Government cuts energy prices

Pro-government commentators welcome the government’s plan to nationalize gas providers and reduce energy prices. The leading left-wing daily, on the other hand, cautions against what it calls anti-market measures.

The government has announced that gas and electricity prices will be cut by 10 per cent from January 1, 2013, “in order to help Hungarian families”. According to the records of utility providers, hundreds of thousands of Hungarians are late with their monthly payments. It has also been announced that the government is buying back the main gas utility provider and storage capacities from EON (Germany).The former have been running deficits lately, while the latter have been profitable.

The Orbán government is doing what it can to prevent the burdens of Hungarian families from increasing, Zsuzsanna Körmendy comments in Magyar Nemzet. The pro-government columnist contrasts this approach with the policies followed by earlier (Socialist led) governments, under which gas prices doubled and electricity prices rose by 63.5 per cent, while the price of gas increased by 108 per cent. Körmendy adds that the average household spends 20 per cent of its income on utilities in Hungary, as against only 6 per cent in Germany. She also remarks that the price cut and the re-nationalization of gas providers should be cherished on the left as well, since both steps serve the interests of poor Hungarians.

The decision is a wise move both politically and rhetorically, Csaba Zsebők writes in Magyar Hírlap. Zsebők points out that the introduction of the flat tax two years ago did not help poor and middle class Hungarians; real wages have decreased, and thus reducing utility costs will be a relief for all Hungarian families. On the other hand, he remarks, the decision may scare foreign investors away from Hungary.

The bottom line is that the Orbán government wants to nationalize the energy sector, Népszabadság contends in a front page editorial. The left-wing daily believes that by reducing energy prices, the government wants to strengthen its bargaining position, and pressure the owners of suppliers into selling their assets. If the government really wants make basic services non-profit, we will soon end up in communism, Népszabadság warns. The author accuses PM Orbán of intending to directly control all the economy, instead of regulating it properly.

In a separate piece, Népszabadság reports that energy providers have accrued huge losses over the past years, and these deficits will be further increased as a result of the price cuts. While in the editorial Népszabadság believes those losses will be reflected in the low price the government will have to pay for the providers, the separate report suggests that after the nationalization of energy providers, the deficits will have to be covered by the tax payers.

Tags: energy, nationalisation, prices