In a bid to put a stop to the rise in utility bills the Hungarian government has also strategic motivations to create a public utility system that is operating on a non-profit basis. But it is also a possibility that the German owners do not wish to sell their Hungarian subsidiaries, said Deputy Prime Minister Tibor Navracsics in an interview with public television M1 on Wednesday morning.
Navracsics said households have such massive utility arrears that already means “social risks" therefore the cabinet needs to see to it that rising energy prices do not burden the population if possible.
Taking over E.ON is treated as a national strategy issue, he added. The world showed, he said, that owning energy companies is after all a security issue and it is not by chance that the majority of European countries have kept these firms in state hands.
Navracsics noted that as in all negotiations it is also “on the cards" that E.ON’s German owners will not sell their interests to the Hungarian state.
The Justice Minister also emphasised that before the transaction they will need to assess the European community’s legal environment to see whether nationalising the company would not collide with competition rules. He added that the European Commission will presumably be suspicious in this case, but it is no problem because as the “guardian of treaties" that is its job.
Navracsics reiterated his view that voter registration needs to be easily accessible for everyone in the country so that people can freely practice their right to vote. He said pre-registration in itself can affect turnout in the next elections, but the effect is not of key importance. Previous experience show that if the voters detect a political sentiment, in which they feel the need to vote in any case then they will also go and register for the vote.
Navracsics noted that three “not negligible" groups will definitely need to register anyhow: (i) people with dual citizenship without place of residence in Hungary who are therefore not included in the electoral roll, (ii) citizens who decide on the parliamentary representation of ethnic groups and (iii) qualified voters who will be abroad on the election day.
In an analysis published earlier this year, political consultancy and research institute Political Capital said “nothing justifies" the introduction of the prior registration as a safeguard for a clean election “as Hungary’s population registry system has never been questioned in past elections."
“For in Hungary a popular tendency of alienation from politics and voter apathy are major problems, and in this environment pre-registration, would only increase the number of passive citizens instead of increasing participation," it added.
Utility arrears are indeed at high levels. According to May figures of the Hungarian Energy Office, overdue bills to electricity, natural gas and district heating service providers exceeded HUF 140 billion.
Irrespective of that it is unclear how the government would be able to provide cheaper energy services to households by buying E.ON’s local interests.
If the cabinet decided to disregard market factors it would practically make energy service provision part of the redistribution system. In that case it would seem to be a simpler solution if it provided support for the needy from budget sources and did not engage in a transaction that cost a few hundred billion forints. In the long run distorting energy prices can cause serious competitive disadvantage for the economy since it could thwart efficiency-boosting investments that would enable the production sector to remain competitive amidst normal market conditions.
Navracsics said it is “on the cards" that the Germany utility giant will not want to sell is Hungarian interests, which kind of tones down the recent official communication, as until now it looked like the talks on the deal are about to e completed.
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