Hungary to Buy Gas Storage as Orban Seeks Wider Sway Over Assets
Hungary will buy a majority stake in the nation’s strategic natural-gas storage facility from oil company Mol Nyrt. (MOL) as the state seeks to broaden its influence over industry assets.
The government and Mol signed a declaration of intent for the purchase of a 51 percent stake in the unit, the Development Ministry said in an e-mailed statement today. Mol will sell the rest of its 72.46 percent to the Hungarian Hydrocarbon Stockpiling Association, or MSZKSZ, which holds the remaining shares, according to the statement. MSZKSZ is an independent industry body charged with overseeing oil and gas reserves.
“The agreement is in line with Mol’s profile-cleaning strategy according to which Mol intends to focus on its core activities,” Chief Operating Officer Sandor Fasimon said in a statement to the Budapest bourse today.
Prime Minister Viktor Orban is reversing earlier privatizations as he seeks to boost his Cabinet’s role in industries deemed of strategic importance. Since coming to power in 2010, Orban purchased OAO Surgutneftegas’s 21.2 percent stake in Mol for $2.65 billion, gained control of car part maker Raba Nyrt. and savings bank Takarekbank Zrt. and purchased a stake in Budapest waterworks from Suez Environnement SA (SEV) and RWE Aqua GmbH.
Orban last year said Hungary would buy German utility EON SE’s local gas businesses for a maximum 875 million euros ($1.13 billion). The transaction may be signed “within days,” daily Magyar Nemzet reported on March 20.
Hungary, the most indebted eastern member of the European Union, cut welfare spending, nationalized private pension fund assets and levied extraordinary industry taxes to narrow its budget deficit below an EU limit of 3 percent of economic output.
The government is imposing mandatory household energy price cuts as it gears up for general elections next year.
The deal will help the government “guarantee the lowest possible gas household gas prices, thus supporting efforts to cut energy costs,” the statement said.
The forint posted its longest losing streak against the euro since 2011 after Standards & Poor’s cut Hungary credit rating outlook to negative yesterday, citing concern the government’s “interventionist” policies may hurt growth and credibility.
The forint has weakened 4.2 percent this month, the most among more than 20 emerging market currencies and traded at 306.7 per euro at 3:46 p.m. Mol shares fell 1.2 percent to 16,420 forint, the lowest intraday price since Sept. 4.
The transaction, which won’t affect the budget balance, will be completed within 90 days, the ministry said. The sale fits Mol’s “clear strategy for profile cleaning,” according to the statement.
The facility has a capacity of 1.9 billion cubic meters, the ministry said.
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