Hungary claims revised nuclear fuel deal meets EU demands

By bne IntelliNews March 25, 2015

bne IntelliNews -


Hungary has reached an agreement with Brussels and Moscow over Russian fuel supplies to the Paks nuclear plant, the Prime Minister's Office claimed on March 25. 

If true, the deal could remove a key obstacle to Budapest's landmark deal with Moscow, under which Hungary will borrow €10bn from Russia to expand the country's sole nuclear plant with Russian technology. 

However, the European Commission said talks between Hungary and the European Union's Euratom Supply Agency are still ongoing. 

"The Commission understands that the Hungarian authorities and the Euratom Supply Agency have resumed talks on the nuclear fuel supply contract to ensure its compatibility with European rules," Reuters cited Anna-Kaisa Itkonen, the EC’s spokesperson for climate and energy policy, as saying. 

Media reports earlier this month had suggested that the EU nuclear agency was blocking the fuel supply deal on the grounds that other fuel suppliers were excluded. The wider Russian deal with Hungary is also still under investigation in Brussels.

Budapest now claims that at least the first obstacle has been removed.

"All obstacles have been removed from the way of solving the issue of the fuel supply contract necessary for the extension of the Paks nuclear power plant," the head the Prime Minister’s Office Janos Lazar told state news agency MTI. The PM's Office said in a statement that Lazar spoke following consultations with EU Commissioner for Climate Action and Energy Miguel Arias in Brussels.

"Hungary has adopted the European Commission’s observations and we will settle the fuel supply contract ... on the basis of the Finnish model," Lazar announced. 

Under the agreement, Russia will supply fuel for the plant for the first 10 years, Lazar added. Under the original deal signed with Moscow in January 2014, Russia would have supplied fuel for the new reactors for 20 years.

“We have succeeded in finding a solution with the help of which Hungary wins and the EU law also comes to effect,” Lazar added. He claims the new deal is also acceptable to Russia.

Tight lipped

Hungary tore up an international tender just over a year ago to hand Russia a contract to expand Paks in return for the funding. Hungary then signed the contracts to design, build and maintain the two new MW1,200 reactors with Russian state nuclear energy agency Rosatom in December. Many details were not publicised due to "national security" concerns.

The EU remains extremely tight-lipped on whether the wider deal satisfies its rules, suggesting only that it likely did not abuse state procurement regulations. However, the December contracts have provoked probes, according to press reports.

The European Commission is examining whether the project meets rules on state aid. Meanwhile, according to the Financial Times, Euratom had refused to approve the fuel deal, insisting other players besides Rosatom be allowed to ship fuel to the plant in the future. Budapest staunchly denied the report and said that it will file a lawsuit against the paper.

Meanwhile, with the stand-off with Russia only deepening, political opposition to the wider deal is at a peak in the EU. Prime Minister Viktor Orban has drawn sharp criticism in Brussels over concern that the project will deepen the bloc's dependence on Russian energy.

Budapest expressed worry as it was signing the contracts with Russia in December that the Paks project could go the way of South Stream should the EU look to block it. Brussels' opposition to the contracts signed by member states - including Hungary - on Moscow's giant gas pipeline project led to it being pulled the same month.

For his part, Orban - who has also recently signed a new gas deal with Moscow - is vigorously opposing Brussels' bid under the auspices of the "Energy Union" for a bigger say in member states' energy talks with Russia. It is joined by the likes of Germany in resisting the EU's broader effort to integrate the bloc's energy market and reduce energy dependence on Moscow. 

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