Experts agree Paks II won’t be built, but will cost a fortune

February 16, 2015


Civil activist movement “NowUs” (MostMi) organized a roundtable discussion for the purpose of discussing the government’s decision to engage the Russian Atomic Energy Corporation (Rosatom) to expand the Paks atomic energy plant in Hungary.  Participants included Adá Ámon, Energy Club president, Zoltán Sz. Bíró, historian and Russian expert, Zoltán Illés, undersecretary for environmental and water protection under the second Orbán government, and Attilá Holoda, deputy undersecretary for energy matters under the second Orbán government.  The experts concluded that presumably Paks 2 will never be built for various economic and political reasons, but nevertheless will end up costing Hungary a lot of money.

The government classifies everything relating to Paks II

On Wednesday the Hungarian parliament is scheduled to vote on the Office of the Prime Minister’s proposal to classify all Paks-related documents.  According to the bill all public procurement pertaining to the Paks II project is to be exempted from the law on public procurement and classified for 15 years.  The Orbán government’s previous deputy undersecretary for energy matters, Attila Holoda, told RTL Klub before Saturday’s roundtable that the government’s objective is to rule out any public disclosure.  Fidesz parliamentary caucus leader Antal Rogan sees matters differently, telling RTL Hungary should “follow the Finn example” and classify everything.  However, the Fidesz MP neglected to mention that in Finland atomic power stations are built exclusively from private capital, whereas in Hungary the government is to invest HUF 3,000 billion (EUR 12 billion) in the project.

It wasn’t necessary to host Putin

Russian expert Zoltán Sz. Bíró said it would have been possible for the Hungarian government to politely decline Putin’s request for a meeting in Budapest.  He said Prime Minister Viktor Orbán could have refused to host the Russian President without incurring any loss, given the former’s isolated position within the European Union (EU).   The historian pointed out that Putin travelled to Europe (Vienna) only three weeks before last year’s shooting down of a Malaysian commercial airplane.   “The only reason they are willing to talk to him is because they hope that by doing so the situation in the Ukraine will improve.”  He added that Hungary was not “in the game” and for this reason it was unlikely Putin would use the occasion of his visit to Budapest to inform the world about anything relating to the Ukraine.

Former undersecretary for environmental protection Zoltán Illés said the Hungarian head of government had to weigh many factors, because all of them have political significance, including the fact that German Chancellor Angela Merkel and French President François Hollande travelled to Kiev and then to Moscow last week, and that Orbán traveled to Kiev on Friday, only a few days before Putin’s visit.  “Diplomacy consists of a plethora of tactical steps, and nothing is only black and white,”  Illés said. He cited raising the Paks issues just before last year’s general election as a good example of tactical thinking:  Orbán had managed to “skin” the matter eight times and everybody did well, while outside observers regarded it as a mistake.

In relation to the Paks II parliamentiary vote, Illés said he wasn’t brave enough to vote against it, which is why he absented himself.  However, he said there are others within Fidesz who do not support the expansion of Paks.

Former deputy secretary for energy matters Attila Holoda said the public knew nothing about Paks or energy matters, and this is how it was possible to “fish in the chaos” and introduce such a thing into an election campaign.  “In Hungary you can win an election by promising to decrease household utility costs.”

Presently there is not need for Paks 2, the decision could have waited 8-10 years

Holoda says there is no need for Paks 2 in its current form, even though he supports atomic energy and is not opposed to atomic energy playing a part in Hungary’s energy policy.  However, such a decision practically does away with the fossil fuel and renewable energy sector because it immediately alarms investors.  He said the real danger was “making a political decision and practically ruling out that any real improvements take place in renewable energy, for example, for 15-20 even 50 years.”

He said that in October 2011 the Hungarian parliament passed a decision regarding energy policy.  The consensus was based on projections of future energy consumption which are no longer true given the drastic decrease of the past few years.  Holoda said the construction of two new reactors was unnecessary given current trends in energy demand, and that such a monumental decision could easily have been postponed for 10 years.  He said the decision to build two additional reactors at Paks was a bad one given the financial and other burdens the project portends for Hungary.

Fixing in concrete an economic elite for 20 years

Illés completely agreed with Holoda, and emphasized that it is possible to predict anything, but that even the short-term prognosis of the energy sector turned out to be mistaken.  He warned that “various lobby groups were holding the pens that make such projections.”  Illés says they want to achieve that the energy sector move in the direction desired by the economic actors who profit from it.  The former undersecreary says everyone knows that the construction of an atomic energy plant requires extraordinarily lengthy preparations and takes 3-5 years, and construction can take another 8-10 or even 15 years.   “When the decision is made for whatever reason, then we have determined the future 3-5 years in advance.” Illés then asked “if it turns out two years from now that we made a bad decision after we’ve invested HUF 150 billion of the 3,000 billion, then do we acknowledge that we made a mistake and threw the money out the window?” adding that “we are deciding about something about which we have no precise knowledge.”

“There is something that costs 3 trillion forints with a ‘clean profit’ of only 10 percent.  If one company gets the business, then it can earn 300 billion in profits.  If ten companies, then each can earn 30 billion.  Those who are involved are set for the next 15-20 years.”  He points out that there will be elections in 2018, 2022, 2026 and 2030 as well, but we cannot even say what domestic political events will take place next week, let alone who will win these elections.  By contrast these events fix in concrete an economic elite.  In reality this is not an energy question but rather a “hard-core, big political question: which camp does the country belong to?  Where are the limits of its sphere of influence?”

Irresponsible preparation is a hotbed of corruption

Illés warns that it is easier to make money from 3 trillion forints than from, say, a HUF 1.5 trillion wind power plant, even though both produce 2000 megawatts of energy, saying it is only a question of which number is bigger.  He says it is for this reason that they don’t want renewable energy.

In Sz. Bíró’s opinion, the key question was not the reliability of energy demand projections, but whether there was anything unavoidable in relationship to the decision.  He said the global energy market was presently undergoing a huge change, and that now more than ever the saying applies that “whoever plays for time, wins life, and money!”    He said the Russians were taking over the Hungarian market which would have been much more difficult to do in 6-8 years time, assuming they could even manage to do so.

He said it is not necessary to be an expert in order to understand four things:  The first is timing.  Nothing forced the government to make the decision now.  This has nothing to do with the Russians, because it would also be a mistake to do this with the Koreans or the Americans.

The second thing is that the project is completely unprepared.  This has nothing to do with Russia, either according to Sz. Bíró.

The third is the loan.  Whenever whoever happens to be in opposition is not in a position to inspect the use of the money, then the suspicion of corruption arises. If a single party benefits from so monumental a project, then it disrupts democratic political competition for the next 10-15 years.  Sz. Bíró says this is related to Russia, whose relationship with the West has dramatically deteriorated, and points out that the nuclear field is based on “long-term, mutual trust,” and that “to be stuck in such a system of connections due to uncertainty would be the height of irresponsibility.”

Paks 2 will cost twice as much as planned, even though it already isn’t worth it

Ada Ámon further explored the question of who will benefit, especially as “the money will never step foot in Hungary”, pointing out that presumably the money will land directly into Rosatom’s account, even though Hungary will be responsible for repaying the loan.  She said Paks 2 will end up costing 6-7 trillion forints and that the “pure profit” will be more on the order of 16-17 percent.   “Two number 4 metros could be built from the profits alone.”  Ámon says the matter is simple in that “doing business with the Russians is a different kind of business” and that furthermore the Russians always regarded energy prices as a kind of means of power.   From this point of view Hungary is a gate on the European Union in which they are buying a market.

According to Ámon, the rising cost of security features means that nuclear energy is the only energy sector where costs are rising.  She said investing in renewable energy carried much less risk and was a better investment than nuclear power plants.  In the long run renewable energy would render old-fashioned power plants superfluous.  “A Paks type of power plant simply won’t be necessary.”

Holoda pointed out that the best would be if Putin were to inform Hungary that it is no longer worth it to Russia to lend Hungary EUR 10 billion, considering that what Russia will lend to Hungary at 4 percent per annum currently costs Russia 16-17 percent per annum.

Illés opined that Putin would nevertheless assure Orbán that everything is going to go according to the agreement, and the reason he is coming to Budapest is to demonstrate to the world that Russia is not about to collapse as a result of the fall in oil prices.  He said it was possible that in the end Russia wouldn’t finance the project itself, but that it wouldn’t prevent the parties from spending a lot of money over the next 3-5 years.

Few new workplaces

Ámon believes that size of the project is such that corruption will completely sweep away the Hungarian economy, and “what will be strange is if somebody isn’t corrupt.”  To this Illés added that for the HUF 3 trillion the facility will not be EU compatible, and if they want to meet European norms then they will have to calculate with greater expense, and in this way it could end up costing 6-7 trillion forints.  He also points out that in Germany only 10,000 people work in the atomic energy sector, whereas 50-60,000 work in the renewable energy sector.