Gergely Gulyas – Photo: MTI

Gulyas: State institutions, companies ordered to cut gas consumption by 25 percent

Hungary's government has mandated public institutions and state-owned companies to cut their gas consumption by 25 percent as an energy-saving measure, the prime minister's chief of staff said on Thursday.

The rule does not apply to hospitals or social-care institutions, Gergely Gulyas told a regular press briefing.

Gulyas said the energy supply situation was difficult all across Europe and rising energy prices had caused an economic crisis.

“It’s clear that the sanctions policy has not lived up to expectations,” he said. Energy prices have skyrocketed, triggering an energy crisis, and Russia is pocketing extra profits, he said.

While Hungary is not suffering from gas supply problems, rising prices are prompting prudent consumption, he added.

Hungary is currently running the largest household utility price support programme in Europe, he said. Price subsidies, up to average consumption, are available up to 150,000 forints (EUR 375) per household, he said.

Meanwhile, Gulyas said the government will cap firewood prices. Firewood will be also available for purchase in forestries, which will be able to provide 10 cubic meters of wood for all customers before the heating season, enough to heat a private household through the winter, he said.

The government will also launch a “coal programme” in the coming days, and raise the limit of open-cast mining from 50,000 tonnes to 280,000 tonnes, he said. The government will have pre-emption rights on the lignite produced, he added.

Small and medium-sized companies with high energy needs will receive support to foot their gas and electricity bills, he said. The government will develop a support scheme to ensure that supply lines remain intact, albeit with shrinking profits, to avoid mass unemployment that would result from interruptions to supply lines, he said.

The price of district heating will be kept level, and the government will launch a programme to provide all flats on the grid with individual meters, he said. The latter will involve some 140,000 apartments and take 4-5 years, he said.

Concerning Hungary’s talks with the European Commission, Gulyas said consultations were ongoing on the procedure regarding the conditionality mechanism which links EU funding, the post-pandemic recovery fund and the seven-year EU budget to the rule of law. The EC aims to conclude the conditionality mechanism procedure first, and the government has accepted this, Gulyas said.

The government agrees with the EC that the efficient and transparent utilisation of EU funds is a shared interest, he said, adding that the government has provided all the guarantees the commission has requested, adding that the two sides had reached an agreement on every professional matter.

Gulyas expressed hope that the talks conducted in Brussels by Justice Minister Judit Varga, Tibor Navracsics, the minister for regional development, and Janos Boka, the state secretary for EU affairs, would produce results. He also called on leftist MEPs to stop working on “blocking Hungary, Hungarian teachers and health-care workers, from the EU funds Hungary is entitled to.”

Meanwhile, Gulyas said Hungary will revamp its bond strategy. The state debt management centre (AKK) will issue bonds with an initial interest rate of 11 percent, the “best offer on the market”, this September, he said.

Asked about the price cap on firewood, Gulyas said the cap would be in effect from next Thursday until at least the start of heating season. The government has been consulting forestries and the agriculture ministry about the scheme, Gulyas said, citing the ministry as saying that if the firewood were to run out, there would be capacity to fell more. Meanwhile, he said the government’s calculations indicated that the price of district heating can remain unchanged for the coming winter.

The government is also discussing energy costs with local councils, Gulyas said, adding that he will meet the head of the Association of Cities with County Rights this week. Local councils have a responsibility to try to save energy on their own and save enough money to be able to pay the increased prices, Gulyas said, adding that was prepared to talk to everyone and help those it can.

The government aims to keep creches, kindergartens and schools open, he said. Basic services must be guaranteed everywhere, but if necessary the government is prepared to intervene to ensure that they are provided, Gulyas said.

The government will take steps to get state-owned energy provider MVM to offer discounted prices to local councils, he said.

Meanwhile, Gulyas said the cabinet will discuss price caps on basic foodstuffs next week or the week after.

On another subject, Gulyas said the government had yet to understand the EU’s proposal to impose a price cap on Russian gas and was awaiting the details. He added that because Europe was importing its gas, there was no point in discussing a price cap for now.

If the sanctions on Russian energy were to be lifted tomorrow “everything would be halved, including prices and inflation”, Gulyas said, adding that the European Commission had chosen to go “in the opposite direction”. This is not hurting Russia, but rather “handing it huge profits”, he insisted.

Gulyas said it was hard to see how Ukraine could “get back on its feet”, so the country needed to be helped. “But because of the damage caused by the sanctions, eventually there will hardly be any European countries that will be able to help, which could lead to a tragic situation,” he added.

Asked about calls to ban EU visas to Russians, Gulyas said he agreed with the view that there was no point in imposing such a restriction.

Asked about reports that the opposition had received funding from abroad for its election campaign, Gulyas said this was illegal and needed to be investigated. “If someone receives money from abroad, it can’t be ruled out that they’ll eventually start representing foreign interests,” he said.

“The accusation in question is serious, and there’s already a confession,” Gulyas said, referring to comments from Peter Marki-Zay that his campaign had received financial support from the United States.

Concerning EU enlargement, Gulyas criticised the bloc for “discouraging” Serbia from wanting to join, adding that Serbia’s EU membership would be in the interest of both parties.

Asked about the Polish prime minister’s remarks on the Visegrad Group, Gulyas called Polish-Hungarian cooperation the “engine” of the alliance, with all member states benefitting from it. The two countries had fallen out over their approach to the Russia-Ukraine war, he said, adding: “If we can agree to disagree and focus on things we do agree on, there is no reason why we shouldn’t be able to strengthen V4 cooperation. That is in the interest of all countries involved,” he said.

Responding to a question on the crisis in the production of artificial fertilizers, Gulyas said 70 percent of the product comprised natural gas. Until the European Union finds a way to break skyrocketing prices, “we will have to find alternative solutions”, which is under the agriculture ministry’s purview, he said.

Regarding next year’s budget, Gulyas said the government currently had no plans to amend the law. Amendments are still possible after the economic November-December indicators have been reviewed, he said. The details will be decided on later, as the economic prospects for next year are extremely uncertain, he added.

In response to a question on whether the government successfully bought another 700 million cubic meters of gas, Gulyas said Hungarian gas reserves were currently 65.4 percent full. That is enough to provide for 81 days of industrial and household consumption, or 175 days of household heating, he said.

Gulyas said the government was setting up the Integrity Authority, a body to review and, if necessary, suspend EU tenders. The body was set up at the request of the European Commission, which the government “has not objected to”, Gulyas said.

In response to question concerning the Matrai power plant, Gulyas said the coal-fuelled plant would “definitely” operate at least until 2029. Meanwhile, green investments will be ongoing, he said.

On the topic of the upgrade of the Paks nuclear power plant, the minister said the head of the company will handle works related to the investment and that it was “realistic” that major construction could begin next autumn.

The government is planning to set up a cement plant to avoid supply chain disruptions as other plants sputter, he said.

Asked about the state’s involvement in the purchase of Vodafone, he said an assessment of the company’s value was under way, and the state would await its outcome.

Meanwhile, Gulyas said the government may decide on any additional pension hike in September.

He said it could not be excluded that large employers may be provided with central support for overheads.

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