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Political yet illegal decision on Paks non-tendering infringement

Here below, you can find the documents I received following an access to documents request regarding the documents of the infringement procedure point towards the fact that the European Commission took a political decision in closing the infringement procedure. And this political decision is against EU law.

The infringement that had been initiated following my complaint, was closed on 17th November 2016. The documents clearly show that the initial arguments of the Hungarian party on international agreements and the financial package that would accompany the Russian offer were dismissed by the Commission. Consequently, in the Commission’s view also there should have been an open call for the project.

In the spring of 2016, after the official reply to the letter of formal notice, Hungary made for the first time counter-arguments of technical exclusivity which had also been dismissed on service level initially by the EC and 4 scenarios were envisaged at this stage of which the closure of the case is clearly stated to be a political solution. This option was taken and the Minister for the Prime Minister’s Office personally thanks the Commissioner for their smooth cooperation.

The letter of Alexander Italianer, Secretary-General of the European Commission

LIST OF DOCUMENTS IN CASE 2016/6535

1 Note for the launch of the interservice consultation on the letter of formal notice (LFN) in infringement procedure NIF 2015/4231-4232 concerning the PAKS NPP project, with Annex (draft LFN), dated 10/11/2015, Ref No Ares(2015)4966089  and also this letter

2 Interservice consultation – the comments of the Legal Service to draft LFN, dated 10/11/2015, Ref No Ares(2015)4975167

3 Interservice consultation – DG ENER opinion, dated 11/11/2015
The first part of this document

4 Interservice consultation – DG COMP opinion, dated 11/11/2015
The second part of this document

5 Interservice consultation – DG TRADE opinion (with comments to draft LFN in Annex), dated 13/11/2015
The third part of this document and its annex

6 Letter of formal notice sent to Hungarian authorities (Hungarian language version), dated 20/11/2015, Ref No SG-Greffe(2015)D/13441

7 Reply of the Hungarian authorities to the letter of formal notice (with Annexes A and B), dated 21/01/2016, Ref No Ares(2016)358726

First part

Second part

Annex A

Annex B

8 Note on the assessment of the Hungarian reply to the letter of formal notice, dated 10/02/2016, Ref No Ares(2016)710709

9 Report on the meeting with Hungarian representatives on 12 February 2016, dated 15/02/2016, Ref no Ares(2017)495511

10 Report on the meeting between Commissioner Bienkowska and Hungarian authorities on 12 January 2016, dated 19/02/2016, Ref No Ares(2016)882647

11 Flash report on the meeting with Hungarian authorities, dated 02/03/2016, Ref No Ares(2017)495771

12 Follow-up to the Note on the assessment of the Hungarian reply to the letter of formal notice (Ares(2016)710709), dated 04/03/2016, Ref No Ares(2016)1129955

13 Report on the meeting with Hungarian authorities on PAKS case, dated 09/03/2016, Ref No Ares(2017)495909

14 Flash report on the meeting of 22 April 2016 with Hungarian authorities on PAKS, dated 25/04/2016, Ref No Ares(2017)496490

15 PAKS – Flash report on the technical meeting of 28 April 2016 with Hungarian authorities, dated 29/04/2016, Ref No Ares(2017)496571

16 Flash report on the meeting with Hungarian authorities on PAKS – 3 June 2016, dated 06/06/2016, Ref No Ares(2017)496889

17 Flash report on the meeting of Cabinet of Commissioner Bienkowska with Hungarian authorities, dated 09/06/2016, Ref No Ares(2017)496962

18 Flash report on the meeting between DG GROW and Hungarian authorities on 14 June 2016, dated 15/06/2016, Ref No Ares(2017)497022

19 Flash report on the phone call between Hungarian authorities and DG GROW, dated 21/06/2016, Ref No Ares(2017)497110

20 Flash report on the meeting of DG GROW with Hungarian authorities on 24 June 2016, dated 24/06/2016, Ref No Ares(2017)497322

21 Flash report on the meeting of DG GROW with Hungarian authorities in Budapest on 5 July 2016, dated 07/07/2016, Ref No Ares(2017)497409

22 Flash report on the meeting of DG GROW with Hungarian authorities on 12 July 2016, dated 12/07/2016, Ref No Ares(2017)497467

23 Commitment letter from Hungarian authorities to Commissioner Bienkowska, dated 4 August 2016, Ref No Ares(2016)4123594

24 Note for the launch of the interservice consultation on the closure of infringement procedure NIF 2015/4231-4232 concerning the PAKS NPP project (with Annexes 1 and 2), dated 24/08/2016, Ref No Ares(2016)4766008 and its annex

25 Interservice consultation – DG TRADE comments, dated 26/08/2016
The first part of this document

26 Interservice consultation – DG ENER opinion, dated 30/08/2016
The second part of this document

27 Interservice consultation – DG COMP and DG TRADE opinion, dated 02/09/2016
The third part of this document

28 Day Note of 17 November 2016 (SEC(2016)469/4) concerning the Commission decision closing infringement procedure 2015/4231-32 (with Annex (SEC(2016)475/2)), Ref No Ares(2017)162348 and its annex

Quote by Benedek Jávor on today’s Commission decision in the Paks II state aid case

The European Commission has today concluded that Hungary’s support for the Paks II nuclear project constitutes State Aid. The Commission has nonetheless approved the support on the basis of commitments made by the Hungarian government, which they say will limit market distortion.

Commenting on the decision, Hungarian MEP and Greens/EFA transparency spokesperson Benedek Jávor said:

“Despite the Hungarian government’s repeated denials, the European Commission has confirmed that the Paks II project will benefit from State Aid. By doing so, the Commission effectively concedes the underlying economic weakness of the project. We remain of the view that Hungary has not demonstrated that this project will avoid undue distortions of the Hungarian and regional energy markets and we will be strongly supportive of any appeal, as is apparently being considered by the Austrian government.

“With the Hungarian state to be the owner, financer, operator and regulator of the new nuclear power plant, there is a clear problem of concentration of power. Competition and public procurement rules must be applied evenly across the entire energy market, and the nuclear industry must be no exception. With nuclear representing more than a quarter of the EU’s current energy production, this decision will severely undermine confidence that the Energy Union and the internal electricity market represent a level playing field.”

Interview with Benedek Jávor: Hungarian argument for Paks II nuclear project is invalid

Below is Euractive’s original interview with MEP, Benedek Jávor in its entirety:

There are players in the game who are ready to take the Pak II case to the European Court of Justice – and I am one of them, Benedek Jávor told EurActiv Czech Republic.

Benedek Jávor is a Hungarian Green and one of the complainants against the Paks II Nuclear Power Plant project.

Jávor spoke to EurActiv.cz’s Adéla Denková.

The European Commission has recently closed the infringement procedure launched against Hungary over compliance with public procurement laws in the Paks II Nuclear Power Plant project. This means that Hungary was not obliged to announce a public tender for the power plant’s construction and that the agreement with Russia does not violate European law. You are one of the critics of Paks II. What do you think about the decision?

According to European rules, there might be certain exceptions to EU public procurement law in the event of existing technical requirements that make it impossible to announce a public tender. The Hungarian government argued that there was no need for a tender in the case of Paks II, because Hungarian regulations and technical standards make it impossible for anyone other than Rosatom to construct the plant. The European Commission accepted this so-called “technical exclusivity” explanation, but I believe it is not a valid argument for several reasons.

Why do you think the explanation provided by Budapest is invalid?

A nuclear power plant is not a bicycle that you buy in one piece. It’s always a tailor-made project constructed in compliance with local regulations. Initially, none of the designs provided by nuclear technology companies meet the requirements of any state, but the winner of a tender will then modify its design according to the country’s individual specifications.

Okay, but the decision suggests that Rosatom is somehow more eligible for the project.

We don’t know whether the other possible suppliers of nuclear technology could have met the criteria, as this has never been established, but according to a recent article in Politico at least Westinghouse was interested in submitting a bid. One thing is for sure, though: not even Rosatom had been able to meet Hungary’s requirements initially. The Hungarian government’s special envoy for the Paks II project, Attila Aszódi, personally stated that several hundred modifications to the original Russian design have been required in order to comply with Hungarian regulations.

Flawed regulation

You said there are other arguments supporting your criticisms of the agreement. What are they?

If we are to accept the government’s technical exclusivity argument, meaning that Hungary’s strict regulations made a public tender unnecessary for the Paks II project because only one supplier could meet them, this means that the regulation itself violates European law. There have been a series of cases at the European Court of Justice which clearly demonstrate that any regulation restricting the market without a compelling reason should be phased out.

The implication for Paks II is as follows: if EU public procurement law permits non-tendering under technical exclusivity, then there is a strong case for launching an infringement procedure against those national regulations which gave rise to a non-competitive technical exclusivity scenario.

Are you going to pursue this argument?

There are players in the game who are ready to take the case to the European Court of Justice, and I am one of them. The question of the tendering or non-tendering of a project may be brought to the Court only by market competitors. But if a case concerns a discrepancy between European and national law, then as an MEP I am entitled to bring it myself. And the Commission must know that if the case is taken to the Court, they can easily lose it.

You were the complainant against the agreement between Budapest and Moscow. What is the history of this case?

The investigation into a possible violation of EU public procurement law was based on a complaint I submitted in 2014, and in November 2015 the Commission announced an infringement procedure over the project’s non-tendering. In the opening letter of the infringement procedure, they stated that Paks II fell under the EU’s public procurement regulation and that an international tender should have been conducted. Almost a year later – in August last year – I received a letter from the Commission outlining a compromise with Hungary which followed a completely different line of reasoning, based on the arguments made by Budapest.

Another strange aspect of the compromise is the fact that this argument apparently occurred to the Hungarian government only at the very end of the procedure. For years, they were not aware that no one else could meet the Hungarian standards and that this was the reason they didn’t conduct a public tender. They used completely different reasoning and never mentioned technical exclusivity until the Commission had rejected all the other arguments. It was only two years after granting the project to the Russians that they suddenly realised that only Rosatom could meet the Hungarian standards.

Expensive power

Another investigation has been launched against Paks II, this time concerning state aid. Do you think the project can survive without financial support from the government? 

Since the very beginning, I have pointed out that the new nuclear power plant at the Paks site would be problematic not only with respect to security, safety and environmental considerations, but also from a budgetary perspective. If current market prices for electricity persist, the project will never pay for itself and will clearly need substantial state aid in order to survive. In addition to the infringement procedure concerning public procurement rules, November 2015 – which was a black month for Paks II – also saw the Commission announce an in-depth investigation into possible state aid in the project.

The Hungarian government endeavoured to convince the Commission that there was no need for state aid. The government commissioned a study, carried out by Rothschild & Cie, which concluded that the project was able to generate fair profits and would pay for itself. This conclusion was broadly communicated by the government. The more interesting part is that according to the study – and this has not been publicised very extensively – Paks II would pay for itself only if electricity prices in the EU market were to double over the next couple of years. No one is actually anticipating this, however.

But aren’t experts expecting a certain increase in electricity prices during this period? 

Prices on the EU electricity market have been low for quite a long time, and the indicators we have do indeed lead us to expect a slight price rise in the next couple of years. But here we’re talking about 20 or 30%, which is very far from a doubling of the price. And following this increase we’ll likely see another decline in wholesale electricity prices because the costs of renewable energy sources keep falling. The above-mentioned study is therefore based on an unrealistic set of assumptions.

Do you have any information about the Commission’s view on the state aid case?

There has been no official communication in this regard, but according to the information we have the Commission may conclude that the project’s estimated costs and estimated incomes are out of balance, and that there will be a clear deficit during its operational life. If they insist on this point, then Budapest will have to accept it.

Still, the Commission could rule that Hungary may provide financial support to the power plant under certain conditions. 

Indeed, the European Commission may accept the need for state aid if special circumstances obtain on the Hungarian power market and the government is unable to resolve the situation in another way. In my view, however, such a deal could also be taken to the Court, and the Commission would be unable to defend it. There’s no proof that constructing a nuclear power plant is the only way to solve the ostensible problems on Hungary’s electricity market. Actually, no one has ever investigated alternative solutions, and the Hungarian government’s estimates of expected total electricity consumption in 2030 and other indicators are based on unrealistic data.

Do you have any estimates regarding the amount of money that could be provided to the project?

According to my calculations and independent assessments, the required state aid may be as much as HUF 100 billion (€300 million) per year. These are conservative numbers, and other estimates range as high as HUF 250 billion annually. Just for comparison, the incomes of the existing nuclear power plant in Paks do not exceed HUF 180 billion per year. And remember: these figures aren’t profits, but total incomes. This suggests that the Paks II project will need state aid in an amount close to the existing power plant’s total incomes and perhaps even exceeding them.

And I haven’t even mentioned the fact that in the last 15 or 20 years none of the nuclear power plant projects in the EU have been completed on time, and total construction costs have been double their initial budgets on average.

Future of the EU power market

On the other hand, investors are currently having a hard time on the European energy market. The general view is that it’s not profitable to invest one’s money into any kind of energy source without state aid. Why then is financial support for a nuclear power plant such a problem? 

The EU electricity market is currently undergoing a transition, and it’s very difficult to say exactly what it will look like in future. Nevertheless, it’s quite clear that the market is becoming much more flexible and will be based increasingly on local small-scale installations. The age of big utilities is over, and baseload generation will no longer play an important role.

You’re right that current electricity prices do not send the right signal to investors. As I have already mentioned, in the next couple of years we’ll most likely see a price increase that will facilitate new investments into energy infrastructure and generation capacities. But that’s not the question: you have to look at the levelized costs of different energy sources. In renewables, costs are declining very quickly. We can also mention natural gas power plants, the construction of which is much cheaper than that of nuclear power plants. This is why, once prices rise, it will still be much more profitable to invest in renewable sources or natural gas.

Do you believe the energy system will be based on renewables and gas in future? 

When you have a large proportion of renewables in your energy mix, you also need flexible energy sources to provide grid regulation. Natural gas power plants are a good fit here, but in the long run even natural gas could be phased out of the system, which will be based on renewables and a high degree of demand-side management, in other words smart technologies and energy efficiency. I cannot see any place for nuclear power plants in such an energy system.

In a nutshell, the trouble with nuclear investments is not a question of tendering or non-tendering. I wouldn’t be satisfied with Westinghouse, EDF, KHNP or any other company winning the tender, because their nuclear power plants would incur the same or even higher costs. With or without a public tender, there will be serious problems with profitability, because nuclear energy is no longer competitive.

Indeed, I don’t believe it ever was competitive; I think it only survived thanks to hidden subsidies. In Hungary, for example, we don’t actually know the real cost of the Paks I nuclear power plant built in the 1980s, because economic relations between the USSR and Hungary at that time were based on barters. With some exaggeration, one could say that we paid for the nuclear power plant with cans of green peas. Anyway, I think Hungary’s high level of indebtedness in the 1980s was closely linked to the construction of Paks I.

On the subject of natural gas, one always comes to the question of energy security. Europe depends on fuel imports, and nuclear power is generally considered more secure in this regard. 

In terms of energy security, building a new nuclear power plant would not be much better in this case. It will be the Russians who will construct it. It uses Russian technology and will be dependent on Russian fuel. Russia will provide a € 10 billion intergovernmental loan to Hungary, which creates a financial leash between the two countries. The Hungarian prime minister may be of a different opinion, but I’m convinced that it’s really dangerous to be dependent on Russia in several ways.

Couldn’t another fuel supplier be found?

The question of fuel dependency was raised by the European Commission, and the Euratom Supply Agency refused to counter-sign the first draft of the agreement on Paks II between Budapest and Moscow, as they considered the 20-year exclusivity provision for the Russians to supply the new power plant with fuel to be unacceptable. Ultimately, they agreed that this period would be shortened to 10 years, after which there would have to be an open tender for a new supplier.

This looks fine on paper, but in reality there’s no other supplier for this type of Russian nuclear power plant. The first third-generation VVER reactors only started operation in 2016 in Russia. It’s expensive for a nuclear technology company to develop a new type of nuclear fuel, and this will be a small market with most of the reactors operating in Russia or Belarus, which means that no market player will be willing to develop fuel of this type for just Paks in Hungary and Hanhikivi in Finland.

I have also been telling the Commission for two years now that they cannot approach the Paks case as an isolated Hungarian issue. Once they sign off on the agreement with Budapest, they will be flooded by demands from other member states to approve similar deals. This would completely destroy the EU energy market. If tens of thousands of megawatts of energy generation capacities in Europe are exempted from the common rules, then – I’m sorry to say – we can forget about a single market.

What the Hungarians think

Recently, you submitted another complaint against Paks II. Does this one concern market conditions? 

This is a question I raised in September at the European Nuclear Energy Forum in Bratislava, and the investigation by the European Commission is still in its early stages.

What is the essence of your complaint? 

The Hungarian government and certain people at the Commission argue that the Euratom Treaty creates a completely independent legal framework, and that nuclear investments are therefore exempt from EU competition and public procurement law. This is very dangerous. My complaint concerns Article 8 of the Electricity Market Directive, which states that there should be a capacity tender announced in each and every case where a government claims there is a risk of a capacity gap on the national market and therefore it seeks to actively intervene in order to solve the problem.

This is fine, but they have to open a public capacity tender that is technologically neutral, meaning that it does not require a particular technology. No such tender was ever announced in Hungary, and thus, in this case it is not the non-tendering of the project which violates EU law, but rather the non-tendering of the capacity. And with respect to this latter issue the Euratom Treaty has no bearing.

What do people in Hungary think about Paks II? Is it a major issue in the public debate? How is it perceived? 

I started my activities in the area of energy policy 15 years ago when I worked at an NGO. Just six or seven years ago when we were campaigning against nuclear energy, we were seen as crazy extremists. There was a consensus among 80% of society that nuclear energy was a good thing. In just a few years’ time, however, we managed to raise public awareness of the problem of profitability, and then the Fukushima accident focused attention on questions of security and safety.

Suddenly, the issue of nuclear energy became completely political. Government supporters became great friends of Russia. The same people who took to the streets in 2008 to protest against the then prime minister’s gas supply deals with Russia have now become best friends with Mr Putin. They consider any statement against Paks II to be a statement against the Hungarian nation.

More importantly, however, most of the public is now convinced that Paks II is an insane project that will create financial dependency on Russia, will never pay for itself, and will be harmful to the environment and future generations. Moreover, those journalists who were clearly pro-nuclear seven or eight years ago have changed their minds.

If one takes into consideration the government’s aggressive propaganda efforts, it’s a significant achievement that there is now a broad consensus among 50 or 60% of the population that we don’t need this project. The government is well aware of this, which is why they blocked a referendum on the issue. They may not be paying attention to it now, but in the long run, they will have to come to terms with the fact that most Hungarians no longer believe in the project.

Paks II: Questionable decision; further legislative debates to be expected

According to MEP Benedek Jávor, today’s decision by the European Commission on closing the infringement procedure on the lack of tendering in the case of the construction of Paks II did not come as a surprise but is bad news for Hungarian tax-payers and it projects further legislative debates.
During summer Mr. Jávor was already talking about a soon-concluding agreement between the European Commission and the Hungarian government. At the same time, based on a letter sent by the EC in August to Mr. Jávor as a complainant, he believes that the decision is based on false information and flawed legal interpretation and it will result in more legal debates. This means that the debate on Paks II is far from being closed, all the more so because the procedure on illegal state aid in the project is still ongoing.
“For a more thorough analysis on the closing of the infringement procedure, we need to see its details. I am looking forward to the decision’s detailed reasoning, which the European Commission will send to me as the complainant, and which should be made public”, said the representative MEP for Dialogue for Hungary. At the same time, he believes that if the Commission’s reasoning was that evading the rules of procurement was possible because apart from the Russians nobody was able to comply with the Hungarian technical and security requirements, then the EC’s decision will probably mean even more challenges for the Paks project, the Hungarian government and the European Commission itself as well. Because, if the reasoning of the decision is based on the above, then the Hungarian regulation may be contravening to the principles of the internal market that are considered the basis of the EU. And this could also have severe consequences.
According to Benedek Jávor, Paks II is severely harmful for Hungary not only financially, but in terms of energy policy and external affairs as well, and so he will keep doing everything it takes in order to defend the country from such threats. In response to János Lázár’s comments, Mr. Jávor thanked the minister’s advice and said he would take it into consideration, however he expressed bad news for Mr. Lázár, as he would keep working with the same determination and effort. He knows that this would cause problems for the minister – as it did hitherto – but he expressed a genuine hope that the minister would cope with the difficulties.

EU action against Paks nuclear plant must lead to rethink in Hungary

The European Commission today decided to launch an infringement procedure against Hungary concerning the implementation of the Paks II nuclear power plant project. The Commission outlined concerns regarding the compatibility of the project with EU public procurement rules. Commenting on the decision, Greens/EFA co-president Rebecca Harmsand Hungarian Greens/EFA MEP Javor Benedek said:

“Today’s decision is a welcome move, which should provide space for a rethink in Hungary on these wrongheaded plans to expand the Paks nuclear power plant.

“There were clear questions about the dubious process followed by the Hungarian authorities in awarding the contract to Russian nuclear power conglomerate Rosatom to build two new reactors at Paks. The Commission has today confirmed that the procedure and lack of a tendering process was not compliant with EU rules on public procurement.

“There are clear alternatives available to Hungary to provide for its energy needs from sustainable energy sources. Given the risk and cost involved with nuclear power, and the ongoing nuclear waste problems that were underlined in Paks last year, this suspension should be used by the Hungarian government to scrap the plans and focus on a sustainable energy future.”

New interim storage needed for Paks2?

Earlier this year the Hungarian government negotiated and signed a modified contract with the Russians that most likely does not include points about the guarantee of reprocessing spent fuel elements in Russia, following the decrease of exclusive supply to 10 years. This was needed after the Commission’s refusal to countersign (under EURATOM) the contract guaranteeing 20 years of fuel supply exclusivity from December 2014.

Together with my Finnish colleague Heidi Hautla, we had requested information from the Commission about the reasons for their decisions on the fuel supply contracts of both Paks2 and Fennovoima; the Commission promised to publish the reasoned opinion of their refusal; the document I received recently, although censored, contained the rebuttal of the Hungarian government’s objections about the decision of the Euratom Supply Agency denying the original Russian-Hungarian contract. You can read it here: http://ec.europa.eu/transparency/regdoc/index.cfm?fuseaction=list&n=10&adv=0&coteId=3&year=2015&number=1398

I have written the responsible Minister asking if the renewed agreement includes a clause on the shipment after he had viewed the contracts in late July. The minister refused to answer the question referring to the confidentiality of the information despite the fact that this measure is set out in the international agreement on nuclear cooperation ratified as a law, and furthermore despite this being public domain in the previous version.

Yet two further elements point towards the deletion of the automaticity clause.

Firstly, The Environmental Impact Assessment (EIA) is written in a way that makes the HU storage most probable when exploring the possibilities for interim storage of spent fuel.  However, the current storage capacity is inadequate for this purpose. Paks2 or the government will have to build a new one with all its financial and environmental consequences.  Furthermore, Greenpeace has highlighted the potential dangers of the planned location of the interim storage as outlined in the EAI.

Secondly, Attila Aszódi (the responsible government official on the expansion project) said recently that the question of transportation to Russia is still open.

Paks leaked documents

So far, the Hungarian government has even testified in court that they do not publish the feasibility studies of Paks because they do not exist.

The other day got me on the basis of some documents, however, safe to say: there are feasibility studies, but they are not inadvertently kept secret. It becomes clear because of them, that these studies partially a low level or not covered are basic questions that also contain, in turn, based on Paks2 will be catastrophic in both the domestic electricity system, Paks1 profitability and the Danube heat finances.

You can download the documents from here.

paks notes1 – integration

paks notes2 – water cooling

paks notes3 – recommendations

The shipment of the damaged fuel assemblies violated directive 2011/70/Euratom

According to Dialogue for Hungary the shipment to the Russian Federation of the damaged fuel assemblies of the 2003 Paks incident violated the 2011 EU directive on the exportation of nuclear waste.
 
According to Benedek Jávor, member of the party and the European Parliament, the contract including the specifics of the shipment is legally questionable. The damaged assemblies were shipped last year through Ukraine, which meant taking serious safety risks. In addition, as it turned out, the shipment contract also pertained to the final disposal of nuclear waste.
 
Following his inquiry to the Euratom Supply Agency, Mr. Jávor was informed that despite the Hungarian government’s lack of effort to inform the ESA, the original contract of 2010 was amended in 2013. According to ESA, however, the Agency’s signature, “when required, is a necessary condition” for the validity of the contract. Following these developments, Mr. Jávor will now turn to the European Commission with the concern that the Hungarian government might have conducted the shipment of damaged fuel assemblies on the basis of a legally dubious contract.
 

ESA response to Benedek Javor (click here).

20th April 2015

 

 

Paks hearing summary

Given the recent developments in the Paks-case, the hearing on the planned nuclear power plants at Paks – jointly hosted by Benedek Jávor and Rebecca Harms – was given a special emphasis.

Ms. Harms started by reminding the audience that just as we have passed the fourth anniversary of the Fukushima accident, we are nearing to the 29th of the Chernobyl disaster. She also expressed her concern over the incident at the Paks power plant in 2003 and enlisted some of the serious risks of the aftermath of the incident, such as the shipment of hazardous waste via the conflict-heavy Ukraine. In her introduction she urged the European Commission to respond.

In his opening speech, Mr. Benedek Jávor started by recalling that the EURATOM Supply Agency has just recently taken a negative decision on the fuel supply contract. Mr. Jávor warned that since the Hungarian Government has not engaged in a proper dialogue with the EU institutions, including EURATOM, now it has to restart negotiations; therefore, the Russian partner’s involvement in the project might easily become uncertain due to the conditions on fuel supply diversification. Meanwhile, during his visit to Budapest, President Vladimir Putin made no secret of his commitment to carry out the project despite the changed economic conditions. Mr. Jávor emphasized that beyond the obvious environmental dangers, there are serious political and economic risks that cannot be properly assessed due to the lack of public debate and the classification of all the relevant documents. He also reminded that in the context of the debate on European Energy Security Strategy so far, gas supply has been in the centre of attention while nuclear investments carry the same risks despite the multiple forms of dependence it creates. The dependence is not only financial and technological, but also on the fuel cycle.

Ámon Ada Paks konferenciaMs. Ada Ámon, director of Energiaklub, explained that the problem with Paks2 is Paks2 itself. Today the 4 block at Paks have a generation capacity of 2000 MWs. This would be more than doubled by the new nuclear power plant to 4400 MWs. The cost of the total investment, she continued, is 12.5 billion Euros, which is 20% of the Hungarian yearly budget with 10 billion coming from the Russians, the rest from state budget. This will lead to a substantial increase in energy production in Hungary, which, given the long term trends in energy consumption, would barely leave any room for other types of energy on the national market. From among the problems raised by the project, Ms. Ámon emphasized the lack of transparency and public debate, which highly increases the likeliness of corruption. Furthermore, we are facing a case of potential illegal state aid, the exclusion of experts from the decision making process, the lack of an alternative energy-scenario, and the centralization of the country’s energy supplies. All the above mentioned go against EU objectives. She also emphasized the lack of tendering, calling it the sign of the government’s indifference towards market efficiency. In addition, there is a persistent threat of increasing national debt by 5-8%. According to Ms. Ámon Paks2 will never be built, because it does not serve either interest of the Hungarian public or the European Union.

Stephen Thomas Paks ConferenceProfessor Stephen Thomas from the University of Greenwich presented a comparison of the British Hinkley Point C and the Paks power plants. Beyond the many similarities, including the lack of tendering and the probability that tax-payers will suffer the consequences if the plan goes wrong, there is a difference in the ability to withdraw from carrying out the project: while in the UK this possibility can still be considered, the situation in Hungary is not so straightforward. Another difference lies between the economic situations of the two countries: Hungary is much more prone to go bankrupt after building two new power plants, whereas the UK would most likely not suffer such harsh consequences. The risks are also higher in the case of Paks, because there is a possibility that the new power plants will not yet be operational by 2026, the year when the government will have to start paying back the loan. In addition, the question of the inclusion of the overnight costs in the price also differs in the two cases: these costs are clearly included in the prices of the Hinkley Point power plants; as to Paks, the status of the cited price is not obvious. An important similarity, though, is the classification of data, hence the lack of public discourse. There is also quite a great deal of uncertainty surrounding the affordability of the Paks plants: the Russians, said Mr. Stephenson, cannot even afford plants in their own country; it is highly questionable, therefore, how they would be able to pull through with the Paks investment.

Tóth István János Paks ConferenceDr. Todor Galev, researcher at the Center for the Study of Democracy in Bulgaria, explains how the consequences of the Ukrainian crisis have had a major impact on dealing with the question of energy dependency. Mr. Galev expressed his concerns over how Bulgarian politics are penetrated by Russian influence, meanwhile suspicions circulate that certain Bulgarian political parties are financed by Russia. He urged measures to be taken in connection with the formation of a regional cooperation, saying that without such a joint action, no country can protect itself from Russian influence.

Dr. István János Tóth, researcher at the Hungarian Academy of Sciences and the Corruption Research Centre in Budapest, described the nature of corruption within Hungary’s energy sector, where the lack of transparency is more typical than in any other sector. With regard to the Paks2 project, he described the so-called “white elephant syndrome”, i.e. the lack of an actual objective, where corruption itself is the goal. Based on statistical evidence, he said that the Paks2 project will be loss-making. He presented a comparison of 75 projects carried out between the years of 1966 and 1977, which pointed out that the price of nuclear power plant investments were the double or even the triple of their original price in addition to the fact that the time of their construction also typically expanded.

Massimo Garribba Paks ConferenceOn behalf of the European Commission, Mr. Massimo Garribba from DG Energy emphasized two major elements in connection with EU regulations since the Fukushima accident: firstly, the so-called stress tests and secondly the improvement of the legislative framework. He reminded, however, that nuclear energy is an important element of the EU energy mix. He enlisted the different aspects under the EU’s scrutiny of the project. First, he confirmed that negotiations about the fuel supply contract have restarted. He also confirmed that both DG COMP and DG GROW are instigating the project. In addition, he expressed the Commission’s commitment to reach an increased transparency in nuclear issues and called on the Hungarian government to declassify as many documents as possible.

The question of illegal state aid recurred during the question panel as well. Professor Thomas explained that at this stage there is no way of knowing whether there is state aid involved, because the documents are made secret; however, he said, it is clear that public money is involved, since the company responsible for carrying out the project is itself state-owned. His stance was seconded by Mr. Garribba, who said that some clarifications are required in order to know more. The debate on this issue tied in with, Mr. Garribba’s stance that the Commission aims towards requesting as much transparency as possible.

The topic of the lack of a public debate over the Paks decisions was given a twist as Dr. Attila Aszódi, responsible government official for the construction of the new Paks power plants, gave his remarks on the issues discussed at the hearing. He began by expressing his disappointment that no one from the Hungarian authorities had been invited to tell their side of the story. Mr. Jávor later responded to this remark saying he had no intention of creating an inconvenient situation in which a governmental official was asked questions he is legally bound not to answer, as the documents on Paks2 are classified. However, he expressed his appreciation for Mr. Aszódi’s participation in the hearing, saying this way at least a debate can finally evolve.

Mr. Aszódi also explained that one third of Hungary’s electricity is imported and it mainly consists of coal-based technologies. “We strongly believe that this isn’t sustainable,” he said, “we need energy sources not relying on coal.” 40% of Hungary’s electricity should come form from nuclear energy in the long run according to the energy mix chosen for long term by the Hungarian government, he explained. He also pointed out that the country would be much more able to use green energy if it had high mountains, like the Alps; however, Hungary is flatland and as such, its energy policy is determined by limited possibilities.

In response to Mr. Tóth’s presentation and other remarks on non-transparency, Mr. Aszódi rejected claims that the Paks project was in any way corrupt, as corruption, he said, is a crime. He urged the speakers to initiate a legal procedure if they suspected corruption. He also warned Mr. Tóth not to mix the concept of corruption risk with nuclear safety. He stated that the 12,5 billion euros is the total cost of the project with all inflation and other risks included.

Mr. Jávor provided Mr. Aszódi with the conclusions of a recent study that found that there had not been any investigations initiated on corruption cases by the Public Prosecutor’s Office in the last 5 years. He also called Mr. Aszódi’s attention to the fact that there were a number of occasions when he filed reports on corruption with documents and evidence to the public prosecutor, however, without any effect. He also mentioned, that the total cost cannot be 12,5 billion euros, because the interest is around 11 billion to begin with, so the total cost (overnight+capital costs together) of the project should be over 20 billion euros.

Ms. Harms also reacted to Mr. Aszódi’s comments telling about her visit to Paks in 2013, when her aim was to find out more about the project; however, as she said referring to the problem of secrecy and non-transparency, during her visit she found out more about the gardening around the plants than the actual project itself. Should she be invited to Paks this time to have a more elaborate view, she would be more than happy to come, she said.