Hungarian PM slams "scandalous" court decision on energy tariff cuts

By bne IntelliNews March 12, 2013

bne -

Illustrating exactly why he has gone to all the bother of amending the constitution, Hungarian Prime Minister Viktor Orban on March 11 slammed a court decision in favour of the country's foreign-owned gas distributors over the government's 10% cut in tariffs. He pledged to enforce lowered energy prices, come what may.

Hungary's gas traders won an initial ruling in a lawsuit against the Hungarian Energy Office (HEO) over the January reduction of network access fees, business daily Napi Gazdasag reported on March 8. The lowering of the fee was part of the 10% cut to retail energy tariffs implemented by the government as part of Orban's strategy to make utilities "non-profit". The country's electricity distributors are awaiting a ruling on a similar case this week.

The judgement for Hungary's gas distributors is not final, which may have influenced Orban to reveal his fury over the impudence of the court in finding against his wishes. "On behalf of the government I must say that the decision of the court is scandalous," Orban said, according to Reuters. He added that the government won't accept the decision, and that it will submit a new proposal to parliament for even bigger price cuts.

With elections due next year, the ruling Fidesz party has been pushing to lower household costs for the whole range of utilities, including energy, water and waste. Officials have recently said that the government plans to slash energy bills by a total of 30% by the middle of 2014.

However, the utilities argued successfully to the court that the regulator failed to take into account the extra financial burdens that the government has placed on them. Since Orban came to power in 2010, those sectors of the economy dominated by foreign investors - in other words the banks, utilities, telecommunication operators and retailers - have had new taxes and regulation piled on top of them. The gas companies insist that when making its decision the regulator did not factor in Hungary's public utility infrastructure tax, financial transaction tax and the hike to the Robin Hood tax.

Orban's comments came the same day that the Fidesz-dominated parliament approved controversial amendments to the constitution, which will limit the power of the country's constitutional court to curtail the government's attempts to introduce new legislation. The vote drew tough criticism from both Brussels and Washington, which the PM used to tell his domestic audience that Budapest will not cave in to interference in its internal affairs.

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