Government to limit eligibility for capped fuel price

Gergely Gulyas told a regular press briefing that MOL’s main refinery in Szazhalombatta, near Budapest, which covers 100 percent of Hungary’s fuel needs and refines Russian crude, has had to be shut down for maintenance work. Hungary will now have to source its fuel supply from imports and by freeing up one quarter of the country’s strategic reserves, he said.

The decree on the government decision will be published on Saturday, Gulyas said.

Whether a vehicle is eligible for the capped fuel price will be determined based on the barcode on its registration licence, he said.

As hitherto, the market price applies in the case of vehicles of over 7.5 tonnes with Hungarian license plates and vehicles with foreign license plates, as well as fuel cans.

Gulyas noted the war in Ukraine and the related sanctions had buckled Europe’s energy supplies, with the price of crude and natural gas skyrocketing.

There are no guarantees, he added, that crude deliveries would be continuous in the autumn and winter, so releasing the entire strategic reserves was off-limits, and only as much as there is a “real chance” of replacing in the next six to nine months could be freed.

The quarter of strategic reserves and MOL reserves would only satisfy a portion of domestic needs, so the rest must be covered by expensive imports, he added.

From December, refined diesel cannot be imported from Russia since it is covered by the EU embargo, he noted. Remaining reserves are only sufficient for residential consumption, he added.

Gulyas said the Hungarian Petroleum Association on July 27 told the government that imports had dropped significantly, and he mentioned high prices and problems with Austria’s Schwechat refinery which hampered procurement. Low water levels along the River Danube is also constricting the imports of fuel by barge, he added.

It is not known how long the Szazhalombatta refinery will be shut down, Gulyas said, explaining that restarting the plant was a complicated process prone to errors, but MOL was keeping the government informed of progress.

Fully 155 kilotonnes of diesel — 184 million liters — will be released in August, he said, 38 percent of strategic diesel reserves.

Meanwhile, the PM’s chief of staff said it would be clear that Europe is switching to a wartime economy if the European Union declares an energy emergency.

Gulyas said such an eventuality would unmask the bad faith of politicians who have claimed that the war would have no effect on Europe. Such a crisis would present difficulties for households and could push the European economy into recession, he added.

He noted that Hungary did not vote for the EU mandate to reduce gas consumption by 15 percent but the country would be forced to comply with it nonetheless. This, he added, was achievable.

All opportunities for replacing gas should be considered for implementation in both the short and long run, he said. “It’s definitely worth escaping from [reliance on] gas.”

Gulays said prices above 200 US dollars per barrel would severely dent Europe’s competitiveness globally, while signs of a swift end to the war in Ukraine were few and far between.

He said Hungary’s government body for handling the energy emergency was drawing up measures such as increasing lignite production and restarting the mothballed blocks of the Matra Power Plant. The government has decreed that firewood can only be taken out of the country with a permit, and forestry managers have been ordered to increase production.

Regarding the operative body handling the drought, he said proposals and decisions had been made, and the minister of agriculture would reveal the measures on Sunday.

The prime minister’s chief of staff said that talks are under way on a daily basis about an agreement with the European Union. Gulyas said there were no significant professional disputes between the two sides and the European Commission was trying to achieve an agreement that it could politically represent in other European forums. The sides will be able to reach an agreement on certain matters very soon but there are some details that still need to be clarified, he added.

It has been agreed that teachers’ wages will be increased to 80 percent of the average wage for degree holders by the end of the current EU financial framework, he said, urging left-wing MPs and MEPs not to make efforts to prevent the increase in teachers’ wages.

Gulyas welcomed a recent report by the OSCE which he said esentially established that the parliamentary elections in Hungary had been held at a high standard, in a free, democratic and fair manner.

The prime minister’s chief of staff also said that there were some 2,000 human smugglers in prison in Hungary, 88 percent of whom are foreigners and 97 percent male. Hungary’s prison capacities are sufficient but such inmates pose a great burden on the country therefore their expulsion is a preferred choice, he added.

Government spokeswoman Alexandra Szentkiralyi said that 860,000 refugees had arrived in Hungary so far fleeing from the war in Ukraine, some 27,000 applied for and 23,000 were granted refugee status.

In response to a question, Gulyas said a visit by Foreign Minister Peter Szijjarto to Ukraine was not on the agenda.

Commenting on a speech by Prime Minister Viktor Orban at the Baile Tusnad Summer University a week ago, he said the position of the prime minister and his government concerning migration had been well-known for years and the speech addressed cultural differences.

Concerning the recruitment of “border rangers” to protect the Schengen borders, Gulyas said over 6,000 people have expressed interest so far. The interior ministry has envisaged to set up a 2,200-strong force by September which will later be expanded to 4,000, he said.

Gulyas said that at recent talks between Orban and the Austrian chancellor, the protection of the EU’s external borders was a highlighted topic. Austria has offered help for the protection of southern borders, he added. It was agreed that the two countries’ prime ministers would meet the Serbian president in the coming weeks, he said. It is a problem, however, that Slovenia’s new left-wing government had immediately started dismantling the fence along the Croation border, Gulyas said.

Asked if the government plans to grant families further assistance in terms of utility prices, Gulyas noted that families with three children were eligible for an additional 600 cubic metres of gas at preferential prices and 300 cubic metres after each further child.

Gulyas said Hungary’s gas storage facilities were filled up with 3 billion cubic metres, corresponding to half of their capacities. If they are totally filled up, the total amount will cover residential consumption up until next April, he said.

In reply to a question, Gulyas said that the price of gas is 2.68 eurocents in Hungary, as against 23.78 eurocents in Sweden and 23.19 eurocents in the Netherlands. While an average German family pays 4.4 million forints (EUR 10,890) a year for gas, the corresponding figure is 200,000 forints in Hungary, the prime minister’s chief of staff said.

Asked about what has changed in the gas market, Gulyas said that inexpensive Russian gas is no longer available. Although the new agreement concluded with Russia is more favourable than the previous one, the Hungarian government, as it did in the past, will not disclose further details, he said.

Asked about taxi drivers, Gulyas said that if they were obliged to pay the market price for petrol or diesel, their fares would go up by 60 percent immediately.

Gulyas said the government would provide detailed information about the programmes scheduled for the national holiday of August 20.

Concerning Polish Prime Minister Mateusz Morawiecki’s recent statement that Hungary and Poland are making different approaches to the war in Ukraine, Gulyas said that both countries had condemned the Russian aggression, the violation of an independent nation’s sovereignty by the armed forces of another country. Hungary has also expressed solidarity with and assisted refugees arriving from Ukraine, he added.

It is a matter of debates with Poland, however, whether arms deliveries are prolonging the war or helping Ukraine restore its territorial integrity, he said. Asked if Ukraine should relinquish some of its territories to Russia, Gulyas said, “we do not want to make a statement in what is an Ukrainian affair”.

However, if someone considers the progress of war, it makes no sense cherishing illusions, Gulyas said, adding that the position of several western politicians that Ukraine should win the war might be morally correct but there is no real chance for such a victory.

Asked about shortage of manpower in health care and education, Gulyas said that the number of physicians had increased by 7,000 since 2010. There might be shortages in some areas but in general the medical profession is staffed properly, he said. As for teachers, Gulyas suggested lifting the restrictions for their employment over retirement age.

Concerning the infringement procedure the European Commission launched against Hungary, saying that banning the access of foreign motorists to fuel at the capped prices available for Hungarians violated the EU principles of free movement and single market, Gulyas said the government would reply to the EC within two months, by deadline.

In reply to a question, the prime minister’s chief of staff said that the Budapest stadium to host the 2023 World Athletics Championships would be completed in time, within the budgeted costs.

Opposition parties slam decision

The opposition parties said on Saturday that the government’s latest decision “to partially withdraw” capped fuel prices represented a severe hit on small businesses, an additional step that boosts inflation and a move away from green solutions.

The Democratic Coalition (DK) said in a statement that ruling Fidesz was gradually withdrawing from more and more drivers the possibility of buying cheap fuel. “This will continue until so few drivers are eligible to buy fuel at the regulated price that the scheme can be cancelled without anyone noticing,” it added.

“First, over 12 years, they brought Hungary to ruin, then lied to the whole country before the election and since then, they have been introducing austerity measures, raising taxes, utility fees and fuel prices, making people pay for the consequences of their government,” DK said.

Jobbik said the decision was a severe hit on small businesses whose operation had already been hampered by decisions in recent weeks. The government allowed only a few hours for small businesses to prepare for having to pay market prices at the petrol station, it added.

Jobbik reiterated a party proposal to waiver VAT on utility fees, provide direct support to those that suffered from recent changes to the itemised small business tax KATA and utility fees, offer preferences to families with one and two children and extend the cap on utility fees to small businesses.

Parbeszed said in a statement that the partial withdrawal of fuel price caps would result in more expensive transport costs and businesses’ increased costs will be transferred to consumers.

Momentum proposed reducing road tolls affecting transporters. “It could reduce inflation running amok so as to prevent the brutal petrol price increases from resulting in brutal food price increase,” the party said.

LMP said the decision was proof that Fidesz had “an aversion to green solutions”. Hungary’s dependence on fossil energy is the result of 12 years of faulty government policies, it added. The party slammed the government for its refusal to comment on its proposal to introduce a monthly 5,000 forint (EUR 12) pass for all means of public transport.