European regulators on Monday cleared Hungary to expand its Paks nuclear plant, approving a project that will extend Russia’s influence over the energy policy of a state that has actively promoted its interests within the EU.

Budapest signed a 12 billion euros ($12.7 billion) deal for two new reactors with Russia in 2014, to be built by state atomic energy corporation Rosatom.

After a lengthy probe, European Union state aid regulators said on Monday that government measures within the plan would ensure its operator would not be over-compensated or gain an unfair advantage over other energy providers.

Russian loan helps fund upgrade

Paks will continue to be owned and operated by the Hungarian state.

The EU approval removes the last big hurdle to an upgrade of a site that generates over half of the country’s electricity output. It will be funded with a 10-billion-euro loan from Russian, with Hungary providing the balance.

The first of the two VVER 1200 reactors is due for completion in 2025 and the second a year later.

Hungary has promoted Moscow’s interests within the EU, including lobbying to scrap the economic sanctions imposed after Russia’s annexation of Crimea in 2014. Bilateral energy ties include a gas supply agreement with Gazprom.

Plant part of long-term plan

Hungary’s government has repeatedly said the nuclear plant will serve the country’s long-term energy security, and that Russia has less economic influence in Hungary than in other Western European states.

Prime Minister Viktor Orban has also followed parts of the Kremlin’s playbook by cracking down on critical non-governmental bodies that he accuses of using foreign funding to subvert the political order.

Green liberal opposition party LMP, which wants a referendum on the Paks project, has said the deal was made in secret and exposed the country to undue Russian influence.

Moscow supports decision

Paks currently has four small Russian-built VVER 440 reactors with a combined capacity of about 2,000 megawatts (MW).

These were built between 1982 and 1987 and will be decommissioned between 2023 and 2037.

In Moscow, news agency Interfax said Rosatom welcomed the European Commission decision and was ready to start implementation of the project’s active phase.

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