Budapest — The government of Hungary decided to raise the capital of state-owned energy company MVM Zrt by 41 billion forint ($108.79 million) to 849.4 billion forints, the company said on Friday in a statement on the stock exchange’s website.
Hungary is highly dependent on Russian oil and gas imports, and soaring energy prices caused the budget and current account deficit to balloon this year, posing a challenge to Prime Minister Viktor Orban’s government.
Hungary will likely have to pay 17 to 20 billion euros for its energy bill next year, Orban said on Wednesday, adding that his government would raise the necessary financing in the market.
Under a 15-year deal signed last year, before Russia’s invasion of Ukraine, Hungary receives 4.5 billion cubic metres (bcm) of gas per year via Bulgaria and Serbia under a long-term deal with Russia.
In order to ease the burden of high energy bills on the current account deficit and the forint currency, MVM reached an agreement with Russia’s Gazprom in October that allows it to defer its payments for gas purchases if prices exceed a certain threshold value.
The deal allows MVM to pay for the gas over the coming three years if prices surge.
In order to shore up the forint that fell to a record low in October, the National Bank of Hungary announced in the same month that it will start providing foreign currency from its international reserves to finance energy imports.
High energy prices also forced the government to end a decade-long policy and scrap an energy price cap for high-usage households from August.
Reporting by Anita Komuves, Editing by Louise Heavens – Reuters
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