bne IntelliNews -

Hungary has signed three implementation agreements with Russia on the planned expansion of the Paks plant, the government said in a statement on December 9.

The deals, signed with Atomenergoprom - a unit of Russia's state nuclear agency Rosatom - give the green light for the planning and construction of two 1,200MW reactors at Hungary's sole nuclear plant. In a statement, the cabinet office said the agreements “formalise the design, procurement and construction parameters for the new units, conditions related to their operation and maintenance support, and details regarding fuel supply and the handling and storage of spent nuclear fuel".

At a news conference, the Hungarian commissioner responsible for the project, Attila Aszodi, said the total cost of the project will be €12.5bn, of which 80% will be financed with a loan from Russia. He stressed the plant will remain in Hungarian ownership.

Russian leverage to the tune of €10bn in Paks is unlikely to cheer the West up, but any sign that Moscow could take control of an EU nuclear plant would cause uproar. Local media claims that recent changes to Hungary's bill on nuclear energy opened the way for foreign ownership and referred to the possible sale of the plant. 

The deals will allow construction to start in 2018, Aszoldi noted. The new units are expected to come online in 2025 and 2026. They will more than double capacity at the plant, which currently runs four Russian VVER-type reactors with a combined capacity of about 2,000MW.

In January, Hungarian Prime Minister Viktor Orban surprised observers by cancelling an international tender for Paks and instead agreed a €10bn loan from Moscow in return for handing Rosatom the contract. Brussels has remained tight-lipped over the deal, noting only that the procurement process did not appear to break its rules.

In the wake of Moscow's announcement in early December that it was scrapping the South Stream gas pipeline because of EU resistance, Hungary said that it hopes the European Commission will make a decision within a year on whether Paks meets EU rules on state aid. If the project fails to get the nod, Budapest is ready to halt the Paks expansion, Aszoldi said on December 3. 

However, he insists he is confident the project does not include illegal state aid. Hungary has been in constant communication with Brussels on the matter, and since the project contains “no elements of state support” it cannot fall foul of EU laws, he said on December 9, according toMTI. 

However, Hungary remains under huge pressure from Brussels and Washington over its perceived lean towards Moscow. In September, Budapest stopped transporting EU gas to Ukraine just days after it agreed on raised imports from Gazprom. Since, several Hungarian officials have been banned from entering the US over alleged corruption.

Meanwhile, the US is said to be pushing to prevent partially state-owned Mol from selling its stake in Croatian oil and gas company INA to a Russian company. A liquefied natural gas (LNG) terminal on the Croatian coast is seen as a key strategic asset to provide Southeast Europe with an alternative to Russian gas supplies. 

The deal is part of a push in Central Europe by Rosatom. It is a major contender for the expected revival of a tender to expand nuclear capacity in the Czech Republic, after a previous competition was scrapped in April in which it was squaring off against Japanese/US firm Westinghouse. It is also thought to be pushing to take some part in the sale of Slovenske Elektrarne, with other suitors wary of the Slovak utility's project to expand the Mochovce nuclear plant.