EC Will Investigate Paks II Nuclear Project in Hungary

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has launched an in-depth investigation into Hungary's proposed state aid for the Paks II nuclear power plant (NPP) project.

The move is the latest hurdle for the ongoing project, which will see the construction of two 1,200-megawatt (MW) nuclear reactors at the existing Paks nuclear power plant. Located about 100 kilometers (km) south of Budapest, Paks is Hungary's only nuclear power plant, and uses four VVER-440 type reactors from Russian company AtomEnergoExport (Moscow, Russia). Commissioned between 1982 and 1987, the reactorsy have a combined generating capacity of 2,000 MW and supplied just over half of Hungary's electricity in 2013. The new units 5 and 6 will use VVER-1200 reactors, also from AtomEnergoExport.

Margrethe Vestager, commissioner in charge of competition policy, stated: "Given the size and importance of the Paks project, the Commission has to carefully assess whether Hungary's investment is indeed on market terms or whether it involves state aid. This requires a complex analysis. I think it is important that stakeholders can also submit their views."

A week earlier, the EC announced that it was also launching an investigation into Hungary's awarding of the 10 billion euro ($13.6 billion) Paks II contract to Russia's state-owned Rosatom Corporation (Moscow, Russia), without an open tender process. For additional information, see March 2, 2015, article - Hungary's Paks Nuclear Deal Faces European Investigation.

The plant's construction is being financed almost entirely by a loan from the Russian government. For additional information, see July 11, 2014, article - Hungary Signs 10 billion Euro Nuclear Deal with Russia.

"The Hungarian government has directly awarded the construction of two new reactors and the refurbishment of two additional reactors of the Paks II nuclear power plant without a transparent procedure," the EC stated. "The Commission considers that the direct award of the Paks II nuclear power plant project does not comply with EU legislation on public procurement."

Countries in the European Union (EU) are free to determine their energy mix, but the EC is charged with ensuring that when public funds are used to support companies, government's adhere to EU state aid rules in order to preserve fair competition in the market.

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