Hungary's Gas Price Rise Illegal

BUDAPEST, Oct 21, 2000 -- (Reuters) Government plans to increase gas prices by 43 percent for industrial consumers would be illegal, the chairman of the Forum of Industrial Energy Consumers (IEF) was quoted as saying on Friday by the MTI national news agency.

The chairman Mihaly Szaniszlo called for the cabinet decision on the rise which is expected to be effective from November 1 to be postponed. He said it breached a law according to which no consumer group can be disadvantaged by pricing.

No one from the government was available for comment on Friday.

The government is expected to finalize at its weekly meeting on Tuesday an agreement between the Economics Ministry and oil and gas company MOL about gas price hikes.

The accord, which allows for a 43 percent MOL gas price hike for industrial users but leaves household prices level with inflation, follows a five-month-old debate and is expected to resolve a MOL suit against the state over gas pricing.

MOL initiated proceedings against the government, after the cabinet capped gas price hikes at six percent for 2000, a move which MOL said earlier could cause a loss of up to HUF 100 billion (USD 318.9 million) in its gas business this year.

MOL Chairman Zsolt Hernadi said on Friday a 43 percent price increase from November 1 would cut the loss of MOL's gas business by about HUF 20 billion for the year.

The state plans to allow MOL to raise its industrial gas prices to compensate for keeping retail prices low despite a sharp increase in global gas prices this year.

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-- Carl Jenkins (Somewherepress@aol.com), October 21, 2000