Hungary tightens eligibility for subsidised fuel amid surge in demand

Hungary's government restricted eligibility for subsidised fuel, a government official said on Thursday, after a jump in demand led to shortages at some filling stations. Trucks weighing over 7.5 tonnes and trucks with foreign licence plates weighing over 3.5 tonnes will have to pay market prices for gasoline, Gergely Gulyas, chief of staff to Prime Minister Viktor Orban, told a news conference.

Hungary's government restricted eligibility for subsidised fuel, a government official said on Thursday, after a jump in demand led to shortages at some filling stations.

Trucks weighing over 7.5 tonnes and trucks with foreign licence plates weighing over 3.5 tonnes will have to pay market prices for gasoline, Gergely Gulyas, chief of staff to Prime Minister Viktor Orban, told a news conference. He said cars, farming vehicles and Hungarian trucks below the weight limit would remain eligible for the subsidised fuel.

Faced with a surge in inflation to its highest in nearly 15 years, the government imposed caps on some basic foods, fuel and mortgages, extending a cap already in place on household energy. Introduced in November, the measure initially capping retail fuel prices at 480 forints ($1.39) per litre, substantially below current market prices, was extended in February to wholesale prices to help retailers cope with rising costs.

However, the price caps have led to increased demand from lorries transiting Hungary and retail buyers from neighbouring countries, triggering extreme demand, the government said. "Fuel tourism and increasing transit traffic and the panic generated over the past days have led to a jump in fuel consumption," Gulyas said. The government has agreed on changes to the system after talks with Hungarian energy group MOL .

The government has also cut the excise tax on fuels by 20 forints per litre, he said. Chief Executive Zsolt Hernadi said MOL's refinery in Szazhalombatta was running at full capacity and oil imports from Russia were continuous.

"MOL has sufficient stockpiles and refining capacity to cover Hungarian fuel consumption," Hernadi said, adding that foreign and Hungarian trucks and buses filling up at retail petrol stations have contributed to the surge in demand. ($1 = 346.26 forints)