The Government aspires to conclude a financial agreement which is the most favourable for the country: negotiations on financial issues regarding the construction of the two new nuclear blocks for the Paks power plant are still ongoing, Minister for National Economy Mihály Varga said on Magyarország élőben (Hungary live) programme of HírTV.

He added that the Russian partner provides EUR 10bn for the project and Hungary will begin repaying the loan over a period of 21 years after the project has been completed and the plant has been put in operation.

In the opinion of Mihály Varga, such credit facilities are exceptional, as 10-year or 15-year loans are usual in international finance. “That is why we needed the Russian partner to finance the project,” he said. The Minister for National economy believes that a good deal will be concluded. Russia is to pay 80 percent of construction costs, while Hungary will foot 20 percent of the bill.

The Minister emphasised that 40 percent of the entire funding, some EUR 3-4bn, will go to Hungarian enterprises and at least EUR 1bn will be channelled to the state budget as tax and contribution payments.
Mihály Varga stressed that the two new blocks at Paks will produce cheap electricity in a safe and profitable way.

Responding to a question concerning the interest payable for the 30-year loan of HUF 3000bn provided by Russia the Minister said that no final agreement is reached yet and they are pushing hard to achieve the lowest possible interest rate.  Mihály Varga said that as soon as the investment project is started it will boost economic performance – in light of current calculations -- by some tens of a percentage point of GDP. Several thousands of people are expected to work on the construction of the two blocks and thus the project will also have a positive impact on employment. And the entire economy wins as the price of electricity decreases after the two new blocks are launched, he added.

He pointed out that it would not have been possible to get a better deal even through a public procurement process. When asked whether the lack of public procurement might or might not “provoke a response” from the EU commissioner for competitiveness the Minister said that negotiations had been conducted with Brussels and no objections were raised. In case the project was financed by Brussels or through the market, some competitiveness issues could arise, but this deal is between two sovereigns. Hungary has the right to secure financing without a tender for the construction of the blocks of the nuclear power plant in case it is through a bilateral agreement.

The Minister called the commissioning of the Russia-based Rosatom a logical step also in light of the fact that the four existing Russian-built blocks of the Paks nuclear plant have been working in a reliable and low-cost way.

Mihály Varga also pointed out that along with renewable energies in the long term Hungary plans to meet energy demand through fossil fuels and atomic energy.

However, he denied media allegations that negotiations on concluding the current agreement may hinge on the long-term gas transport contract which expires in 2015.

(Ministry for National Economy)