Hungary has so far drawn down €239mn of a €10bn loan from the state of Russia for an upgrade of the Paks nuclear power plant, it was announced on February 19.

Answering an opposition query, finance ministry state secretary Andras Tallai said that the "bulk" of that money has already been repaid, he added. This effectively means that Hungary has taken out a loan with better conditions to refinance the Russian credit.

Hungary picked Russian state nuclear company Rosatom without a tender to build two 1,200 Mw reactors in Paks from €12.5bn. The intergovernmental agreement was signed in January 2014 by Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orban.

The financial aspects of the deal stipulate an interest rate on the €10bn loan at 3.95% until Paks 2 is operational, which then rises incrementally to 4.95% over the next 21 years.  Lower financing costs on the market have made the Russian loan conditions far less favourable. Hungary has lobbied to amend the conditions of the loan, but in the meantime it sought market funding.

The four existing blocks of the Paks power plant account for some 40% of the country's electricity production but the oldest blocks will reach maturity by the early 2030s. 

Construction of the two reactors were expected to start in 2017, but Hungarian authorities had yet to give the final permit for the construction. Experts expect the new blocks to go operational after 2030.