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Hungary has decided to narrow the scope of eligibility for price-capped fuel and will free up a quarter of its strategic fuel reserves to help ensure supplies, the prime minister’s chief of staff said on Saturday.
Gergely Gulyas said the measures, which will narrow eligibility for price-capped petrol and diesel to privately-owned vehicles, farm vehicles and taxis - and will exclude company-owned cars - was needed as the main Danube refinery of gas and oil group MOL (MOLB.BU) goes under maintenance from Monday.
Gulyas said the new price-cap rules would take effect as of midday Saturday.
“It’s important to note that the government can maintain the fuel prices capped at 480 forints ($1.21) per litre for the retail consumers,” Gulyas told a press briefing.
The limit on prices was introduced last November and set the retail price for both 95-octane gasoline and diesel. Prime Minister Viktor Orban’s government introduced the cap, now set to run until October, to shield consumers from inflation which is running at its highest level in two decades.
Orban’s price caps have been a mainstay of efforts by his nationalist government to shield households from the higher cost of living, but even with these measures, inflation (HUCPIY=ECI), (HUCPIC=ECI) rose into double-digit territory last month.
MOL’s executive chairman Zsolt Hernadi warned on Friday of possible fuel supply problems unless there are measures to boost fuel imports, given the company’s Danube refinery is unable to produce enough diesel to meet demand in the country even under normal circumstances, and it will be shut for scheduled maintenance on Monday.
MOL, which also owns the largest network of service stations in the country, has previously called for the fuel price cap to be phased out.
