EC agrees to Hungary’s Paks II, but funding decision still awaited

23 November 2016

The European Commission (EC) has ended proceedings against Hungary over the award of a contract to Russian state nuclear corporation Rosatom to build two new units at the Paks NPP, although it is still investigating funding for the project. Paks currently comprises four Russian-supplied VVER-440 pressurised water reactors, which started up between 1982 and 1987. Under an agreement signed in 2014, Russian enterprises are to supply two VVER-1200 reactors (Paks II), as well as a loan of up to €10bn ($10.6bn) to finance 80% of the project.

The EC has since 2015 been investigating two issues related to Paks II – procurement, and whether funding of the project amounts to state aid. On 17 November it closed the infringement procedure over public procurement rules in connection with the capacity maintenance of the Paks plant, but is still investigating whether the project involves state aid.

The EC said at the time that the Hungarian government had awarded the construction of two new reactors and the refurbishment of two additional reactors at Paks “without a transparent procedure”. The Hungarian government confirmed in a statement on its website that the EC no longer disputes Hungary’s right to come to an agreement with Russia regarding the Paks II project and a related credit facility.

"Hungary has sufficiently justified that the use of the so-called technical exclusivity exemption, which means that when the technical and safety requirements of the project can only be met by one company, it can be compatible with EU laws to award the contract directly," EC spokeswoman Lucia Caudet told reporters on 18 November.

Hungary said it expected the investigation into funding for Paks II to be closed next week. The statement said there is “a realistic chance” that construction of the units can begin in 2017 or 2018. In September Project company MVM Paks received an environmental licence Paks II, and in October a site licence application was submitted to the national regulator. The first unit is to completed in 2025 and the second in 2026.



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