bne IntelliNews -

The European Commission is expected to rule in October on whether Hungary's plan to expand its sole nuclear plant involves illegal state aid or not, a BBC report claimed on June 12. 

Opponents of the project told the British broadcaster that they hope the European Commission will rule that Hungary's 20% share of the construction costs will be judged to be a direct subsidy, which is illegal under competition rules, the report says. 

However, it does not back up the suggestion that the EU plans to offer a ruling in the autumn, nor make any reference to sources. Brussels has remained conspicuously quiet in the 18 months since Hungary signed the deal with Moscow. Its only immediate response in January 2014 was to note that the procurement process did not appear to break its rules. 

Hungary said in December that it hoped the European Commission would make a decision by the end of 2015 on whether the project meets EU rules on state aid. Budapest could yet scrap the project if Brussels fails to give it the nod, Attila Aszodi, the government official that heads the Paks scheme, said at the time. 

"We are preparing the contract in a way that if the European Commission does not approve the project we could quit," Aszodi told a conference. The official stressed that he firmly believes the project is free of state aid. 

Budapest tore up an international tender in January 2014, to hand Russia a contract to expand the Paks plant. In return, Moscow agreed to lend Hungary €10bn to fund the project, which is likely to cost a total of €12.5bn. The pair signed contracts on the design, construction and maintenance of the two new 1,200 megawatt reactors in December. Many details were not publicised due to "national security" concerns. 

Hungary has drawn sharp criticism in Brussels over concern that the project will deepen the bloc's dependence on Russian energy. However, the only public stance on its legality taken thus far by the European Commission came in April when it informed Hungary that nuclear fuel agency Euratom has approved the contract under which Russia will supply fuel for the plant. 

The green light cleared the way for Hungary to proceed with the project, although talks with the EU over public procurement and competition issues remain on the table. 

In the BBC report, opponents of the deal also claim the plan will plunge Hungary into debt and deepen the country's dependence on Russia. They go on to argue the expansion will produce expensive energy, far above market prices. 

The government, on the other hand, defends the project, saying that the two new 1,000MW reactors are necessary to cover growing energy demand and will actually increase the country's energy independence.