Can the Paks-2 NPP operate without State aid? - A business economics analyses



The key question of our analysis is whether the Paks-2 nuclear power plant company will be capable of independent operation in the economic sense, or its survival will depend on further additional aid by the owner, the central budget, even after its commissioning. We examine from a corporate perspective in what way the already disclosed financing terms and conditions affect the everyday operation of the power plant company. In other words, we look for an answer to the question whether the expected financial commitment of the owner (in our case, due to State ownership, of the taxpayers) will end once the EUR 2.5 billion own contribution (approximately HUF 765 billion at today’s rates) specified by international contract is paid out to realize the investment in the period from 2015 to 2025.

This topic is made particularly timely by the recent decision of the European Commission to authorize State aid to the British Hinkley Point C nuclear power plant.[1] The Hungarian government, however, still insists that no State aid will be needed for Paks-2. According to their position, “the analyses have shown that no State capital support is needed to ensure the conditions of payoff.”[2]

In our view, if the company operates as a market company, then it can operate in a self-sustainable way, without being in need of continuous capital replacement due to its losses. Of course, it is conceivable that, for short periods, the owner will provide bridging support to the power plant company, but such support must not become periodical, since it might then lead to permanent market distortion and maybe prohibited State aid. According to Article 288 of the Commission decision on the Hinkley Point C Nuclear Power Station, “State aid is any aid granted by a Member State or through State resources in any form whatsoever, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods in so far as it affects trade between Member States.” If Paks-2 NPP can remain operational in the long run only through the additional capital injections of the State as owner of the company, that would obviously grant the company such selective advantage relative to other power generators as fulfils the conditions applicable to State aid. Therefore, our investigation focuses primarily on specifying the market conditions under which the government expectations of realizing the Paks-2 NPP project without State aid can be met.


[1]The Commission decision concerning the Hinkley Point C Nuclear Power Station is accessible also in Hungarian in the Official Journal of the EU (28 April 2015: pp. 40-111).

[2]Written answer by János Lázár, the Minister heading the Prime Minister’s Office, to the question of MP Bernadett Szél, 22 October 2014: