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Liberalization of electricity market should continue

European Union competition commissioner Neelie Kroes said in an interview on Wednesday that the liberalization of Hungary's electricity market should be continued.

Kroes said Hungary implemented key reforms in the electricity sector after the country's EU accession in order to boost competition and investments, however, the measure to separate ownership was modified two years later. Also, competition could be expanded on the retail markets for gas and electricity, where the percentage of consumers switching to alternative service providers remains low, especially among small businesses and households. Furthermore, public funds given to companies, including certain company- or sector-specific funding, could be spent on financing research and development, Kroes added in the interview published in business daily Világgazdaság.

Speaking of the liberalization of Hungary's telecommunications market, the EU commissioner said the opening of the market has resulted in lower telecommunications charges, innovative developments such as mobile broadband and IP-based television services, and greater choice for consumers.

As a result of the opening of the gas market, there are a number of Hungarian and other European energy providers competing for consumers. However, the number of gas importing companies remains low, which restricts further competition.

In the electricity sector, the major Hungarian power generators were protected by long-term power purchase contracts until 2008. The sales volumes and prices of these companies were guaranteed by the state, which prevented the emergence of competition on the wholesale market, which could have resulted in lower prices. This was the subject of the European Commission's decision dated June 2008, which stipulated the phasing out the long-term power purchase agreements by the end of 2008, Kroes recalled. (MTI-ECONEWS)