Orbán: Households to still pay capped energy bills

All Hungarian families will continue to pay capped prices for electricity and gas up to average consumption, Prime Minister Viktor Orbán told public broadcaster Kossuth Radio on Friday.

Families are estimated to save 56,000 forints (EUR 138) on electricity per month and 146,000 forints (EUR 362) on gas bills compared with market prices, Orbán said. While maintaining the utility price caps cost the budget 250-260 billion forints last year, the costs will grow up to 2,000 billion forints this year, he said. Hungary’s budget would not be able to bear such a burden, he said.

At the same time, it is certain that the cap can be maintained for the rest of the year, Orbán said, adding that it would be clear in October “whether Europe will get dragged into a wartime economy.” The government determined low market prices for households, “to avoid providers turning even a single forint of profit on household prices,” he said.

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Hungary has enough natural gas, but “gas prices will present a difficulty,” Orbán said. The prime minister said Péter Szijjártó, the minister of foreign affairs and trade, had been working on establishing alternative supply routes for years. The majority of Russian gas is now flowing to Hungary through a pipeline recently constructed via Turkey and Serbia, Orbán said. Hungary also imports some 1.5 billion cubic meters of LNG gas through the Croatian interconnector.

Hungary is also working on increasing domestic production and is in talks on buying 700 million cubic meters from Russia above the volume contracted in its long-term agreement with that country, he noted. “These [measures] together will cover us,” he said.

Meanwhile, the government is also working on helping households to abandon gas consumption wherever possible, Orbán said: commissioners László Horváth and Gábor Riz are currently working to restart the closed coal-fueled blocks of the Mátra power plant and on reopening lignite mines in northern Hungary. The government imposed a ban on firewood exports, and forestries have been requested to present plans on stepping up firewood production, he said. Lászlo Palkovics, the minister of technology and industry, has been requested to set up a “stove and furnace scheme,” he said.

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Referring to EU efforts to solve the problem of dwindling gas supplies, Orbán said the procurement of gas was “a matter of survival”, so it was “better if we can rely on ourselves” rather than Brussels. He insisted that the EU plan to cut gas consumption by 15 percent was “not working”.

The prime minister cast doubt over the successful outcome on the battlefield of American training of the Ukrainian army or that sanctions would “shake the Russians”. Also, sanctions were likely to backfire, he said, adding that Europe was on course for a wartime economy from October.

Without a deal with Russia, energy supplies cannot be replaced entirely elsewhere due to a lack of capacity, so a new strategy is needed that focuses on securing peace, Orbán said, urging ceasefire and peace negotiations. Orbán said the US had a key role to play, arguing that the war in Ukraine was a “proxy war” into which “the West has drifted halfway”. A US-Russia agreement would ensure “security and stability”, he added.

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The prime minister said that on the economic front, the government had worked out a series of measures to prevent “trouble”. “We’ll battle the recession,” he said, outlining measures such as the extension for another two years of the reduced 5 percent VAT on housing construction after its original expiry at the end of this year.

Meanwhile, he said the drought in Hungary was not threatening the country’s food supplies. Hungary’s agriculture has the capacity to cover the needs of 10 million people even under such circumstances, he said. At the same time, exports will shrink, he warned. While the economy will lose revenues, Hungarians’ food supplies are not at risk, he said.

Regarding damage control for farmers, Orbán said the fund for such purposes was exhausted. The government has set up a working group to work on aid for farmers, and its decisions will be announced in the next week or so, he said.