Hungary denies EU has blocked its nuclear deal with Russia

By bne IntelliNews March 13, 2015

bne IntelliNews -

 

Hungary has denied a Financial Times report that the European Union has blocked Hungary’s €12bn nuclear deal with Russia. 

Citing unnamed sources, the newspaper reported that the European Commission had confirmed a decision by EU nuclear agency Euratom that refused to approve Hungary's plans to import nuclear fuel exclusively from Russia. The newspaper claims the move could halt the project to expand the Paks plant.

However, Budapest has firmly rejected the report. It also seems likely that, if necessary, Hungary and Russia could adapt the agreements in order to avoid the project being blocked.

Hungary tore up an international tender just over a year ago and handed Russia a contract to expand its sole nuclear power plant in return for funding of €10bn. Hungary then signed the contracts to design, build and maintain the two new 1,200 megawatt reactors with state nuclear energy agency Rosatom in December. Many details were not publicised due to "national security" concerns and earlier this month parliament voted to keep them secret for 30 years.

Two EU agencies are now reportedly examining the agreements. After Euratom reportedly refused to approve the fuel deal, Hungary appealed. However, according to "three people close to the talks", the European Commission has now backed Euratom, the FT claimed. That decision was made at a meeting in Brussels in early March, the newspaper reported.

In order to save the deal, Hungary will need to negotiate a new fuel contract or pursue legal action against the commission, members of the opposition told the FT.

“If the Russians now refuse to modify the original contracts, this will be the end of the road for the project,” claimed Javor Benedek, a Hungarian member of the European Parliament’s Green group. “The report is very clear that the fuel supply agreement does not comply with European law.”

Hungary has staunchly denied the report. “It is not true that the EU has blocked the Paks II construction," Andras-Giro-Szasz, a Hungarian cabinet state secretary, told MTI.

The EU investigations come amidst growing suspicion of Viktor Orban's relations with Moscow. In mid-February the Hungarian prime minister welcomed President Putin to Budapest in a highly controversial visit. Orban proudly claimed to have sealed a new gas deal that hands his country cheap fuel. The two leaders also reaffirmed their commitment to the Paks project.

The Budapest official leading the Paks project, however, admitted in December that Hungary might have to scrap it should the EU put obstacles in the way. Hungary hopes the European Commission will make a decision within a year on whether the project meets rules on state aid.

Brussels is seeking a bigger say in EU governments’ energy talks with Russia as part of a broader effort to integrate the bloc's energy market and reduce energy dependence on Moscow. Orban, however, said recently he opposed any commission interference in negotiations with Moscow, saying it violates national sovereignty.

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