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Paks Upgrade Saga Continues As EC Launches Investigation Into Hungary’s Deal With Russia’s Nuclear Giant Rosatom

Tamás Székely 2015.11.24.

The Hungarian government’s firm position is that there is no state aid in the Paks 2 nuclear upgrade project, the Prime Minister’s Office said in response to the European Commission’s latest announcement. The government is committed to keeping the Paks nuclear plant in state ownership as this is the way Hungary’s energy security can be guaranteed and cheap electricity ensured for households and businesses, the Cabinet insisted.

The European Commission (EC) on Monday said it launched an in-depth investigation into Hungary’s plan to provide financing for the Paks project. The commission will assess “whether a private investor would have financed the project on similar terms or whether Hungary’s investment constitutes state aid”. If it involved state aid, the commission would investigate further for any distortions of competition on the Hungarian energy market.

“Given the size and importance of the Paks project, EC has to carefully assess whether Hungary’s investment is indeed on market terms,” said Margrethe Vestager, the competition commissioner. EC last week said it suspected Hungary had failed to comply with European Union public procurement rules in connection with the Paks upgrade. The government has “directly awarded the construction of two new reactors and the refurbishment of two more reactors” at Paks “without a transparent procedure,” the EC claims.

The Prime Minister’s Office said in response that during a two-year consultation period the commission had not raised doubt whether illegal state aid had been involved in connection with the project. The government stands ready to face any investigation and will prove that there was no illegal state aid and that the Russian loan had not been called down.  Hungary has signed a loan agreement with Russia for the 12 billion euro project. Last week Prime Minister Viktor Orbán said in an interview with public radio that “the operation of Paks is the number one precondition for cheap electricity in Hungary.”

The Hungarian political parties also commented the Commission’s decision to launch an investigation into Hungary’s Paks upgrade deal. The ruling Fidesz party group said the European Union’s announcement of an in-depth probe into the financing of the Paks nuclear power plant upgrade represented “another attack against public utility fee cuts”, to which the left wing in Hungary was giving its support. Fidesz called Paks the cheapest source of electricity for Hungary, adding that “the nuclear power station’s development is unavoidable for the Hungarian public and industry to receive cheap electricity sustainably.” The lifespan of the currently operating blocks will expire one day, and without the expansion, Hungary and the Hungarian people will become vulnerable which Fidesz said would lie “in the interest of Brussels and the Hungarian left”.

The green opposition LMP demanded that the government should stop all preparations for the expansion of the nuclear power station until the related European Union procedures are concluded. LMP co-chair Bernadett Szél said that preparations cost hundreds of billions of forints and if the government fails to suspend them, LMP will consider filing a criminal report for budget fraud and damage caused by administrative authorities.

Left-wing DK deputy leader Csaba Molnar said the Paks project fails to meet EU regulations in three areas and two official procedures against it are already under way, with a third one, on the classification of environmental information, being prepared. He called on the government to “make do with two slaps in the face and not run into a third one”. The Paks expansion project will push future Hungarian generations into indebtedness, it is non-transparent, poses corruption risks and only serves the interests of ruling Fidesz and its Russian business partners, he said.

Opposition Együtt (Together) party demanded that no more money should be spent on the Paks expansion and the government should make all contracts signed so far public. The resources that Hungary has allocated for the investment should be instead spent on green energy and energy-saving projects, a party statement added. The opposition PM party said the government should immediately suspend preparatory works on the Paks expansion project because all future spending on it “will most probably be money wasted”.

Meanwhile Russia’s state-owned nuclear energy company Rosatom, general contractor for the upgrade of Hungary’s Paks nuclear power plant, said it would host the Atomex-Europe nuclear industry suppliers’ forum in Budapest between November 30 and December 1. The forum includes a conference and presentations by nuclear industry companies. Suppliers and representatives of major Russian nuclear industry companies will also hold individual business meetings, the company informed media.

via hungarymatters.hu and MTI