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It All Boils Down to Energy in Hungary: A Buzz Interview with Rita Parkanyi of KCG Partners

It All Boils Down to Energy in Hungary: A Buzz Interview with Rita Parkanyi of KCG Partners

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The energy crisis has led to businesses shutting down for the winter and subsequent employment-related issues, with the Hungarian government now providing energy subsidies, according to KCG Partners Founding Partner Rita Parkanyi.

"Similarly to many other European countries, the energy crisis has been a key challenge for Hungary recently," Parkanyi begins, saying that an immediate impact was felt in numerous industries. "Consequently, people and businesses are very cautious about energy consumption and, whenever possible, they are trying to come up with new technological solutions to save energy," she notes.

According to Parkanyi, different industries are affected differently. "For example, the clients from the tourism industry are highly affected by the soaring energy prices – every day we read news on hotels being closed, either temporarily or permanently. The legal sector is busy helping these businesses to renegotiate contractual agreements." For example, she says, "when it comes to commercial lease agreements, many of them are negotiated for three-to-five years, and now they’re facing completely different circumstances. Such an increase in energy prices could not be foreseeable one year ago, and we advise these companies on how to re-negotiate contractual terms, or even on what their chances are if they go to court."

Similarly, Parkanyi says that there is a lot of work in the field of employment law. "Businesses that are closing over the winter are trying to find solutions for their employees," she points out. "It is a very unusual situation, as they cannot employ people for the next two-to-three months, but, also, they don’t want to permanently terminate their contracts and lose them." She says that the legal sector is busy trying to find new solutions to deal with this uncertainty and make sure that work relations continue once businesses reopen.

Parkanyi adds that there are many other changes in the energy field. "There has been a new controversial regulation imposing a ban on reselling excess energy from solar power installations back to Hungarian systems," she notes. "Up until now, one could sell excess energy and, in winter, they would get energy back from the system. The government explained its decision through technical reasons – as a whole, the Hungarian energy system needs to be modernized and it couldn’t handle such an increased energy transfer." According to her, it was quite shocking for the market, "as thousands of households wanted to install solar systems. Now many of them may cancel their orders since the investment might not make sense anymore."

Looking on the bright side, Parkanyi says that "a new energy subsidy program will come into force on November 2, 2022, to combat the increased energy prices. It will provide subsidies to large manufacturing enterprises implementing energy efficiency-related investments, such as solar panel installation or consumption-reducing investments." Additionally, Parkanyi highlights that there are considerable investments in the energy field as well. “A South Korean company will set up an electric car battery factory in Nyiregyhaza, Hungary," she notes. "The investment amounts to EUR 700 million and is a very important development for the company and the country as well."