Hungary's nuclear deal under EU scrutiny

BUDAPEST (Reuters) - European officials are examining whether the Paks project meets EU rules on state aid and the supply of nuclear material from Russia. The EU sets limits on state subsidies, and has rules designed to prevent EU countries becoming over-dependent on Russia for nuclear fuel.

The Euratom Supply Agency (ESA) has sought changes to the Paks supply deal asking that non-Russian organisations be allowed to ship fuel to the plant, the Hungarian government said earlier this month. The government said talks with the EU about fuel supply were not blocking the project. On March 24, Janos Lazar, chief of staff to the prime minister, said all hurdles to a fuel supply deal had been removed.

A Commission spokeswoman has also confirmed that the EU was looking into the fuel supply deal, but was not blocking the Paks construction. The EU has not yet commented on the state aid aspects of the project.

“There are very strict rules governing state aid and the single market, and I think this project as we know it now goes against them,” said Andras Perger, an energy analyst at independent think tank Energia Klub in Budapest.

Attila Aszodi, the Hungarian commissioner in charge of the Paks project, said the project did not contravene state aid rules because the rate of return is high enough that, theoretically, private investors would get involved if they had the chance.

Since Hungary and Russia agreed the original deal to develop the Paks plant, the two countries have signed three further agreements setting out details of the project. Despite the EU Commission’s concerns and Moscow’s financial difficulties, Hungarian officials say the deals are not in jeopardy.

Editing By Richard Woods