"Hungary’s licensed natural gas service providers could request a 15-20% price hike as of July, local daily Népszabadság reported. Their main argument could be the weakening of the forint versus the US dollar, it added.Meanwhile, right-leaning daily Magyar Nemzet expects a 10% price increase. It learned, however, that the new government has already started talks with the gas distributors to cut tariffs. The best case scenario is that prices will not change, the paper added.
According to Népszabadság, consumers can expect to pay 15-20% more for natural gas as of July, mainly because of the forint’s depreciation against the USD.
Portfolio.hu viewpoint:
We need to note that we are still around half into the period that is taken as the basis to determine exchange rate impacts therefore we can expect some changes here. The question is whether the Fidesz cabinet will be willing to approve such a drastic price increase. Although gas prices are regulated by the state on the bases of a formula, the previous government had no scruples about amending the related decree so that gas prices would not go up by more than 10% (on average) from April 2010.
A number of experts warned already then that the amendments will have only a short-term price dampening impact and the changes to the accounting of inventory-related expenses could lead to higher prices already in July. And there is one more thing to remember, namely that the "extended" gas price subsidy regime will end come July. Therefore the new government will soon need to start thinking what to do about this, because the previous Socialist government had on plan in this regard for H2, which means no funds had been earmarked for gas price subsidies in the budget for the second half of the year."
Source: Portfolio Online Financial Journal
15.07.2010