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Official: Russiaʼs financial problems will not impact Paks deal

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Russiaʼs financial difficulties, which are expected to result in the country cancelling new loans according to reports, will not affect its deal with Hungary on the upgrade of the country’s sole nuclear power plant in Paks, government commissioner for the upgrade Attila Aszódi said yesterday, Hungarian news agency MTI reported.

During an interview on state-owned all-news channel M1 late yesterday, Aszódi reportedly said that Russiaʼs finance ministry issued a statement yesterday, saying that funding for the project had already been set aside in 2014.

Aszódi noted that the Russian general contractor for the project would choose the sub-contractors, adding that the sides had agreed that 40% would comprise companies already active in Hungary, MTI reported.

“The budget is strained, more than strained. I think we are in a situation where we are forced to take a break from issuing new loans,” Deputy Finance Minister Sergei Storchak was quoted by Russian news agency Interfax as saying on Monday.

This statement, coupled with the recent announcement that Hungary’s Prime Minister Viktor Orbán has been invited to meet Russia’s President Vladimir Putin in Moscow next month, and the news that American firm GE was asked yesterday if it could be involved in the project, led some to suggest that the current plan may be in jeopardy.

Under a deal announced about two years ago, while Orbán was in Moscow, Russian nuclear firm Rosatom was to build two new reactors at the Paks plant for €12.5 billion, with €10 billion in financing provided by the Russian state. That deal was awarded without a competitive bidding process.

The deal with Rosatom is currently being investigated by the European Commission due to questions about its competitiveness. EC officials have said that, since it might not be profitable from a market standpoint, the Paks deal could amount to state aid. Hungarian officials have denied this charge.

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