in a good year so supplies are sufficient despite the drought damage, he added.

In response to a question, Gulyas said no other European country was helping consumers like Hungary, up to an average consumption of gas and electricity. Hungarians pay gas bills of 17,000 forints (EUR 42) instead of the market price of 180,000 forints and state subsidies on electricity are also considerable, reaching a monthly 200,000 forints per household, he added.

The government is working on offering alternative methods for reducing gas consumption to households and proposals will be published within two weeks, he said.

In response to a question on damage compensation to farmers, he said the state was making every possible effort to help farmers get compensated. The government expects getting agricultural subsidies from the EU but “beyond these it is not worth waiting for more from the EU”, he added. The assessment of drought damage is still under way, he said.

Asked about the effects on Hungary’s gas supplies of Russia “holding back” Nord Stream 1, he said gas supplies from the direction of Austria had dropped so efforts were being made to compensate for this from the south.

In response to another question, he said no decision had been made about a possible merger of Vodafone and Digi. It is too early to talk about how the state’s acquisition of a stake in Vodafone would affect telephone tariffs. “It can only have a positive influence, but as to what extent, it is too early to tell,” he said.

Hungarian taxpayers will benefit from the state acquiring a stake in Vodafone because a company that can generate significant profits will be in state ownership, he said. Gulyas added that the acquisition would not result in overdominance on the market because there would remain a significantly larger market player than 4iG or the state.

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