CONSULTING

Hungary has only one nuclear power plant, at Paks, where four VVER 440-213 reactors
provided about 15 TWh or 52.7 percent of the country’s electricity in 2015. The reactors started
operation in the early 1980s and have been the subject of engineering works to enable their
operation for up to 50 years, until the 2030s, accompanied by a 20 percent increase in capacity.
The first unit received permission to operate for another 10 years after a periodic safety review
in 2013, the second unit in 2014. 865
In March 2009, the Parliament approved a government decision-in-principle to build additional
reactors at Paks. 866 Even at this time, Russian assistance seemed to be the preferred option, and
the Foreign Minister indicated that expansion of the Paks plant would be part of a “package deal”
on outstanding economic issues with Russia. 867 But it was still a shock to nuclear vendors 868 when
in January 2014, an international financing agreement was reached between Hungary and Russia
through direct negotiation between their heads of government for 80 percent of the value of the
construction contact worth €12.5 billion (US$13.2 billion). This was followed by an engineering,
procurement, and construction and fuel contract in December 2014. It is said that was to be a
“turn-key” contract, including a 20-year fuel contract and spent fuel return. 869 The EU’s EURATOM
did not initially give its approval and it was only signed by all parties in April 2015 after changes
on the diversification of fuel supply.
The loan deal has been criticized, 870 because it was agreed just five days before a general election,
and only a few of the crucial terms and conditions of the deal were made public. 871 According to a
version of the loan contract leaked by the Russian side, the loan rate will be significantly below
the market norm for such a project, with reports suggesting variable rates of 3.95-4.95 percent
interest to cover 80 percent of the project’s costs. The loan must be used by 2025 and be paid back
within 21 years of the commissioning of the plant, starting in 2026. However, penalty conditions
are said to have the possibility to bankrupt the Hungarian State, and opposition parliamentarians
at the time called for the Government to cancel the project. The Government is nonetheless
determined to proceed and has even modified proposed legislation to increase the period for
which contract terms would remain secret from 15 years to 30. The scope of the confidentiality is
that it “may deny publishing any data connected to the project, if their publication would engage
either the national security interests of Hungary, or intellectual property rights.” 872 The secrecy
of the project has raised significant national and international protest as by keeping everything
confidential, there will be little opportunity to keep track of costs. The project represents a U-turn
for the ruling party, which had fiercely criticized previous socialist governments for failing to
865 WNN, “Paks unit 2 gets 20-year life extension”, 27 November 2015, see http://www.world-nuclearnews.org/RS-Paks-unit-2-gets-20-year-life-extension-27111401.html,
accessed 29 March 2016.
866 John Shepherd, “Hungary’s Parliament Paves Way to Build New Reactor Unit”, NucNet, 31 March 2009.
867 Realdeal.hu, “Hungary, Russia Seek to Resolve All Outstanding Issues in One Package, Says FM”,
21 January 2011.
868 NIW, “Newbuild: Hungary Ditches Tender in Favor of Rosatom Deal”, 17 January 2014.
869 NIW, “Newbuild, EPC Contract Signed for Russian VVER1200s at Paks”, 12 December 2014.
870 NIW, “Hungary: Secrecy, Political Risk Cloud Prospects for Paks Expansion”, 20 February 2015.
871 Politics.hu, “Hungary signs EUR 10 billion Paks agreement with Russia”, 1 April 2014.
872 NIW, “EU Hungary doubles down on Paks 2 secrecy”, 27 February 2015.
Mycle Schneider, Antony Froggatt et al. 202 World Nuclear Industry Status Report 2016