Nevertheless, MVM believes it is necessary to review legislation governing Hungary's power market, in order to adopt relevant EU directives, Pal said. While the EU does not recognize the current "dual" market, it calls for a "backup" provider once the market is completely deregulated. While legislation regarding this has not yet been drafted, MVM has a good chance of being eventually picked as a backup provider, Pal said. The CEO also addressed plans by the economy ministry to integrate Hungary's power network, currently owned by MVM, with the independent grid operator Mavir. Pal said the best solution would be to re-integrate Mavir into MVM, as this would ensure a secure supply of electricity. Commenting on a recent capacity auction by MVM, which attracted lower than expected demand, Pal called for a revision of auction rules. While current regulations allow MVM to auction extra capacities for a period of six months, eligible consumers and traders typically need one-year contracts, he noted. Pal also rejected the notion that long-term power purchase agreements, in which the bulk of generating capacities are tied down, should be cancelled in order to boost market competition. Pal noted that unilateral withdrawal from these contracts could cost in excess of HUF 100 billion, and recalled that MVM is instead renegotiating these contracts with power plants. HUF 420 billion sales, HUF 1-2 billion loss planned this year MVM calculates with sales revenues of HUF 420 billion and a "minimal" HUF 1-2 billion loss this year, Pal said. MVM had losses of HUF 1.3 billion in 2003. The CEO recalled that MVM will spend some HUF 70 billion on network developments over the next three years. The company is also contemplating the creation of new power plant capacities, in the form of project financing constructions. These investments could be in the same magnitude as network developments, Pal said. At the same time, MVM is not interested in renewable energy projects, focusing instead on co-generating facilities, to be installed at district heating companies. PIN//Interfax