Paks nuclear expansion needs new fuel terms

16 March 2015

Hungary must renegotiate the fuel supply portion of a deal for two Russian reactors at the Paks nuclear power plant after terms proved unacceptable to the Euratom Supply Agency.

An intergovernmental agreement signed in early 2014 would see Russian enterprises supply two VVER-1200 reactors at Paks, as well as a loan of €10 billion ($10.5 billion) and €12 billion ($12.6 billion) to finance the majority of the project. While it is normal for vendors to supply a new reactor's first load of fuel as well as some subsequent reloads, rules in the European Union require all power plants to have more than one fuel supplier in the long term.

This common policy on fuel supply is ensured in the nuclear sector by the Euratom Supply Agency (ESA), overseen by the European Commission (EC), which must countersign any significant nuclear fuel contract for it to comply with EU law. According to presentations available online, the ESA's aim is to prevent any EU consumer of nuclear fuel from becoming "over-dependent on any external source". In recent months this requirement has been underlined by the EU's new Energy Union initiative, which seeks to improve energy security overall for the 28 nations of the bloc.

Paks - new unit location 460 (Paks NPP)
The space at the Paks site where two new reactors are planned (Image: Paks NPP)

World Nuclear News understands that the ESA has decided the fuel supply diversification in the Paks contract was insufficient, and that it declined to countersign the contract. This led Hungary to appeal to the EC, which confirmed its agreement with the ESA's decision. Sources told WNN the issue solely concerns the diversification of fuel supply and not the project in general, which could in theory press ahead without fuel supply in place.

While the proposed fuel supply terms for new Paks units failed to meet the ESA's requirements, the contract to construct a Russian AES-2006 unit at Hanhikivi by Fennovoima in Finland was recently passed by the ESA and required no attention from the European Commission.

The matter is now with the Hungarian government, which must liaise between Rusatom Overseas, the export subsidiary of the Russian state nuclear corporation Rosatom, as well as the ESA and the EC.

On 13 March, Hungarian minister of the prime minister's office János Lázár noted that the intergovernmental agreement with Russia included terms on fuel supply for the new plant and that this had been consented to by the European Commission before it was signed in January 2014. He told Kossuth Radio's 180 Minutes program, "intensive negotiations are ongoing between the European Commission and Hungary".

Should Hungary not succeed in convincing the EC that the fuel supply terms are adequate, or succeed in renegotiating with Rosatom, another option open to Hungary would be to appeal to the European Court of Justice to overturn the EC decision.

Researched and written
by World Nuclear News