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Paks agreement headed to Parliament for approval

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The government will submit a bilateral agreement between Hungary and Russia on the upgrade of the Paks nuclear power plant to Parliament, state secretary János Lázár announced today. According to Lázár, the government will review a 2009 parliamentary resolution on a mandate to prepare for the upgrade of Paks at a cabinet meeting next Wednesday and submit the bilateral agreement to Parliament for approval the following week.

Russian state-owned Rosatom will build two more blocks at the Paks plant, it was announced at a meeting of Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orbán earlier Tuesday. Eighty percent of the project’s cost will be financed with a €10 billion credit line from Russia.

Lázár emphasized that the credit for the Paks upgrade would not be an intercompany loan but a loan from the state of Russia to the state of Hungary. The government excluded the possibility of Rosatom operating the blocks after their completion; they will be under the ownership of the Hungarian state, he added.

Negotiations are ongoing on the credit, Lázár said, qualifying that the loan would carry a preferential rate and have a run of 30 years. In the state secretary’s opinion, Russia’s credit offer is “extraordinarily favorable.” He noted that the rate for euro-based financing would be around 5.6%, but added that a 30-year euro construction contract does not exist.

Lázár said the cost of repaying the Russian loan would not be built into the price of electricity generated by the Paks plant.

Finally, Lázár estimated that the first of the two new blocks would start operating in 2024 at the earliest.

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