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Infringement procedure: The end of the Hungarian Energy Association’s golden age

After a series of violations to the EU’s energy regulation, the Hungarian government is now faced with an infringement procedure. With this, the Orbán-cabinet will finally have an official document proving that what the government does in the energy market is not only beyond rationality and against consumer interest but also against EU requirements. Although not heard on the news, the procedure can end the absorption of money by the privileged and Fidesz-friendly MET (Hungarian Energy Association).

Fidesz immediately started its mantra about how Brussels is attacking the government’s efforts in the reduction of utility costs; therefore, it is important to clarify some points.

  1. The procedure was put into effect because of a failure to adapt the third energy package in 2011, when the reduction of utility costs was yet unheard of.
  2. In countries where the energy package was consistently adapted (e.g. in the Czech Republic), energy costs became more favorable than in Hungary, and also on a market basis.
  3. One of the conflicting points between the EU and Hungary is the construction of the tariff-system: energy costs are most heavily taxed in Hungary, which evidently raises the prices, while weakening the position of vital investments in the energy sector.
  4. The main source of conflict is whether service-providers have equal access to the supplies of the cross-border gas pipeline connecting the Austrian Baumgarten with Hungary. As of now, gas is cheaper on the free market than in Hungary; however, only two stakeholders, MVM and E.ON, have access to it, which, according to the European Commission, goes against competition rules. All we can add is that the situation created by the government is even more corrupt than what it seems. E.ON’s gas business was since purchased by the government, and within the framework of an anti-corruption procedure, MVM signed off their own capacities to an oligarch company with an offshore background, namely, MET, which, as a result of vague business dealings, gave a 50-billion-forint-share to its mysterious owners, among them István Garancsi.

It is not the first time that the “war of independence against Brussels” turns out to be a complete hoax: again it is the EU who has to protect Hungarian people – this time from Orbán-friendly oligarchs doing pirate business on the energy market with governmental help. Dialogue for Hungary demands the Orbán-government to draw the consequences and to avoid making the Hungarian tax-payers pay for the sanctions laid out for going shares in the energy-market.