Paks II is a problem in itself - excerpts from the EU hearing in Brussels

On 19 March Energiaklub together with The Greens/European Free Alliance organized a public hearing in the European Parliament in Brussels on the questions around the planned Hungarian nuclear plant, Paks II. Given the recent developments in the Paks-case, the hearing – jointly hosted by Rebecca Harms and Benedek Jávor – was given a special emphasis.

Ms. Rebecca 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.

Ms. 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.

Professor 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.

Dr. 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.

On 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.