Sofia slapped a hefty transit tax on Russian gas in October, a move which Budapest considers unacceptable

Hungary will block Bulgaria’s entry into the EU’s passport-free Schengen area unless Sofia lifts its transit tax on Russian gas, Hungarian Foreign Minister Peter Szijjarto warned in a video posted on Facebook on Saturday. According to Szijjarto, Budapest will use its veto power in the European Council if necessary.

“We have made it clear to the Bulgarians that if they keep this in place for long, if they jeopardize the safety of Hungary’s energy supply for long, then we will veto their Schengen entry,” he said, calling Bulgaria’s tax “scandalous and hostile,” and “completely contrary to European legislation,” as it risks stopping gas supplies to Hungary and other EU nations which receive Russian gas through Bulgaria.

Sofia imposed an additional tax of 20 Bulgarian lev ($10.76) per megawatt-hour of Russian natural gas entering Bulgaria in October. Hungary, which relies on Russia for most of its gas needs, called the measure “unacceptable,” saying it poses a threat to Hungary’s energy security. Budapest has been pressuring Sofia to cancel it ever since.

READ MORE: EU transit state slaps new tax on Russian gas

According to media reports, Bulgarian and Hungarian officials held talks over the past week regarding the tax, and have already reached a preliminary agreement. In his video on Facebook, Szijjarto indicated that a decision on Bulgaria’s Schengen membership will be made next week, and “that’s why they suddenly started trying hard to eliminate this tariff.”

“If they do, we will also reverse our decision on the veto,” the foreign minister said.

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