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EC says Paks deal is state aid, gov’t denies claim

History

Hungary has failed to provide sufficient information supporting its argument that a planned upgrade of its sole nuclear power plant does not confer the power generator with an unfair economic advantage, the European Commission said in a report released today.

The government refuted the report, which describes concerns first officially flagged by the EC in November, according to state news agency MTI.

Hungary has contracted Russian nuclear firm Rosatom to build two new reactors at the Paks plant for €12.5 billion, with €10 billion in financing provided by the Russian state. The Hungarian government has argued that the project complies with the market economic investor principle (MEIP), a key EC criterion for assessing state aid, MTI said.

But the EC disagreed with the governmentʼs assessment. “Hungary has not provided sufficient information on whether the investment is profitable on economic terms, taking into account the allocation of risks under the contract, and expectations on future revenues (based on future electricity prices),” said the summary of the EC report, published in the Official Journal of the European Union today.

The Prime Minister’s Office responded to the EC report saying it contained “a number of inaccuracies and misunderstandings” in addition to “unfounded and misleading assertions”, MTI reported. The office also reportedly said it is the governmentʼs “firm stance” that the Paks upgrade is in fact competitive, and it expects the investment to be recouped under market conditions, without the need for state aid.

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