Russia’s nuclear power company Rosatom will expand Hungary’s only nuclear power plant, doubling its capacity, in what is said to be the biggest construction project in Hungary since the fall of communism.
The deal regarding the Paks power plant in central Hungary was signed on Tuesday during a visit of Hungary’s Prime Minister Viktor Orban in Russia.
The Paks power plant, covering about 40 per cent of Hungary’s electricity needs, is already running a Russian-manufactured VVER reactor build in the 1980s.
Some of the Hungarian opposition politicians have criticised the deal, saying it makes the eastern European country overly dependent on Russia. Apart from the cooperation with Rosatom, Hungary also receives most of its gas and oil supplies from Russia.
"We are buying nuclear fuel from Russia, we are buying natural gas from Russia, we are getting oil from Russia, so most of our energy resources are coming from Russia," said Ada Amon, director of the advocacy group Energia Klub, which has opposed the Paks expansion. "This decision is too early to be made."
According to Russia's state atomic agency head Sergey Kirienko, Moscow is prepared to lend Hungary up to €10bn (£8.3bn) to pay for the construction of the two new 1,200MW units that have previously been approved by the EU.
Hungarian Minister of State Janos Lazar said about 80 per cent of the cost, expected to amount to up to €12bn, would be covered by a 30-year sovereign loan from Russia, while Hungary would have to put up the remaining 20 per cent.
The new blocks are not expected to come online before 2023 and will remain in Hungarian state ownership, Lazar said. He said the construction could add 1 per cent to Hungary's economic growth per year and create up to 10,000 jobs.
However, the future of the deal remains uncertain as opposition Socialists have said they will review the deal if elected in the upcoming spring elections.
"The Socialist-led government after the spring elections will review the obligations undertaken by Orban, because a responsible decision about the expansion of the Paks plant can only be based on... a broad social and professional consensus," the Socialists said on Tuesday.
The green liberal opposition party LMP, which has opposed the nuclear power expansion, said Orban was selling out Hungary's sovereignty by making it dependent on Russian energy.
Nevertheless, most of Hungary’s representatives agree the expansion of the Paks power plant is necessary, with a majority of its members of parliament approving it before the last election in 2009.
Officials at state-owned energy group MVM, which runs the Paks nuclear plant, have said Hungary would aim to renegotiate its gas import contract, which is due to expire in 2015, with Russian supplier Gazprom soon.