Hungary Seeks EU Action Against Bulgaria's Transit Tax on Russian Natural Gas

Hungary has requested the European Union's executive to initiate a legal procedure against Bulgaria concerning a tax recently imposed on Russian natural gas passing through its territory.

The tax, implemented in October, is believed by Bulgaria to diminish the privileged position of Russia's state-owned energy company Gazprom in southeastern Europe, as well as hinder Russian influence in the region.

However, this tax has instigated anger not only in Bulgaria but also among neighboring Serbia and fellow EU member Hungary. Both countries heavily rely on Russian gas, primarily supplied through the TurkStream pipeline passing through Bulgaria.

To address this dispute, Hungary's Minister for EU Affairs, Janos Boka, took to Facebook, announcing that he had sent a letter to the European Commission, urging them to launch an infringement procedure against Bulgaria. This initial step aims to ensure the compliance of member states with EU laws.

According to Boka, the tax imposed by Bulgaria lacks prior consultation with Hungary and contravenes the EU's laws on customs and trade. He strongly emphasizes the potential energy security risks that such a fee poses to Hungary and the entire region.

Boka concludes that if an infringement procedure is not initiated, Hungary is prepared to escalate the matter to the highest court of the EU by the end of the year.

Since Russia's invasion of Ukraine in February 2022, most European countries have significantly reduced their dependency on Russian gas. However, Hungary has been actively lobbying in Moscow for more favorable gas deals since the war began.

Following the invasion, Bulgaria was cut off from Gazprom shipments. Nonetheless, it allowed the use of the TurkStream pipeline passing through its territory to supply gas to pro-Russian governments of Serbia and Hungary.

The tax in question, which imposes a fee of 10 euros per megawatt-hour on Russian gas transfers, was discussed within the EU in October, but no decision was reached regarding its appropriateness.

Bulgaria's government asserts that the tax will not result in higher prices for Hungary and Serbia, but it will reduce profits for Gazprom.

As this ongoing dispute unfolds, it remains to be seen how the EU will respond to Hungary's request for action against Bulgaria's transit tax on Russian natural gas.