Russia amends loan deal for Paks II

On November 25, the Russian Duma parliament ratified a five-year extension of the Hungarian state loan of 10 billion euros ($ 11.3 million) for the construction of the two-unit Paks II nuclear power plant. . The Duma ratified the protocol amending the 2014 agreement between the governments of the Russian Federation and Hungary on the provision of the loan (the protocol was signed in Moscow and Budapest in May).

As of May 2021, Hungary had used the proceeds of the loan for a total amount of 320.4 million euros. Due to a significant delay in the start of construction of the nuclear power plant due to the lengthy procedure for obtaining approval from the European Commission for the project, Hungary applied in January 2020 to the Russian Ministry of Finance to extend the period of use of the loan by five years. (until the end of 2030) and postpone the start of repayment of the principal of the debt of the loan from 2026 to 2031, while keeping the final maturity of the loan unchanged (September 15, 2046).

Rosatom, accepted the changes to the construction schedule for the nuclear power plant and in May 2021 an intergovernmental protocol was signed which accepted the changes requested by Hungary. However, in order to secure the interests of Russia as a creditor, the protocol included a provision obliging Hungary to repay the current debt in the amount of 72.7 million euros no later than April 30, 2021 and to pay the outstanding debt. accrued interest on this amount from the date of repayment. This obligation was fulfilled by Hungary before the signing of the protocol. In addition, the protocol includes a provision on the possibility for the parties, at the initiative of the borrower, to agree to a decrease in the previously agreed amount of the annual use of the loan.

The Paks II project was launched in 2014 by an intergovernmental agreement between Hungary and Russia for two VVER-1200 reactors supplied by Rosatom. The contract was backed by a loan from the Russian state to finance the majority of the project. The Hungarian Atomic Energy Authority (HAEA) issued a site license for Paks II in March 2017 and the European Commission also approved that the effects of the new plant on competition would be acceptable, subject to certain commitments from the Hungarian government. The preparatory work started this year, following the obtaining of a specific authorization from HAEA. After some delays, a building permit is expected soon following the reorganization of the HAEA.

Photo: the Paks II nuclear power plant project in Hungary

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