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European Commission investigating Paks 2 for restricted state subsidies

Hungarian news site 444.hu reports that European Commissioner on Competition Margrethe Vestager indicated in a letter Tuesday that the Commssion is investigating whether Hungary’s controversial expansion of the Paks 2 nuclear reactor would involve restricted state subsidies.

The Danish commissioner, who has a reputation for being tough when it comes to economic competition, has already clashed with industry giants Google and Gazprom for anti-competition practices.

According to 444.hu, the European Commission has been investigating the government’s planned expansion of Paks 2 since May 22nd. The government has even been notified of the investigation.

The European Commission is still awaiting a formal response from the Commission regarding the government’s reasoning as to why the Paks 2 expansion would not involve restricted state subsidies.

If the European Commission is not satisfied with the Hungarian government’s reasoning, the Commission’s next step will be to launch yet another infringement proceeding against Hungary.

Hungarian energy think-tank Energiaklub and MEP Benedek Jávor of Dialogue for Hungary (Párbeszéd Magyarországért) asked the European Commission to investigate (based on what is known about the secretive project) what would happen in the event that Paks 2 is unable to produce energy according to the preliminary estimates. If such a scenario were to arise, the government would have to subsidize the expenses related to the new reactors.

Energy expert and Corvinus University professor Balázs Felsmann and Energiaklub recently published an analysis on why they think there is a high likelihood the state would have to step in to provide restricted state subsidies for the Paks upgrade.

Commission Margrethe Vestager considers these concerns to be serious.

Minister Overseeing the Office of the Prime Minister János Lázár has repeatedly denied that the Paks 2 expansion would involve any restricted state subsidies.

444.hu writes the Commission’s current investigation may be completed by October this year. It will be clear by then whether the Hungarian government’s current plans will be approved by the European Commission.

Benjamin Novak :