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Market liberalization to boost electricity prices

Household electricity prices may jump by as much as 20%-30% if the government decides to terminate long term contracts it signed with power companies in the mid-90’s, daily Magyar Hírlap reported, without citing anyone.

Hungary’s government will soon be forced to start negotiations with power companies over the fate of these contracts as full electricity market liberalization is just around the corner, the paper said, adding that if the government decides to tear up the contracts it may have to pay the utility companies up to Ft 250 billion - Ft 300 billion ($1.37 billion – $1.65 billion) in compensation for lost revenues. This, in turn, would drive up retail electricity price within months, the paper said. Hungary has pledged to open up its electricity market to free competition by July 1 this year. (Magyar Hirlap)