Hungary to end long-term power deal with Suez unit

BUDAPEST, July 30 (Reuters) - Hungary's state-owned power wholesaler MVM has terminated its long-term power purchase agreement with Dunamenti Eromu, a unit of French utility Suez (LYOE.PA: Quote, Profile, Research), as of Dec. 31, MVM said on Wednesday.

The decision follows a ruling by the European Commission in June, in which the EU executive said Hungary's long-term power agreements constituted unlawful state aid to power generators.

Talks with Dunamenti about new terms were unsuccessful, MVM said in a statement.

The decision means that MVM will buy 1,531 MW of power or a quarter of its contracted portfolio in the market instead of buying it from Dunamenti, MVM said.

In June, the European Commission told Hungary to terminate the purchase agreements by the end of this year and recover aid granted to the firms since the country's EU accession in 2004.

It said such agreements can restrict competition because they close off much of the market from new entrants.

Ending the deals was crucial to liberalising Hungary's power market and termination of similar agreements in Poland earlier in the year had led to lower electricity prices, it added. (Reporting by Sandor Peto, editing by Anthony Barker)