Austria to sue EC over Paks 'state aid' approval

23 January 2018

Austria plans to sue the European Commission for allowing Hungary to expand its Paks nuclear power plant, Austrian Sustainability Minister Elisabeth Köstinger said yesterday. In a statement by the Federal Ministry of Sustainability and Tourism, Köstinger said: "It is a wrong signal if the European Commission classifies subsidies for the construction of nuclear power plants as harmless to energy policy."

The Paks plant, which is 100 km south of Budapest, currently comprises four Russian-supplied VVER-440 pressurized water reactors, which started up between 1982 and 1987. An inter-governmental agreement signed in early 2014 would see Russian enterprises and their international sub-contractors supply two new units at Paks - VVER-1200 reactors - as well as a Russian state loan of up to €10.0 billion ($11.2 billion) to finance 80% of the project.

Hungary received the go-ahead to start construction of new nuclear power units at Paks this year as planned, following the Commission's approval last March of commitments the country had made to limit distortions in competition. The Commission concluded that Hungary's financial support for the Paks II project involves state aid, but it could approve this support under EU state aid rules on the basis of these commitments.

In November, the Commission cleared Hungary's award of a contract to Russian state nuclear corporation Rosatom to build the two new units at Paks. The Commission had been examining until then two matters related to Paks II - procurement and whether funding of the project amounts to state aid. On 17 November it closed the infringement procedure it had launched against Hungary over public procurement rules in connection with the capacity maintenance of the Paks plant.

A spokesman for Köstinger told Reuters yesterday: "EU assistance is only permissible when it is built on common interest. For us, nuclear energy is neither a sustainable form of energy supply, nor is it an answer to climate change." The spokesman added that the deadline for filing a suit to challenge the executive Commission's decision at the European Court of Justice is 25 February.

Project company MVM Paks II received an environmental licence in September 2016 and in October that year submitted a site licence application for the two new units. The Hungarian National Atomic Energy Office (OAH) issued the site licence in March last year. The first unit is to be completed in 2025 and the second in 2026.

Rosatom subsidiary ASE Group, the general contractor for the Paks II project, last week awarded GE Hungary, a unit of General Electric, a €793 million ($970 million) contract to manufacture and supply the turbines for the two reactors.

Austria, which shares a border with Hungary, has no nuclear power plants. It launched a similar legal action against the Commission in 2015 over its approval of the UK's support for the Hinkley Point C nuclear power plant project in Somerset, England.

Hungarian Prime Minister Viktor Orbán is scheduled to hold his first meeting with recently elected chancellor of Austria, Sebastian Kurz, on 30 January.

Orbán’s office said in a statement that the Paks nuclear power plant guarantees the cheap, reliable and safe supply of electricity to Hungarian people and businesses, adding that Austria's lawsuit would not affect work on the project. The Hungarian government will "stick to its plan to ensure the maintenance of capacity" at the Paks plant, it said.

In January last year, the OAH extended the operating licence of block 3 of the Paks Nuclear Power Plant by another 20 years.

Paks 3 was commissioned in 1986 and its operating licence was set to expire on 31 December 2016. OAH said earlier that month it had received an application to extend the operating licence of unit 4 for another 20 years, until 31 December 2037. Units 1 and 2, which received their 20-year licence extensions earlier this decade, will operate until the ends of 2032 and 2034, respectively.

Researched and written
by World Nuclear News