Russia has agreed to extend by five years the credit use period on the loan it granted to Hungary to finance the construction of the Paks-II NPP. In 2014 Hungary selected Rosatom, without a tender, to build two VVER-1200 reactors at the Paks NPP for €12.5bn ($14.9bn). The Hungarian Atomic Energy Authority issued the site investigation and evaluation licence in 2014, and the site licence in 2017. Russia is financing 80% of the cost of the units with a €10bn loan.
Construction was to start in 2017, but a protracted European Commission (EC) probe and lengthy examinations by local authorities concerning safety delayed the project. The agreement had set 2023 as the deadline for unit 1 to become operational but this has now been postponed to at least 2029. The current Paks plant comprises four Russian-supplied VVER-440 pressurised water reactors, which began operation between 1982 and 1987. The EC agreed in April to allow groundwork at the site to start early in 2021 before the permit is awarded. Rosatom Director General Alexei Likhachev said recently that the Hungarian regulator is expected to issue a construction licence this year enabling work to begin in 2022.
Russian Prime Minister Mikhail Mishustin on 27 April signed the relevant protocol amending the March 2014 loan agreement. Under the amended protocol, the credit use period will be extended from 2025 to 2030. It also amends the timing of payments to redeem the loan. Under the new agreement, Hungary will repay the loan within 16 years, and not 21 years, as originally planned.
The updated agreement states that the first repayment instalment will be made on the next date - 15 March or 15 September following the commissioning of the fifth and sixth units of the Paks NPP, but no later than 15 March 2031. According to the original protocol, Russia would have received the first loan payment no later than 15 March, 2026. The loan rates in the updated version of the agreement have not changed. The interest rate for the loan is 3.95% a year until 15 March 2026, 4.5% until 15 September 2032, 4.8% until 15 September 2039, and 4.95% until the final repayment.
Hungary’s Finance Ministry said the standby fee for the credit is "more flexible" in the modified contract. "The credit contract is extraordinarily favourable because of its long run, and Hungary has the right at any time to repay the credit it has drawn down, at nominal value, without paying any further fees," it added.