EU tells Hungary to end long-term power deals

History

The European Commission has told Hungary to end long-term power purchase agreements for electricity, saying they constitute unlawful state aid to power generators.

The purchase agreements should be terminated by the end of this year and Hungary must recover the aid granted to the firms since the country's EU accession in 2004, a statement from the EU executive said on Wednesday. “The phasing out of long-term purchase agreements is a crucial step in the liberalization of the electricity market in Hungary,” Competition Commissioner Neelie Kroes said in a statement. “The termination of very similar agreements in Poland in April this year has already led to lower electricity prices,” she said. “I hope that the advantages of genuine competition both for competitors and for consumers will become apparent on the Hungarian market as rapidly as they have in Poland.”

Around two thirds of the electricity generated in Hungary is sold under long-term power purchase agreements to the state-owned national power wholesaler MVM Zrt (MVM). The Commission concluded that such agreements can restrict competition because they close off a significant part of the market from new entrants. The statement said power purchase agreements concluded between MVM and 10 power generators between 1995 and 2001 “have been conferring unlawful and incompatible state aid to these generators”. (Reuters)

ADVERTISEMENT

Almost half of Hungarians get fringe benefits, survey shows Analysis

Almost half of Hungarians get fringe benefits, survey shows

19,000 young jobseekers hired in expanded subsidy program Government

19,000 young jobseekers hired in expanded subsidy program

Manager screenings - not just for managers Interview

Manager screenings - not just for managers

Zsa Zsa Gabor's ashes buried in Budapest City

Zsa Zsa Gabor's ashes buried in Budapest

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.