"The Hungarian government has announced it will increase the price of household gas by 9.9% from 1 July, which will force The Budapest district heating company Fõtáv to up its rates on both district heating and hot water by about 5-6%, which will first appear in the monthly bills in September, business daily Napi Gazdaság reported on Monday.The Ministry of Transport, Telecom and Energy announced the 9.9% price hike late Friday, saying that “The import price of natural gas is ultimately defined by the price of oil", adding that in the recent period the price of crude jumped by over 60% from USD 80 a barrel to USD 130 a barrel.
The paper also speculates that as the July increase will be smaller than it should be, another hike should be in the pipeline and projects that a 15% gas price rise is to be delivered in October.
While one cubic metre of gas cost households HUF 101 in December 2007, the third hike since then will take it up to HUF 123.2.
The political decision not to raise the price of gas for households by as much as it should be could put even the liberalisation of the gas market in jeopardy, the daily speculates. It said the government had earlier pledged to E.ON Földgáz Trade Zrt., the biggest natural gas trader in Hungary, that it would “work off" the loss the gas trader had been forced to accumulate due to previous regulations. This means that either a bigger gas price needs to come in the remaining of the year or that the opening of the market has to be put off, Napi Gazdaság said.
Daily Népszabadság calculated that the 9.9% price hike applies only to non-subsidised users, while in the four subsidized groups the price of gas will go up by 11.4%, 12.3%, 14% and 15.4%, respectively (the bigger the subsidy, the bigger the price hike).
In Hungary, more than half of gas users, some 1.6 million households receive some form of price subsidy."
Source: Portfolio Online Financial Journal
02.06.2008