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State secretary: Govʼt plans further investments in energy sector

Energy Trade

The Hungarian government is planning additional investments in the energy sector, state secretary Zsuzsa Németh said at a conference today, Hungarian news agency MTI reported.

The state could acquire energy distributors as well as traders under one proposal, Németh said at the Portfolio Energy Investment Forum 2015.

The proposal, which has not yet been submitted to the government, envisions a separation of the owners of the assets of such distributors and their operators, she said. The operators would function through state-owned utilities company ENKSZ, while their assets would be owned by an infrastructure fund, she added.

The measure would aim to minimize the fiscal impact, she said, adding that the government had no intention of buying energy companies "at any price".

Such acquisitions could be financed with a bridging loan from the Hungarian Development Bank (MFB) until the end of 2018, Németh said. From 2019, the MFB financing could be replaced with other resources, such as monies from institutional investors, retail investors and long-term international loans, and the infrastructure fund could even apply for European Union funding, she added.

The companies would pay producer prices for electricity generated by the Paks nuclear power plant, she said. Payments into a decommissioning fund for the plant could be suspended for a period, though this would require consultations with the EU and international organizations, she added.

At present, household gas suppliers buy domestically produced gas from traders, but from the next gas year, ENKSZ could buy this gas directly from oil and gas company MOL, Németh said.

The proposal aims to maximize synergy between the state-owned Hungarian Electricity Works (MVM), MOL, MFB and the state-owned postal company Magyar Posta, within the boundaries of EU and international rules, she said. Profit will not be the primary goal, rather earnings will be plowed back into the businesses, ensuring secure operation, she added. If the system operates well, the government could weigh further utilities price cuts, she said.

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