Hungary says EU legal action will not stop Paks expansion

21 November 2015

Hungary says it will go ahead with its plans to expand the Paks nuclear power plant under the contract awarded to Russian state nuclear corporation Rosatom despite a report in the Hungarian privately-owned newspaper Nepszabadsag that European Union (EU) regulators had begun legal action to force suspension of the project.

The European Commission (EC) expressed reservations after Hungary chose Rosatom last year to build two new units at Paks without first going to international tender. Russia has agreed to provide a favourably priced €10bn ($10.7bn) loan to cover 80% of the project costs.

"The Commission raised concerns about the compatibility with the EU public procurement rules," Commission spokeswoman Lucia Caudet told reporters following the announcement of formal infringement proceedings. She said Hungary had two months to respond, but did not say the EC had asked Hungary to suspend preparations for the project.

Hungary insists that it respected all relevant laws when it awarded the contract. Prime minister Viktor Orban's chief of staff, Janos Lazar, told a news conference that Hungary would draft a detailed response to the EC, but would continue with its plans. "Regarding the expansion and maintenance of capacity of Paks, everything will proceed according to the government's intentions," he said. Hungary has been in continuous contact with the Commission about the plans ever since, Lazar said, adding that EU regulators had already approved the fuel supply and technical parameters of the project before lodging the new challenge

He noted that Hungary had first notified the EC about Hungary's plans to enter a bilateral nuclear deal with Russia in November 2013, adding that then Commission president, Jose Manuel Barroso, did not raise any concerns "of principle" about the matter at the time.
Rosatom said in an emailed statement to Reuters that it agreed fully with Lazar's assessment and would fulfil all its obligations outlined in the contracts between Russia and Hungary.

"This is not a political debate but a commercial debate about whether Hungary has the right to enter into a €12bn commercial or business deal with a non-EU state," Lazar said. The debate would revolve around how EU-based companies can access the expansion deal, which will see two new 1200MWe Paks units scheduled to begin operation in 2025 and 2026. He said no investors apart from Rosatom were interested in a deal which met the Hungary is ready to defend its position in court if needed, Lazar stressed.

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