Changes to the tax system will be made, Nabucco is not a question of money - Hungarian PM

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Monday, January 26, 2009 02:39:00 PMThe key task ahead of the Hungarian government is to reduce burdens on labour, but this may be achieved only via a comprehensive programme that will affect both the tax and contributions systems, Prime Minister Ferenc Gyurcsány said on Monday after holding discussions with economists about what the cabinet needs to do in the current stage of the economic crisis. He continued to decline to give details about the planned changes.

The PM said the reduction of burdens on labour are the key priority and that needs to be achieved via a comprehensive programme that spans three to four years.

“We cannot afford to cherry-pick," he said, indicating that sporadic measures will not do.

Gyurcsány believes the grade of redistribution and income centralisation has to be reduced and that it requires spending cuts.

Nabucco - Not a question of money

Answering a question the Premier, pledging allegiance to the Nabucco programme, said the new pipeline could meet two objectives at once. Firstly, it will not deliver Russian natural gas, and secondly, it will not deliver gas via Ukraine. (A pricing row this month between Russia and Ukraine led to a weeks-long disruption of gas supply to Europe and accentuated the need for more diversified energy supplies, highlighting the region's huge dependence on Russian gas.)

The 3,300-km (2,051-mile) Nabucco pipeline will meet 5% of Europe's gas needs, bringing 31 billion cubic metres of Caspian or Middle Eastern gas annually from Turkey to an Austrian gas hub via Bulgaria, Romania and Hungary.

Hungary will host a Nabucco conference on Tuesday which will be attended by European Commission President José Manuel Barroso.

The question is who will be willing to finance the construction of the pipe, the costs of which are already seen bloated to nearly EUR 8 billion. This question has become especially pressing amidst the current global financial crisis when the companies taking part in the project scrutinise the destination of every cent.

Gyurcsány said financing the project should not be a business question and that the funds will need to be ensured primarily from European sources.

The organisers of the Budapest conference want statements from the participants that they remain interested in the Nabucco project. Turkey and the USA, however, may prove to be hurdles in that. Turkey had previously demanded to keep another 15% upon the usual 20% of transit gas without paying the transit fee. And the USA would not be happy to see gas flowing into the pipe from Iran, which on the other hand would be willing to supply.

EIB asked to help

The Nabucco pipeline consortium has asked the European Investment Bank (EIB) to help finance the project but Chairman of the bank said they need more information before reaching a decision.
"We have been approached by the Nabucco partners and have been asked to finance a substantial share of the project," Reuters cited EIB Chairman Philippe Maystadt as telling a press conference in Budapest.

"In principle we're ready, but of course we'll only finance if it's viable so we'll need more information to see if this project would meet the criteria for financing," Maystadt added.