Hungarian government buys gas with brutal high euro loans

The Hungarian government has decided to create a special reserve of natural gas. To do so, it would be willing to take out a huge euro loan.

Creating a huge gas reserve

The Fidesz government wants to build up a huge stock of natural gas. A decree to this effect was published in the Hungarian Gazette. The maximum size of the special natural gas reserve is 7,811,000 MWh.

The decree was signed by Minister of Industry and Technology László Palkovics. The government will also take out a euro loan for the creation of a special gas reserve, up to a maximum of €1 850 million. But gas cannot be bought without a second thought. The maximum purchase price is the price calculated on the basis of market prices at the time of the contract, including system charges and the related price-fixing costs up to the virtual trading point of the domestic gas system, napi.hu writes.

In practice, this currently translates into an exchange rate of €210/MWh, according to CEEGEX. The cost does not include system charges. The regulation comes into force on Friday.

Read alsoHungarian government buys gas with brutal high euro loans

Gas security stocks disrupted in 2021

Last year, Fidesz dismantled the security reserve of natural gas. On 15 October 2021, Minister of Innovation László Palkovics decided to reduce the security reserve of natural gas. Previously it was reduced from 15,374,000 MWh to 12,723,644 MWh.

Foreign Minister Péter Szijjártó met Russian Foreign Minister Sergei Lavror two weeks ago. The aim of the meeting was to ask Gazprom to buy an additional 700 million cubic metres of gas. However, the Russians have not yet given any feedback on this. At the time, the government led by Viktor Orbán had already approved the €1,850 million loan.

At the end of July, the cabinet authorised the Hungarian Hydrocarbon Stockpiling Association (MSZKSZ) to buy gas on credit. The loan is fully guaranteed by the state. The question is where the Hungarian state plans to buy gas from and for how much. The Russians might have an increased price, but politically they are closest to the Orban government.

Read alsoHungarian government buys gas with brutal high euro loans

Source: Hungarian Gazette, napi.hu