The European Commission (EC) have decided to start an infringement procedure against Hungary, after assessing the terms of the award for the construction work of two new reactors and the refurbishment of two additional reactors at the Paks nuclear power plant.

The EC is concerned whether the award of these contracts was in line with the EU procurement regulations. The EU legislation seeks to ensure “that all economic operators have fair changes to participate in a call for tender and to win a contract”. However, the Hungarian government decided to directly award a Russian state-owned company with the nuclear power project – the Paks power plant accounts for more than 50 per cent of Hungary’s electricity.

The Hungarian-Russian intergovernmental agreement includes a loan given by the Russian government to the Hungarian government in order to cover 80 per cent of the project costs to build the new reactors.

Viktor Orbán, the Hungarian prime minister, insists that this agreement complies with the EU rules. In addition, the EC insists on pursuing the investigation to assess whether “a private investor would have financed the project on similar terms or whether Hungary’s investment constitutes state aid”.

The Hungarian authorities have now two months to respond.

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