Nuclear Politics

EC Says It Has Doubts Over Hungary’s Proposals For Paks 2 Nuclear Project

By Kamen Kraev
13 January 2016

EC Says It Has Doubts Over Hungary’s Proposals For Paks 2 Nuclear Project
The existing Paks nuclear station in Hungary.

13 Jan (NucNet): The European Commission has expressed doubts about whether Hungary’s plans to provide financing for the construction of two new nuclear reactors at the planned Paks 2 nuclear station involve legal state aid, a statement in the EU’s Official Journal said.

The EC has also questioned the calculations of capital costs and investment return rates the Hungarian government has used, the statement said.

According to the EC, Hungary has not provided sufficient information on the profitability and risk level of the investment and it is also unclear if any private investor would go ahead with this project under the same conditions. This makes it difficult for the EC to assess whether state aid is indeed necessary, the statement said.

The EC said it is concerned about the project’s eventual “distortive effects” on competition and trade since Paks 2 is expected to increase the domestic electricity market concentration.

The EC’s statement lays out the details of the arguments which were used to open a state aid investigation into the Paks 2 project at the end of November 2015.

An agreement signed in 2014 would see Russian enterprises supply two VVER-1200 reactors for Paks 2, as well as a loan of up to €10bn ($10.8bn) to finance 80 percent of the project.

At the time the EC said it had concerns that this investment may not have been on market terms, as Hungary had argued. The EC said it would assess the business case for the construction, operation, and decommissioning of the two reactors on the basis of the agreed transaction terms and in view of the EU’s energy market projections.

In November 2015, the EC also launched an infringement procedure against Hungary concerning the implementation of the Paks 2 nuclear power station project and the award of a construction contract for the planned facility to Russia.

The EC said the Hungarian government can submit its comments on the state aid investigation within one month of the date of publication of the EC’s statement on the EU’s Official Journal.

Paks has four Russian-supplied VVER-440 PWRs, which began commercial operation between August 1983 and November 1987.

The EC’s statement is online:

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