European Union launches state aid probe into Hungarian nuclear reactors

BRUSSELS – The European Union said Monday it has opened a probe to establish whether Hungary’s financing of two new nuclear reactors constitutes illegal state aid.

The EU’s antitrust watchdog is trying to work out whether a private investor would have financed the building of the reactors in the city of Paks the same way as the government.

“Given the size and importance of the Paks project, the Commission has to carefully assess whether Hungary’s investment is indeed on market terms or whether it involves state aid,” EU competition commissioner Margrethe Vestager said. “This requires a complex analysis.”

Hungary’s government said it was confident it was complying with EU rules just like it had in earlier investments in the Paks project.

“The Hungarian government’s firm position is that the Paks project does not include state aid,” Prime Minister Viktor Orban’s office said. “The investment would also be carried out by a rational investor, since the project’s expected return is higher than the cost of invested capital.”

The government noted that it wanted to keep the Soviet-built power plant in state hands.

“That is the only way to guarantee Hungary’s energy security, cheap electrical power for the population and competitive electrical power for businesses.”

Hungary signed a deal with Russia in 2014 to expand the nuclear plant, including a loan of 10 billion euros ($10.6 billion) from Moscow covering some 80 per cent of the costs.

Monday’s EU move comes days after it opened a legal case against Hungary over questions about contracts for extensions to the Paks II nuclear plant.