Hungary is yet to sign E.ON gas business contract - Orbán (2)

(Adds more quotes by Orbán)
In his regular weekly interview with public radio MR1, Hungary’s Prime Minister Viktor Orbán addressed his recent visit to Brussels, the acquisition of E.ON’s local gas business and the excessive deficit procedure (EDP) he strives to exit. The PM still refused to name his candidate for the job of outgoing central bank (NBH) Governor András Simor.

On economic issues and the EDP

Orbán said he had discussed three subjects with European Commission President José Manuel Barroso. Firstly, they have reviewed all the disputed issues between Budapest and Brussels and “concluded nearly all of these". Secondly, they have assessed the situation of the Hungarian economy. In this respect Orbán said that due to the crisis in the EU, the bloc “needs success stories and Hungary is such a success story. If you look at the numbers, the country has regained its strength."

The third subject was the EDP and whether “this threat" should be maintained. “That is what will be decided in the spring," he said.

The PM added that Hungary “has a good chance" of exiting the EDP and “this is worth fighting for."

When asked about the uncertain budget items Orbán stressed that while the future is uncertain the deficit targets will be reached in the coming years too. He said the electronic toll collection system will be implemented just like the new cash registers with direct online connection to the tax authority.

On the IMF and funding

Orbán reiterated that Hungary asked the IMF for a financial safety net, a flexible credit line (FCL) what Poland also has, but it was rejected.

When confronted with the fact that Hungary is not eligible for such a facility, Orbán responded that “it is not a question of eligibility but will; they could have granted it if they had wanted to."

He said the credit talks with the Fund are not over yet. This comes on the back of a comment by Gerry Rice, Director of the IMF’s External Relations Department, who said on Thursday that (i) the Fund was always discussing policies for a Stand-By Arrangement and (ii) “these discussions have been put on hold."

Orbán emphasised that the state of the economy has improved, but added that “the IMF is focusing only on one thing: it wants us to terminate the bank tax and levy the people. The IMF is also a bank that is why it is protecting the interest of banks and would tax people," he said.

To a question where Hungary will raise funds if it needs to credit from the IMF, Orbán responded that “it is important whether our debt is in forint or foreign currency," adding that ratio between the two needs to be changed, referring to the fact that FX debt increases the country’s vulnerability.

“If it is worth for German billionaires to buy Hungarian government bonds, then Hungarian housewives should buy them too. I’m always saying this is good business that is why they should buy."

When confronted with the fact that borrowing from the IMF would still be cheaper, he responded that “we will see how much funding will cost domestically or from abroad."

On the new c.bank chief

Regarding the replacement of the NBH Governor, he said the decision was up to him, “but the people can be certain that another offshore knight will not be heading the NBH once again," referring to András Simor, who got into the cross-hair of Orbán’s anti-NBH rifle right after Fidesz won the first round of elections in 2010.

On his trip to Moscow

Orbán was on a one-day visit in Moscow, where he met Russian President Vladimir Putin and discussed energy issues with him.

“We were received with profound friendship," he said, adding that co-operation in the field of energy is a “sensitive and exciting" issue because Hungary simultaneously wants to regain its independence and maintain its energy supply security.

He underlined that “Hungary [...] can now import energy from three to four places; our dependence is gone. [...] But we are in talks how we could import gas in the long term from Russian territory."

Orbán also said it should be considered what means are at the state’s disposal to lower retail energy costs.

“The more power plant, storage unit and long-term contract we have, the more possibility we have to lower energy tariffs for households," he added.

On E.ON.

The PM noted that the state has just acquired the long-term natural gas supply contract with Russia from E.ON.

Orbán told local newswire MTI late on Thursday that Hungary has acquired the natural gas business of Germany utility E.ON, namely E.ON Földgáz trade (EFT) and E.ON Földgáz Storage (EFS). The purchase price has not yet been revealed but according to a press report, the Hungarian Electricity Works (MVM) was authorized to pay up to EUR 875 million for the assets.

In the interview Orbán did not want to reveal the purchase price, saying the contract has not been signed yet.

"I’m not sure the purchase price may be revealed before the signing of the contract," he responded to a question how much the state paid for the E.ON assets.

"We have had international companies make a value assessment, we’ve set the maximum price and we made the purchase well below that," he said.

This means the contract has not been signed yet.

When asked about a press report that the state-held MVM was authorized to pay no more than EUR 875 million, Orbán responded: "this is not unrealistic".

• Tags:
• interview,
• imf,
• economy,
• orbán,
• credit line