* Legislation being prepared by Development Ministry
* Part of government drive to reduce household energy bills
* Government plans new round of energy price cuts next month
* Ruling party gears up for an election in April or May 2014
By Gergely Szakacs and Krisztina Than
BUDAPEST, Oct 9 Hungary is drafting legislation
to ban dividend payments from utilities, Development Ministry
State Secretary Janos Fonagy said on Wednesday, as the ruling
Fidesz party tries to boost state influence in the energy sector
before a 2014 election.
Prime Minister Viktor Orban's government, which says
Hungarians pay too much for energy bills relative to what they
earn, has already flagged legislation to transform utilities
into non-profit organisations.
Germany's E.ON and RWE, France's EDF
and GDF Suez and Italy's Eni all own
substantial stakes in Hungarian utilities. The companies either
declined or were not immediately available to comment.
Fonagy said on state television that services forming a
"natural monopoly", such as gas, electricity, water and others
"serving important public interest" should come mostly under
central or local government ownership on a non-profit basis.
"The profit generated as a result of decent corporate
activity could not be extracted as dividend, but rather, it
should be reinvested into the operation, maintenance and, very
importantly, improvement of the service," he said.
The European Commission has declined comment on recent
changes in the utilities sector in Hungary but said it was
monitoring developments in all affected EU member states.
"The Commission will continue to insist on phase-out
timetables for regulated prices being part of Member States'
structural reforms," the Commission's office in Budapest said.
"Furthermore the Commission will continue to promote
market-based price formation in retail markets, including
through infringement cases against those Member States
maintaining price regulation that is not meeting the conditions
laid down by EU law," it said in an emailed response to Reuters.
Orban, whose government has already imposed a 10-percent cut
in household power bills from January and plans new reductions
next month, has said his administration was in talks to buy out
6 or 7 major utilities.
Orban, who says he has saved Hungary from financial
collapse, is still battling to lift it out of a protracted
period of economic weakness, and his interventionist policies
have often scared investors.
Eric Depluet, the head of E.ON's Hungarian unit, has
rejected the government's rhetoric against banks and utilities.
"We have come here not to colonise, but because we had been
invited, and we took on business risk and made serious
investments," he said last week.
The Hungarian state has already bought E.ON's natural gas
trade and storage units via state-owned MVM as well as a
51-percent stake in gas storage company MMBF from MOL.
MVM has said the transaction would give Hungary a greater
say in energy prices. MVM also said it would seek to renegotiate
a long-term gas import contract with Russia's Gazprom,
which supplies most of import-reliant Hungary's gas needs.