Hungarian government announces state of danger due to energy crisis

At the government’s weekly press conference, Gergely Gulyás, Minister at the Prime Minister’s Office announced that the government is declaring a state of danger due to the developing energy crisis. He added that the purpose of this is to defend Hungary and the price caps on utility costs which have been in effect.

Handling the energy crisis

Due to the energy crisis, the cabinet has decided on 7 main points of action:

• Increase domestic gas production from 1.5 billion to 2 billion cubic metres;
• Foreign Minister Szijjártó has been authorised to acquire additional gas reserves; the current gas reserves are enough for a quarter of the year, but more is needed;
• the government is imposing an export ban on energy carriers and firewood, except for storage rental;
• the government intends to increase coal mining as much as possible;
• all the units of the Mátra power plant must be restarted as soon as possible; they must be put to use;
• the government has initiated the extension of the operating life of the Paks nuclear power plant;
• as the war in Ukraine is dragging on, and the economy is stagnating, all those in Hungary who can do something for the security of the energy supply must do their part – Gulyás said. For this reason, as of 1 August, households where the gas and electricity consumption exceeds the average, will have to pay more (for the amount exceeding the average use) or will have to reduce their consumption. The extra funds from this will go into the energy protection fund.

The capped prices will continue to be granted up to the average of residential consumption. According to Gulyás, three quarters of Hungarian households will not be affected as their consumption does not exceed this limit.

Preparing for winter

Gulyás added that the government is doing all it can to ensure that there will be enough gas in the country in the winter. The storage facilities need to be filled up – they are currently at 44% capacity.

When answering a question, the minister said that the government is not planning on introducing measures like those that have been introduced in several Western European countries.

The price cap on fuel prices has been extended until 1 October 2022 for now. Gulyás added that as the situation is very fluid, the government might react in case of an unexpected event.

Why was the tax law change fast tracked?

To a question about why the tax law amendment was rushed through parliament in less than 48 hours this week – especially in light of the fact that the government had made a commitment to the European Commission to reduce this kind of fast legislation – Gulyás answered that when a proposal is submitted, it should be processed. The minister also said that the government is entitled to adopt legislation at an accelerated pace eight times a year.

As a reminder, it was because of this amendment that there were protests in Budapest on Tuesday, and the change is likely to affect several hundred thousand small business owners negatively.

On the EC’s latest Rule of Law Report

The European Commission's Rule of Law Report identifies shortcomings in several areas in Hungary. Will this prevent us from getting the funds from the RRF? – a journalist asked.

Not in principle, was Gulyás's answer. He added that there is no legal obstacle, but only the Commission knows the reason for the delay.

When asked for his view on the European Commission's latest rule of law report on Hungary, Gulyás said that this is simply a continuation of the smear campaign against the country, and that there is nothing interesting or colourful about it.