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Brussels blocks Hungary’s nuclear deal with Russia

EURACTIV with agencies

13-03-2015

Paks nuclear power plant in Hungary. The Hungarian government didn't call a public tender to build a new reactor and instead chose Rosatom. The Russian firm offered beneficial financial conditions. [Paks NPP]

The European Commission has objected to Hungary’s €10 billion plan to expand its Soviet-era Paks nuclear power plant in a deal with Russia, and may force Budapest to revise the terms of the agreement, EU sources said yesterday (12 March). Hungarian officials strongly denied the reports.

Confirming a report in Friday’s Financial Times, one diplomat said objections by the EU’s nuclear fuel purchasing agency Euratom against a plan for Moscow to supply fuel to new reactors at the Paks facility was backed by the Commission. Hungary may have to review the deal.

In January 2014, Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin agreed that Russia would build two new reactors at Paks, and provide a 30-year loan of some €10 billion, covering 80% of the costs.

The Soviet-constructed plant in central Hungary now supplies about 40% of the country’s electricity. Many in Hungary have protested against the plan to increase the country’s energy dependence from Russia.

>> Read: Russian nuclear plant divides Hungarians ahead of election

Benedek Javor, a Hungarian member of the Greens bloc in the European Parliament, has opposed the deal. He told Reuters the EU objection was to a fuel supply contract signed with Russia.

According to the FT, Euratom refused to approve Hungary’s plans to import nuclear fuel exclusively from Russia. Hungary appealed against the decision, but last week the Commission threw its weight behind EurAtom.

Reportedly, the move blocks the expansion of the Paks central. To revive it, Budapest would need to re-negotiate its contract with Moscow or pursue legal action against the Commission.

The Euratom Supply Agency (ESA) ensures a regular and diversified supply of nuclear fuels to EU users. In particular, the ESA recommends that EU facilities operating nuclear power plants maintain stocks of nuclear materials and cover their needs by entering into long-term contracts with a diverse range of suppliers. It also monitors the EU nuclear fuel market.

A government spokesman in Budapest quoted by Reuters, Zoltan Kovacs, denied that the EU executive had “blocked” the expansion of Paks.

A Hungarian cabinet state secretary Andras-Giro-Szasz also “firmly denied” the report, in a statement to Hungarian state newswire MTI.

“It is not true that the EU has blocked the Paks II construction,” Giro-Szasz, communication state secretary for the prime minister s office, told MTI.

Giro-Szasz said he has asked the FT to issue a correction, MTI added.

The European Commission and Euratom had no immediate comment. 

According to reports, on 3 March the Hungarian parliament classified the contract with Russia for the expansion of the Paks nuclear plant for 30 years.

Positions

EU energy chief Maroš Šef?ovi? declined to comment today (13 March) on the talks between the bloc and Hungary over the country's plans to expand its Paks nuclear power plant.

"On this issue, we agreed with the Hungarian authorities that this matter will be treated as classified and therefore I cannot comment," Šef?ovi? , the EU's vice president in charge of energy union, said on the sidelines of a meeting of foreign ministers in the Slovak mountain resort of Strbske Pleso.

A Hungarian government spokesman said on Friday that talks with the European Union about a fuel supply deal for the Paks plant do not block its expansion in any way. 

Anna-Kaisa Itkonen, spokesperson for energy issues, clarified that last week the Commission decided, on the basis of the Euratom treaty, to raise concerns regarding the supply of nuclear fuels to the Paks central.

However, for confidentiality reasons, the Commission can only comment in very limited manner. The reason is that the respective documents are classified. However, the Commission was told that the Hungarian authorities had given their consent so that the documents be declassified. The Commission’s intention is to publish its position as extensively possible at a later stage.

Asked when exactly, she responded “soon”.

Background

In early 2014, Hungary and Russia signed a cooperation agreement which included the construction of two new VVER reactors of up to 1200 MWe each at Paks.

The first new unit is to be commissioned in 2023, with the second following about two years later.

During Putin's visit to Hungary last February, Russia's Rosatom and Hungary's ministry of human capacities signed a memorandum of understanding on cooperation in the training of nuclear energy personnel.

The Paks extension project is expected to cost nearly €12 billion, according to Portfolio.hu, an economic news website. Of that, 80% will be provided by Russia in the form of a "highly preferential" 30-year loan.

Hungary is heavily reliant on Russian gas and Orbán welcomed Russian President Vladimir Putin to Budapest in February to agree a continued supply - a visit controversial to the West as it came amid conflict between Kiev forces and pro-Russian rebels in Ukraine.

>> Read: Putin and Orbán contemplate stronger energy ties

Further Reading

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