By Margit Feher
BUDAPEST--The Hungarian government is seeking to impose a limit on the dividend payments by power companies Elmu Nyrt. (ELMU.BU) and Emasz. Nyrt. (EMASZ.BU), majority-owned units of German utility RWE AG (>> RWE AG), ahead of parliamentary elections in April.
"The most important thing is that no dividend payment would be possible from funds earmarked for network maintenance and development," government spokesman Andras Giro-Szasz said at a press conference after a cabinet meeting Wednesday.
The Hungarian Fidesz party, which is seeking a second term in office at elections five weeks from now, has said utility firms should become non-profit organizations to ensure energy prices for households are at their lowest possible level.
Last year the government cut household utility prices by a total of 20% and it has pledged further cuts to electricity, natural gas and heating prices this year, largely after elections April 6, which Fidesz looks poised to win according to the latest opinion polls.
"Siphoning dividends out of the companies may put supply safety at threat," said Szilard Nemeth, head of the government's utility price-cut task committee, at the same briefing.
The cabinet has ordered the energy authority to investigate the finances of RWE's Hungarian units, Mr. Nemeth added.
"Sooner or later, the government will force the (foreign) energy suppliers to their knees and they will exit," a stock market analyst at a brokerage said, who asked to remain anonymous.
RWE and EnBW Energie Baden-Wuerttemberg AG each hold stakes in Hungarian power suppliers Elmu and Emasz.
RWE holds a 55.3% stake in Elmu and has a 54.3% stake in Emasz, while EnBW owns a 27.3% stake in Elmu and a 26.8% share of Emasz. The Hungarian state's power wholesaler and distributor MVM Zrt. holds a 15.6% stake in Elmu and a 11.7% stake in Emasz.
Elmu and Emasz will hold their annual shareholders meeting March 21, two weeks ahead of its regular date every year.
"We have brought the date forward since it's a significant public-relations event and this way it will receive sufficient attention," Elmu spokesman Norbert Boross said.
"We don't know if there will be a dividend payment, that's up to the shareholders," Mr. Boross added.
Elmu had a net profit of HUF12.21 billion forints ($54.2 million) and Emasz generated a net profit of HUF5.15 billion in the first six months of last year, under Hungarian accounting rules. Full-year results are due later this month.
The government has regulatory means with the energy authority to limit the dividend payments, which would be a step reinforcing the vote-winning function of the former price cuts, an analyst at a brokerage said in Budapest on condition of anonymity since the issue is "overpoliticized."
Write to Margit Feher at email@example.com
Stocks mentioned in the article : RWE AG