It is no secret that energy costs are rising around the world. Hungary is no exception, but the Budapest General Assembly offered a solution in this year’s budget. Specifically, they set up a fund designed to offset the increased energy prices.
The Fund and the Decision
The funds allocated in the budget are designed to offset the economic and energy crises. The funds will be used to help pay for the increasing costs of public lighting, public transport, and utility costs in public buildings. It also includes support for low-income citizens and for interest payments.
Why It Is Necessary
One of the reasons for the creation of the fund is the increase in interest payments. The municipal council has paid an additional 7.4 billion forints (€18.2 million) in interest payments this year. The increase was thanks to inflation.
Additionally, experts estimate that utility prices will increase tenfold next year. This also influenced the decision to create the fund. Yet another factor was the estimate that public lighting costs for the year will be 5 billion forints more than the original estimate.
How It Will Be Financed
The money for the fund will come from additional revenues via extra interest, tourism tax, sales, services, and business taxes.
Eighteen assembly members voted in favor of the amendment. Ten voted against it, and one abstained.
The Assembly Also Passed an Energy Conservation Package
This fund was not the only energy-related news from the General Assembly. It also passed an energy conservation package. Twenty-six assembly members voted in favor of this package, with only two abstaining.
The package calls for turning off the city’s decorative lighting two hours earlier than normal. This should save 792,510 kWh every year.
The package also limits heating and cooling efforts in city-council-operated buildings. In the summer, air conditioning cannot go past 25 degrees Celsius. In the winter, heating can’t go past 21 degrees. Importantly, there are exceptions for nursing and retirement homes.
Context: Hungary Declared a State of Emergency Due to Energy Earlier in the Year
Hungary was aware that the country would need to take measures to counter the energy crisis. In fact, the country declared a state of emergency due to potential energy threats in July.
At the time, the government said it would increase domestic energy production to combat the problem. The typical annual natural gas production for Hungary is 1.5 billion cubic meters. Hungary planned to increase this to 2 billion cubic meters. Additionally, Hungary banned energy exports. It also increased the operating hours for the sole nuclear power plant.
These measures went into effect in August.
What the Future Holds for Hungary and Energy
Viktor Orban, the Hungarian prime minister, hopes that the country can deliver a partial cap on household energy bills for 2023. Orban expects the budget to require modifications in December.
As a reminder, Orban has long supported placing caps on electricity and gas bills. However, the rising prices overburdened the country’s budget. Even so, Orban believes that the budget can accommodate energy caps at least into 2023. However, he says that work will have to be done.
MVM, a state-owned energy group, is offering flexible payment solutions. Additionally, Hungary is boosting its budget deficit thanks to extra gas purchases from Russia. This is relevant as Hungary gets most of its oil and gas from Russia.
Energy prices in Hungary remain high, but the government offers a few solutions. One of these is a fund to combat the energy crisis financially. Additionally, Orban hopes to continue the cap on household energy bills into 2023. This should hopefully provide some relief for Hungarians.
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