Nuclear Politics

EC Clears Investment In Hungary’s Paks 2 Nuclear Project

By Kamen Kraev
6 March 2017

EC Clears Investment In Hungary’s Paks 2 Nuclear Project

6 Mar (NucNet): The European Commission has cleared Hungary’s plans to finance the planned Paks 2 nuclear station by way of state aid, a statement said today. The EC said Hungary’s state aid abides by EU rules because the country has made commitments to limit distortions of competition. 

The EC found that the Hungarian state will accept a lower return on its investment than a private investor would. This means the investment would involve state aid under EU regulations. However, EU rules allow state aid if it is “limited and proportionate”.

According to the EC, Hungary has taken measures to avoid “undue distortions” of the domestic energy market.

Those measures include avoiding overcompensation for the operator of Paks 2, avoiding market concentration by legally separating the operation of the Paks and Paks 2 nuclear stations, and ensuring market liquidity by guaranteeing Paks 2 will sell 30% of its electricity on open power exchange auctions.

Separately, in November 2016, the EC closed an infringement case against Hungary regarding the compatibility of the Paks 2 project with EU public procurement legislation.

An agreement signed in 2014 would see Russian state-owned nuclear corporation Rosatom supply two VVER-1200 reactors for Paks 2, as well as a loan of up to €10bn ($10.6bn) to finance 80% of the of the €12bn project.

Progress on Paks 2 had stalled because of the EC scrutiny.

Last week, Hungarian foreign minister Peter Szijjarto said construction of the station is likely to begin in 2018.

The EC said the two new reactors planned at Paks 2 will replace the four reactors currently operating at the neighbouring Paks site, which were constructed in the 1980s and account for approximately 50% of Hungary’s domestic electricity production.

Hungary says Paks 2 will replace phased-out generation capacity and address the need for new capacity, the EC said. Details online: http://bit.ly/2lSLdaf

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