EU approves Hungary's nuclear power station deal with Russia

EU approves Hungary's nuclear power station deal with Russia
Russia will finance 80% of the Paks II project and operate the plant.
By bne IntelliNews March 6, 2017

The European Commission (EC) dropped the last of its probes into Hungary's project to expand the Paks nuclear power plant on March 6.

Hungary's planned €12bn expansion of its only nuclear plant has been controversial at home and abroad since the contract was handed to Russian state nuclear agency Rosatom in January 2014. Russia will finance 80% of the project and operate the plant. Critics claim the deal will hand Moscow increased leverage in European energy markets.

The EC launched two infringement procedures against Budapest in 2015. The first, on the lack of a public tender, was closed in November, reportedly thanks to the help of Brussels officials. Now the EC has dropped its second probe - over state aid - into the project to build two new VVER-1200 reactors to eventually replace the existing four at Paks.

The EC said in a statement that it has concluded that Hungary's financial support for the construction of two new nuclear reactors in Paks does involve state aid. However, "it has approved this support under EU state aid rules on the basis of commitments made by Hungary to limit distortions of competition”.

Margrethe Vestager, EC competition commissioner, stated: "Hungary has decided to invest in the construction of the Paks II nuclear power plant, its right under the EU Treaties. The commission's role is to ensure that the distortion of competition on the energy market as a result of the state support is limited to a minimum. During our investigation the Hungarian government has made substantial commitments, which has allowed the commission to approve the investment under EU state aid rules."

The EC underlined that “to avoid overcompensation” of Paks II's operator, any profits earned will either be used to repay Hungary for its investment or to cover normal operation costs.

"Paks II will be functionally and legally separated from the operator of the Paks nuclear power plant (the MVM Group) and any of its successors or other state-owned energy companies,” the commission added.

The statement continued that “Hungary also agreed that to ensure market liquidity" Paks II will sell at least 30% of its total electricity output on the open power exchange. The rest of Paks II’s total electricity output will be sold by Paks II on objective, transparent and non-discriminatory terms by way of auctions.

Paks produces around 50% of Hungary’s domestic electricity production. Work on the expansion is due to start next year. However, Hungary’s green party LMP last week announced plans to initiate a referendum on the project.

News

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss