Hungary price regulation "strong" but not uncommon -GDF Suez
SIOFOK, Hungary Oct 17 (Reuters) - The regulatory impact on Hungarian energy prices is "strong" but not uncommon in Europe, an official of French power group GDF Suez said on Thursday.
Prime Minister Viktor Orban's government, which faces an election in April or May 2014, has enforced cuts in electricity, gas and heating prices of 10 percent which took effect in January and is planning further cuts of 11.1 percent from next month.
Orban's government, which is in a drive to boost state influence in the energy sector, says Hungarians pay too much for energy relative to what they earn. The measures are also part of efforts to lift consumption and boost the indebted economy.
"What you see in Hungary, the regulatory impact on the market ... it is very strong but is not uncommon," Willem Coppoolse, head of illiquid gas markets origination at GDF Suez told a gas conference in the western town of Siofok.
"Everywhere in Europe the state intervenes in tariffs, in the way a business is structured," Coppoolse said. "It is very tempting to influence and try to dictate to the market, especially on the retail prices which are very sensitive."
The European Commission has said it was monitoring developments in all affected EU member states, also flagging possible infringement cases against states maintaining price regulation systems that do not comply with EU rules.
The Hungarian government is also planning legislation that would ban dividend payments from utilities.
Coppoolse did not explicitly mention the government-imposed price reductions. GDF Suez is involved in the operation of distribution systems, retail and power generation in Hungary, he said.
He cited the company's domestic market, France, where GDF Suez is the main supplier to retail customers. He said the company has had big battles over price setting with the government, which still controls about a third of GDF Suez shares.
"We have been fighting to defend a very simple principle, that, okay, if you are the main supplier at regulated prices, these prices should reflect your import contracts," Coppoolse said.
"After a very long battle, after very strong actions and discussions ... this item is now getting normalised and now we have a good approach for the tariffs for retail customers, with a strong incentive of course to get better prices," he said.
Economy Minister Mihaly Varga was quoted as saying on Saturday that household energy prices could be cut by yet another 10 percent before next year's election. (Editing by David Holmes)
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- U.S. war veteran released by North Korea returns home |
- WTO overcomes last minute hitch to reach its first global trade deal
- China's parliament: Japan has "no right to criticize" air defense zone
- Ice storm causes blackouts, delays in Texas, Arkansas