January 25, 2019 / 11:29 AM / 23 days ago

Hungary working to modify funding for Russian-built nuclear plant

BUDAPEST (Reuters) - Hungary is working to modify financing for a nuclear plant being built by Russia so it only starts repaying the loan once the two reactors begin supplying power, a Hungarian minister said, after an EU review of the plans contributed to delays in the project.

The existing 2 Gigawatt Paks plant, which accounts for half of Hungary’s power capacity and meets a third of consumption, started up in the 1980s and will be decommissioned in the 2030s.

Hungary awarded Russia’s state-owned Rosatom a contract to build a similar-sized plant to replace the existing one, but construction has faced long delays, partly because of a European Union review of the project, including the way it was funded.

“Once we know the deadlines for the technical contract, we will modify this (financing) contract,” said Janos Suli, the minister in charge of the project, adding that this would meet procedures set by the EU executive.

“We will begin repaying installments once the blocks begin production,” he said. “There is no damage, no extra payment involved, only a rescheduling of the financial payments.”

He said the Russian and Hungarian finance ministries were working to modify funding arrangements. Hungarian Finance Minster Mihaly Varga would travel to Moscow to finalize the changes for Hungary’s parliament to approve, Suli added.

After parliament voted to build new nuclear capacity in 2009, Prime Minister Viktor Orban bypassed an international tender and signed a deal with Russian President Vladimir Putin.

The move drew international criticism, especially from the United States, which is concerned about Central and Eastern Europe’s heavy reliance on Russian energy sources.

Under the deal, Moscow will build two reactors to supply the capacity and offered a 10 billion euro ($11.3 billion) state loan to help finance the 12.5 billion euro project.

The Organisation for Economic Co-Operation and Development said Hungary’s decision to choose Russian technology was understandable, given Moscow’s track record and stable supply chain.

“The market has many competitors but Russia is one of the strongest,” the head of the OECD’s nuclear energy agency, William Magwood, said. “Other countries will have to find a way to be competitive with Russian suppliers.”

Reporting by Marton Dunai; Editing by Jason Neely and Edmund Blair

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