Interview with László Fazekas, Deputy CEO and CFO, MVM Group

13 May Interview with László Fazekas, Deputy CEO and CFO, MVM Group

With 20 years in the energy industry, how would you assess Hungary’s energy sector and the major changes being made towards sustainability?

Over the past decade, Hungary has significantly developed its energy infrastructure. As a landlocked country, we lack direct access to LNG terminals, but we have built natural gas interconnectors with all neighboring countries except Slovenia, ensuring strong regional connections for both gas and power.

In 2021, Croatia opened an LNG terminal on Krk Island and MVM Group secured long-term regasification capacity, adding about 35 billion cubic feet of LNG annually to Hungary’s supply. While Russian gas remains dominant in our portfolio, this and other diversification efforts have strengthened our energy security. Hungary’s green energy transition is a major challenge, but the country has significantly increased renewables in its power mix and has ambitious plans for further growth.

Another key challenge is phasing out coal-fired power. Hungary has only one remaining coal plant, which is part of our portfolio. The government has decided to replace it with a CCGT (combined cycle gas turbine) and renewables by 2028. This will make Hungary coal-free in power generation, putting us ahead of many Central and Eastern European countries like Romania, Czechia and Serbia, where coal plants are still operational. It’s a major, crucial project for both Hungary and MVM Group.

We also face a challenge in extending the lifespan of Hungary’s only nuclear power plant, located in Paks. Its four reactor blocks are set to expire between 2032 and 2037, but the government has decided to extend their operation by 20 years, until 2052–2057. This is crucial, as the plant supplies 40–50% of Hungary’s electricity and is the country’s main baseload power source. It also plays a vital role in decarbonization and meeting net-zero targets, as we believe nuclear energy is essential for achieving these goals. While a separate state-owned project will add two new reactor blocks in Paks, MVM Group is focused on extending the life of the existing plant, making it one of our flagship projects.

The government and MVM Group are open to exploring small modular reactor (SMR) technology, which offers flexibility with smaller, modular units. If deemed technologically and economically viable, SMRs could be a future opportunity. For now, our priority over the next two decades remains the lifetime extension of the existing nuclear plant and the construction of two new reactor blocks.

MVM Group is one of Hungary’s largest and most vital companies. Could you share the company’s history, key milestones and give us an overview of its current structure and size?

MVM Group has a strong history, with its core rooted in nuclear power and the transmission network. A major milestone came in 2013 when we acquired E.ON’s natural gas wholesale and storage business in Hungary, expanding our focus beyond electricity. Over the past decade, MVM has made several key acquisitions, including major power and gas distribution companies. We also integrated the retail sector and today, MVM supplies 100% of Hungarian households with electricity and natural gas under the regulated Universal Service framework. In 2020, we made MVM Group’s first international acquisition, we purchased 100% of Innogy Česká Republika, a former E.ON subsidiary and market leader in Czech natural gas retail, with a growing power segment.

In 2024, we acquired a 5% stake in Azerbaijan’s Shah Deniz offshore gas field, one of the world’s largest. This strategic investment not only offers strong commercial value, but also enhances supply diversification for both Hungary and MVM Group. MVM Group serves over 11 million customers across Central and Eastern Europe, operating in 23 countries and engaging in wholesale markets across the continent.

With 19,000 employees, we are one of Hungary’s largest employers and a key player in nearly every aspect of the country’s power and natural gas value chain. Our portfolio includes Hungary’s sole nuclear power plant in Paks, supplying 40–50% of the nation’s electricity and four underground gas storage facilities crucial for winter supply security. We also operate the country’s high-voltage transmission system and hold a 30–40% share in power and gas distribution. As the backbone of Hungary’s energy sector, MVM Group plays a central role in achieving the country’s energy strategy goals, aligning closely with national policy and leading its implementation.

How do you see international operations and acquisitions as key to future success?

Regional partnerships are key to our strategy and we actively seek opportunities in neighboring markets. In December, we signed a share purchase agreement with E.ON to acquire its stake in a leading gas and power retail company in Romania. The transaction is still under approval, but based on our experience in Hungary and Czechia, we aim to enhance retail operations in Romania as well.

Our goal is for at least 25% of our EBITDA to come from international activities by 2035. While Hungary remains our core market, we believe a strong international presence is essential for long-term success. Regional partnerships are crucial to our strategy. After acquiring a 5% stake in Shah Deniz, we are focusing on significant investments in Hungary, particularly in CCGT, lifetime extension of Paks nuclear power plant and the grid. We expect this will boost our Hungarian EBITDA, making it a challenge to increase our international share.

How important will MVM Group and Hungary be in the regional energy market and what is the current and potential for collaboration with the US?

Our energy system is closely tied to the region. As we phase out coal and introduce three new CCGT blocks, these gas-fired plants will provide both base load power and flexibility. CCGT technology is ideal for adjusting power output, offering efficiency and low carbon intensity. With a growing share of renewables, balancing production becomes crucial, as renewables are difficult to regulate. Energy storage or CCGT plants are needed for this balance. While expanding our renewable portfolio, these new CCGT projects will enhance energy security for both Hungary and the region.

Since the escalation of the Russian-Ukrainian war in 2022, major Russian gas routes to Europe, including Nord Stream 1, Nord Stream 2 and the Yamal-Europe pipeline, have been stopped or damaged. The only remaining route is the South Corridor via Turkey, Bulgaria, Serbia and Hungary, which continues to support gas supply security for Hungary and the region. The importance of this corridor grew in 2025 when the Russian-Ukrainian gas transit contract expired and was not renewed. Hungary now plays a key role in supplying Slovakia, supported by interconnectors with neighboring countries, enabling us to assist in this challenging situation.

Regarding the United States, we see several opportunities. As CFO, my focus is on financing. We have issued dollar bonds twice and plan to continue doing so to fund our strategy and ambitious CapEx plans. The international bond markets, especially US investors, offer great opportunities for us. As a state-owned, investment-grade energy company, we believe we are an attractive investment. We are also open to cooperation with US companies, particularly in energy supply and aim to diversify our natural gas portfolio, creating potential for collaboration.

What digital solutions is MVM Group implementing for operations, marketing and customer experience?

We are a technical company focused on grids, power plants and energy supply to over 11 million customers, but digitization and innovation are also key priorities. Digitization is crucial for both operational excellence and financial performance. Our focus areas include emerging technologies, artificial intelligence and automation.

One key initiative is implementing smart grid technologies, which will allow real-time monitoring of energy distribution, improving reliability and cost savings. In AI, we focus on predictive capabilities to reduce costs and enhance pricing strategies in our wholesale business, as well as improve customer engagement and experiences. In automation, we use Robotic Process Automation in client services to increase efficiency by handling repetitive tasks. Across all areas, data is key and we have significantly boosted our focus on data governance in the past two years.

We don’t aim to develop new technologies ourselves but adopt existing AI solutions. Based on our strategy, we have already integrated AI in client services and other business areas.

Can you give details about your upskilling, education programs and CSR initiatives?

We have found it increasingly difficult to recruit top talent due to market competition. To address this, we have implemented a new recruitment and education strategy, partnering with universities and even high schools in specialized fields like nuclear energy. By engaging potential employees early, we can offer them opportunities and attract talent.

We also provide training to our current staff to enhance engagement and ensure we have the necessary human capital for our strategy. While government programs have reduced unemployment, our ambitious plans, such as grid strengthening and renewable integration, require skilled workers. It’s a challenge and we need to be innovative in attracting, retaining and developing talent to achieve our goals.

What are MVM Group’s key goals and main projects for the next 5-10 years?

Our strategy, approved by the sole shareholder last year, focuses on four pillars. The first, the green transition, aims to expand our renewable capacity by 3,000 megawatts by 2035. Last year, we increased our renewable capacity from 300 megawatts to nearly 900 megawatts. We also plan to extend the lifetime of our nuclear facilities and invest in 1,500 megawatts of gas-fired capacity, alongside 500 MW of energy storage. Additionally, we will phase out coal. Strengthening the power grid is another key priority to integrate renewables, ensuring a more resilient, reliable and smart transmission network in the next five years.

Another strategic pillar is the customer oriented and adaptive organization as highlighted in my thoughts about digitization. The fourth pillar is financial excellence, ensuring sustainable growth while maintaining MVM Group’s investment-grade credit rating. We achieved this in 2021 with our first bond issuance and maintained it through the energy crisis and war, thanks to strong cooperation with our shareholder, the Hungarian state. This rating enables us to efficiently access international bond markets to fund our strategy. Our main societal focus is decarbonizing our generation portfolio. We aim to balance the energy trilemma:providing secure, affordable and sustainable energy. Achieving this balance is challenging, especially while ensuring supply security, but it remains our core responsibility and will be our key focus over the next five years.