Hungary gets agreement to delay Paks II loan repayment

Russia and Hungary signed an inter-governmental agreement in early 2014 for Russian enterprises and their international sub-contractors to supply two VVER-1200 reactors at Paks, including a Russian state loan of up to EUR10 billion to finance 80% of the project, which is known as Paks II.

The ministry said the new arrangement was necessary because of the time lost to state aid investigations into the project by the European Commission. In March 2017, the Commission finally concluded that it could approve financial support for the Paks II project support under EU state aid rules on the basis of commitments the country had made to limit distortions in competition.

"As a result of successful talks, the financing agreement of the Paks 2 investment can be modified in a favourable way for Hungary. It will be sufficient to start paying off the loan in 2031," the Finance Ministry said yesterday, adding that the new plant will start operations in a decade though major construction work at the site has yet to start.

Hungary has four nuclear units at Paks, which is 100 km south of Budapest. These are Russian-supplied VVER-440 pressurised water reactors, which started up between 1982 and 1987.

The Hungarian Energy and Public Utilities Regulatory Authority announced in November last year that it had approved Atomerőmű Zrt's plan to construct the two new units at the existing Paks plant site. A construction licence for the project is required from the nuclear regulator, the Hungarian Atomic Energy Authority, before building work can start.