Step 1: Come elections, introduce price controls
The 2014 elections’ wonder weapon by Orbán was the “utility reduction” (rezsicsökkentés) – price control on domestic gas, electricity and water providers. Orbán made utility providers to freeze and then cut domestic utility bills by 10+10%.
He even ordered utility companies to write on each monthly bill that “Your government has saved you XXXX forints on this bill” – in Fidesz-orange and complete with instructions on type font. Housing representatives were ordered to hang a note in the buildings reminding inhabitants how much the government saved them each month. When the notes were vandalized or removed, building managers were penalized. We have nothing better to do.
Ladies and gentlemen, this is NOT a conservative government.
Step 2: Watch utility providers go bankrupt and nationalize / cronify them!
Water, gas, and electricity providers were promised to be compensated for their losses, but it didn’t always come through. Especially if they were foreign-owned.
After all, our prime minister is at war with “media, banking, energy and retail” and wants to own those sectors – either through his cronies or personally, through his front, or through straightforward nationalization. There really isn’t any significant difference between the three methods.
So when the companies made losses due to price control, they weren’t subsidized (not that it’s a good idea) – they were bought. And subsidies suddenly started to flow.
Step 3: Watch market prices decline and pocket the difference from your captive customers!
The market prices of said public utilities have declined in the meantime – due to market forces, not the government. Yet, the utility bills are to this date frozen on their 2013 level (minus 10+10%). The difference is now significant.
5.8 billion forints of profit have been realized by the state dealer of natural gas last year on the difference between (evil, expensive) market prices and the artificially high, state controlled prices. (Fun fact: when Orbán set up the state dealer, he pressed that it’s “non-profit”, not that it made any sense. And that the multi national utility providers used to reap “luxury profit”.)
Actually, one way to secure profits to Fidesz-friendly (often offshore) companies is to give them access to cheaper gas at market prices and let them resell to the Hungarian consumer, at state controlled prices.
Gas prices have fallen all over Europe last year, except Hungary, the Netherlands and Sweden – according to Eurostat. Hungary still has the second lowest gas prices and fourth lowest in electricity prices (domestic), but beats everyone as it is one of the most expensive on purchasing power parity. In 2015-16 gas prices in the EU have fallen by 10.5% on average, except for Hungary (up by 1.5%).
And if you think that people get pissed off at the artificially high gas prices – why would they? Where else in the EU do they pay utility bills?
Step 4: Accuse Brussels that they want to take our price controls away!
They should, but they don’t.
But that doesn’t stop Orbán from launching a direct mail campaign, supported by a forest of ominous-looking billboards telling people that Brussels wants to force evil market forces on them.
Before the 2018 elections another round of (selective) price controls are expected.
Do yourself a favor and never, ever call Orbán a conservative in polite company.
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