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Hungary says committed to end power monopoly

Hungary is committed to end the near monopoly of state-owned power wholesaler MVM and will draft legislation by the end of April to better regulate the firm.

The government will also end or renegotiate MVM's long-term power purchase contracts that have impeded competition, and is determined to spin off the power grid and the system operator, Economy Minister Csaba Kákosy told a news conference.

MVM owns two of the top three Hungarian power generators, the entire grid, controls 75% to 80% of the wholesale market through long-term contracts and controls cross-border capacity. It recently purchased a 10 % stake in electricity retailer Elmü.

Kákosy said the government planned to change regulations to declare MVM a firm with significant market power, which would allow the regulator to more closely control its activities.

Prime Minister Ferenc Gyurcsány asked Finance Minister János Veres last week to fire the MVM's chief executive and draft legislation to end the company's monopoly as it had become overly dominant, resulting in unreasonable price increases for households.

Hungary's central bank recently warned that poorly-crafted energy sector regulation will push up inflation, while the competition office said that under current regulations, competition is unlikely to develop. (Reuters)