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EU green light for Paks II nuclear power plant in Hungary

08 March 2017, 14:20 CET
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EU green light for Paks II nuclear power plant in Hungary

Paks nuclear power plant - Photo by Barna Rovacs (Rovibroni)

(BRUSSELS) - Amid criticism from environmental groups, the European Commission gave its green light Monday to state subsidies for the construction by a Russian company of two new nuclear reactors in Paks (Paks II) in Hungary.

Brussels approved this support under EU state aid rules on the basis of Hungarian commitments to limit distortions of competition. Hungary wants Rosatom – a state-owned Russian company – to build two new reactors at the Paks nuclear plant.

"Hungary has decided to invest in the construction of the Paks II nuclear power plant, its right under the EU Treaties," said Margrethe Vestager, Commissioner in charge of competition: "The Commission's role is to ensure that the distortion of competition on the energy market as a result of the state support is limited to a minimum. During our investigation the Hungarian Government has made substantial commitments, which has allowed the Commission to approve the investment under EU state aid rules."

The Commission's state aid investigation found that the Hungarian State will accept a lower return on its investment than a private investor would do. The investment therefore involves state aid within the meaning of EU rules. These rules require state aid to be limited and proportionate to the objectives pursued in order to be approved.

The Commission says Hungary has demonstrated that the measure avoids undue distortions of the Hungarian energy market. In particular, it has made a number of substantial commitments to limit potential distortions of competition.

However, Greenpeace says the decision is "irresponsible and ignores prime minister Viktor Orbán's takeover of Hungary's nuclear regulator.

A new law approved by the Hungarian Parliament in early December allows the government to overrule the country's nuclear regulator on matters related to the construction of nuclear reactors and radioactive waste storage facilities. Greenpeace warns that government control threatens the regulator's independence and its ability to enforce nuclear safety measures. The independence and transparency of national regulators is a basic safeguard enshrined in the Euratom Treaty.

"The Commission is being spectacularly irresponsible," warns Greenpeace EU legal adviser Andrea Carta: " it's allowing massive subsidies for a project backed by a government that openly challenges the importance of independent oversight for nuclear safety. The EU competition watchdog uses the Euratom treaty to justify state aid, but ignores the treaty when it clearly conflicts with Hungary's takeover of its nuclear regulator. The Commission's decision means Paks will have an unfair advantage on the energy market, making it harder for renewable energy to compete."

Russia plans to finance the reactors through an international loan, as stipulated in a 2014 nuclear cooperation agreement with Hungary. Paks II is expected to cost around €12.5 billion.

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