Minister for National Economy Mihály Varga, speaking on public service television M1 this morning, said that the agreement on the financing of the Paks nuclear power plant expansion project offers conditions which are more favourable than those available on the market. Meeting in Moscow, the two parties agreed to a variable-rate loan of EUR 10bn with a tenor of 21 years.

According to the Minister, in the initial eleven years the rate of interest payable on euro will be below 4 percent (the Ministry for National Economy signalled 3.95 percent),  while in the second phase it will be 4.5 percent and in the final, third phase it will be 4.9 percent.

The Minister expressed his view that these conditions are highly favourable for the country, as such long-dated loans are non-existent on the market and the costs of this instrument are lower than any other Hungary could obtain.

It will take ten years to build the two blocks, including the first five years devoted to planning and preparations. After that, the Minster continued, comes a half-year test period before 2025 and thus the repayment period of 21 years ends in 2046. Accordingly, the term of this agreement is 36 years, Mihály Varga stressed, adding that the contract also offers the option of early repayment.

In an interview for public broadcaster Kossuth Radio the Minister emphasised that the Government is not obliged to utilize the entire amount of EUR 10bn of the credit line. As final prices for the project will be determined through tenders, the amount eventually used is expected to be lower than the total available funding.

The agreement is to be submitted to Parliament soon, he stressed.

(Ministry for National Economy)