Hungary to call down first installment of Russian Paks II loan

November 8, 2017

Hungary to call down first phase of Russian Paks II loan
The Paks nuclear plant | Photo: Facebook/MVM Paksi Atomerőmű Zrt.

Hungary will begin calling down the first installment of a EUR 10 billion loan from a Russian state-owned bank for its financing of the Paks II nuclear reactor project, said state undersecretary responsible for the project Attila Aszódi at an energy conference Tuesday. Aszódi announced at the Portfolio Energy Investment Forum 2017 that loan proceeds in excess of HUF 30 billion (USD 111.5 million) would be remitted to the first ten contractors, portfolio.hu reports.

80 percent of all work will be financed via the Russian loan (which totals some EUR 10 billion), with the remaining 20 percent financed through Hungarian public funds, Aszódi noted. This means that in addition to the HUF 30 billion to be supplied to project contractors which Hungary will have to pay back to Russia with interest, HUF 7 billion is payable immediately from public coffers.

Critics of the Paks II project, which involves the construction of two new nuclear reactors at the Paks atomic energy facility, argue that taking out such a large loan from a Russian state bank renders Hungary dependent on Russia for decades to come. Environmentalists also argue that the environmental permit granted to the project failed to answer numerous important questions.  Numerous experts, including a former Fidesz MP and undersecretary for environmental matters, believe the project will never actually be built for the simple reason that, given its EUR 12 billion price tag (which could easily end up costing twice as much given the government’s poor record at completing large projects on budget-ed.), the cost of the electricity the new reactors would generate will be prohibitively high.