Hungarian parliament approves EUR 10 billion Russian loan for Paks

June 24, 2014


LMP MPs stage protest in parliament: “You are betraying your own grandchildren”, “No to Russian atom loans”,  “No to Paks, No to Putin”

Governing party MPs approved a controversial EUR 10 billion loan agreement with Russia on Monday, to be used to fund the expansion of Paks nuclear power plant. The bill passed with 110 votes for, 29 against and 19 abstentions.  All opposition parties voted against the Russian loan except Jobbik, which abstained.

Opposition parties criticized the lack of a tender process, feasibility studies or public debate on the expansion. LMP MP Bernadett Szél said the cabinet “has handed the country to Vladimir Putin”, noting that the 21-year agreement involves a “high exchange rate risk”.

Together-Dialogue for Hungary MEP Benedek Jávor and MP Tímea Szabó held up a giant cheque for HUF 700,000, the estimated amount that the loan will cost each Hungarian citizen. Hungary will have until 2025 to call down the loan and will repay it over 21 years. Jávor calculated that the country will repay more than double the loan amount over that period.

Economy Ministry state secretary András Tállai defended the deal, saying “at least the loan came without political conditions, unlike the IMF loan taken out during the Gyurcsány administration. The interest rate is very favourable at 3.95%”.

Jobbik, itself widely reported as having close links to Russia, abstained from the vote, despite having announced it would support it earlier in the day. Vice-president János Volner said Jobbik supports the project but opposes foreign loans.

Before the vote the five-person LMP parliamentary delegation staged a protest, with each member holding aloft a different sign.  After the vote LMP urged President János Áder to refer the agreement to the Constitutional Court and said it will approach the ombudsman if the head of state ignores its plea.

Rosatom president Sergei Kiriyenko and then-Hungarian national development minister Zsuzsanna Németh signed the agreement in Moscow in late January, in the presence of Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin. Parliament approved the project the following month.

The Paks plant is owned by state energy company MVM. It has two blocks with four 500 KW Soviet-era reactors and produces 40% of Hungary’s electricity.  Russian company Rosatom will build two more blocks of between 1 and 1.2 MW each.  The Russian loan will cover 80% of the planning, construction and operation costs, with Hungary providing the remaining 20%.