Hungary, Rosatom is reportedly withdrawing from the Paks project

, SEE Energy News

Russia’s nuclear company Rosatom has reportedly informed the Russian government of its intention to withdraw from the Paks nuclear power plant expansion project due to force majeure, 24hu reports, citing Russian sources citing Alexei Likhachev, Rosatom’s CEO.

The expansion of NE Pax, the largest Hungarian investment of all time, envisions the Russian state nuclear energy group Rosatom building two new reactors as part of a 12.5 billion-euro project based on a 2014 intergovernmental agreement. Russia has secured a 10 billion-euro loan to finance 80% of the costs.

According to sources, Russia no longer supports the investment, the realization of which could be hampered by sanctions. No further details are known.

Minister without portfolio in charge of project expansion Janos Suli did not answer questions about this news.

On the other hand, Rosatom General Director for Central Europe Zalan Bac denied the reports. Implementation of the Paks 2 project will continue as planned and Rosatom is fully meeting its contractual obligations under the Russian-Hungarian intergovernmental loan agreement, including securing project financing, he added.

Hungary has raised a loan of 10 billion euros from Vnesheconombank (VEB), but due to sanctions, the Russian lender cannot transfer funds to the state development bank MFB. In order to avoid that, VEB should transfer loans through Rosatom to Russian territory, Bach said.

The project has been delayed for several years, as Hungarian nuclear regulator OAH has yet to issue a final permit due to security concerns. There appear to be problems with alignment with Rosatom’s VVER-1200 reactors, experts say.

Earlier this month, Likhachev said that the works on the upgrade of the nuclear power plant were going according to plan and that it would be put into operation in 2029-2030. years.

The nuclear project, in general, is not dead yet, but Rosatom’s space is limited due to sanctions and the war in Ukraine, Attila Aszodi, former state secretary in charge of the project, told local media. He also stressed that Hungary has signed a good agreement for the project on a turnkey basis with a fixed price. If, for any reason, the Russians exceed the budget, they bear the risks, he added.

Other analysts predict that, even if Hungary sticks to Rosatom, the Pax 2 project would still be at enormous risk as Western companies would likely refrain from cooperating on a major project with a Russian contractor.

In 2018, GE Hungary, a subsidiary of General Electric, won a contract worth 793 million euros for the production and delivery of turbines for two new units.

The government believes that Hungary needs nuclear energy in order to achieve security of supply and meet climate policy goals. By 2030, about 90% of the country’s electricity production could be CO2-free.

NE Paks covers half of Hungary’s electricity production.