Hungary is obliged to start repaying interest incurred on the loan offered by Russia for the expansion of the Paks nuclear power plant only after the country has taken out an amount and for only the amount actually used, Minister of State Gábor Orbán said, adding that the financing terms for the loan facility agreement concluded with the Russian partner are very favourable for Hungary.

“We had two financing options for the expansion of the Paks plant: obtaining either resources from the market or a facility provided by an interstate agreement. Through the latter, resources could be obtained the interest of which are on average 15 basis points lower than that of market loans which would be available for Hungary,” he stressed. Gábor Orbán said that as a result, the country’s savings will total HUF 18bn per year.

Accordingly, over the more than 32 years the State of Hungary will save some HUF 600bn; this is the amount which Hungary gains through the financing agreement with Russia compared to any other loan facility, he emphasised.

He pointed out that during negotiations it became clear that it is more favourable for Hungary to pay the own funds required by the agreement over an extended period of time, as – instead of one or two years – instalments are spread over ten years.

“Consequently, the state is not burdened by one or two huge instalments in a given year, but only by smaller, more easily manageable amounts,” he said.

Under the terms of the document, Hungary shall pay interest of 3.95 percent per annum from 2014 until the nuclear reactor blocks start operating, but not later than 15 March 2026. The interest rate payable in the first, second and third seven-year periods of loan repayment is 4.5 percent, 4.8 percent and 4.95 percent, respectively.

In the first, second and third seven-year periods, 25 percent, 35 percent and 40 percent, respectively, of the actually utilized loan amount shall be repaid in 14 identical instalments.

(Ministry for National Economy)