Putin signs deal to finance Hungary’s nuclear plant extension

Banking sanctions against Russia made changes to the nuclear energy deal between Russia and Hungary necessary

editor: REMIX NEWS
author: Magyar Nemzet
Russian President Vladimir Putin attends a meeting with Russian Federation Council Speaker Valentina Matviyenko at the Kremlin in Moscow, Russia, Tuesday, Aug. 1, 2023. (Alexander Kazakov, Sputnik, Kremlin Pool Photo via AP)

On Monday, Russian President Vladimir Putin signed a protocol amending the financing contract for the Paks nuclear power plant, which became legally binding. Russia will provide Hungary with a €10 billion (roughly HUF 3.9 trillion) loan for the construction of the Paks nuclear power plant, covering 80 percent of the planned costs.

The modification was necessary for two reasons: firstly, because the flow of money between Russia and Hungary has been significantly hampered by Western financial sanctions and, secondly, because the Paks project is significantly behind schedule.

Hungary’s Paks nuclear plant. (MTVA/Csaba Jászai)

Russian news agency Ria Novosty reported that the amendment states that Hungary will pay to Russia, within 30 days of the ratification of the protocol, the interest accrued between March 1, 2022, and the date of entry into force of the protocol, as well as the cost of maintaining the unused part of the loan, totaling some HUF 350 million. The protocol also stipulates that no default interest will be charged if the amount is received on time.

This procedure will settle the dispute between the Hungarian and Russian parties over the amount of the loan not yet used because of the delay in the investment.

The protocol also stipulates that the sanctions will change the payment procedure. Although the loan amount will continue to be denominated and payable in euros, the Hungarian side will need to open a euro account with a Russian bank to make the payment.

Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin signed an agreement in 2014 that Russia’s state-owned Rosatom company would expand the current 2,000 megawatts capacity of the Paks nuclear plant completed in 1987 by the then Soviet Union with two new reactors with a combined capacity of 1,200 megawatts.

Although the exact financial details of the transaction remain classified, the expansion is expected to cost €12 billion.

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