Hungary will not commence the liberalization of its electricity market until 2003 according to comment from Eva Hegedus, a senior ministry official on Tuesday. This represents a further delay in the process, which Hungary had originally planned to start in 1999.

The first stage of the liberalisation process will be to offer a choice of suppliers to 300 industrial consumers, representing 35 per cent of the market. Eva Hegedus said that eligible customers would benefit from a fall in prices of at least 15 per cent although such reductions will be difficult to deliver with present prices barely covering production costs.

The further two and a half year delay in market liberalization will be a disappointment to many however, Hegedus insisted that reform will go ahead and that this will benefit many consumers.

Controls will remain in place to prevent mergers creating a dominant force in the Hungarian electricity market. No single entity will be permitted to control more than 30 per cent of the generating market, according to Ms Hegedus.

As a fast track applicant for EU membership, Hungary is obliged to introduce market reforms if it is to achieve EU accession. The 1999 government energy plan seeks to move toward a use of cleaner technologies and emission controls for coal-fired generating stations. It is intended that there will be a major change over from coal-fired plants to gas turbines over a three to four year period.

The Hungarian government also wish to attract foreign capital for investment in capital-intensive energy projects.