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Hungary parliament to okay MOL stake buy by July

Hungary's parliament has until July 15 to approve the state's purchase of a 21.2% stake in Hungarian oil and gas company MOL according to a government resolution confirming the government's support for the purchase, the National Development Ministry said.

The contract, including payment conditions, will become binding after parliamentary approval.

The contract will be available for parliamentary discussion in full, in line with an earlier announcement of national development minister Tamás Fellegi.

The government designated the national assets management company MNV as buyer. MNV will exercise the state's ownership rights over the stake.

The government will prepare a report of the steps taken and on the fulfillment of the contract by the end of this year.

The resolution has authorized the national development minister to ensure the central budget funding necessary and to create the necessary legal conditions for the transaction, including an amendment to 2011 Budget Act.

Of the measures above, the government submitted to Parliament a bill to the 2011 budget on Friday to raise central budget expenditures by HUF 490 billion to HUF 14,337 billion and increase the deficit to HUF 1,184 billion because of the purchase. The transaction raises the budget deficit under Hungarian legislation, but does not cause Hungary's Maastricht deficit, calculated with European Union methodology, to increase.

Under the proposed amendments, Parliament is to approve the purchase of the 22,179,488 MOL shares in the name and for the benefit of the state. The amount paid for the shares is not to exceed €1.88 billion, thus the amount may differ from the appropriation in the budget because of exchange rate changes.

The government announced on May 24 that it reached an agreement to pay €1.88 billion to buy a 21.2% stake in MOL from Russian peer Surgutneftegas.

National Development Minister Tamás Fellegi said when the deal was announced that the state would use part of an already drawn earlier loan from the IMF to pay for the purchase.

Hungary has about €2.5 billion of its IMF-led loan on deposit with the National Bank of Hungary, Econews reported in February. Hungary was granted the loan after its bond markets locked up at the height of the financial crisis in the autumn of 2008.