EU court halts funding for Hungary’s Paks-2 nuclear plant built by Russia
Photo: Construction of the Paks-2 nuclear power plant in Hungary (Getty Images)
Austria has won the right to block financial support for Hungary’s Paks-2 nuclear power plant, which is being constructed by Rosatom, according to a ruling by the European Union Court of Justice (EU CJ).
The EU Court annulled the decision of the General Court of the EU and invalidated the European Commission’s plan to provide financial aid to Hungary for the construction of two new nuclear reactors at the Paks-2 site.
Austria initiated the block on European aid.
The dispute dates back to 2018
Vienna filed a lawsuit against the European Commission in 2018, arguing that it had failed to ensure fair competition. Austria stressed that state aid for Hungary’s nuclear project violated the EU principle of a level playing field.
In 2022, the lower EU court rejected Austria’s claim, reasoning that the €12.5 billion subsidy, despite its scale, did not breach competition rules.
Austria appealed, and now the EU Court ruled that the Commission could not limit its assessment solely to the subsidy’s compliance with state aid rules. It also needed to evaluate whether the direct award of the contract for the construction of the two reactors without an open tender was lawful.
The court emphasized that an open tender could have affected both the construction costs and the quality of the project.
In its decision, the European Commission argued that directly awarding the contract complied with procurement rules. However, the court found that this decision was not properly justified.
Paks-2 project and Russia
The Paks Nuclear Power Plant was originally built in the last century under a Soviet design and currently has four VVER-440 reactors with a total capacity of 2,000 MW. Their operational life is set to expire between 2032 and 2037.
Hungary plans to expand the plant with two Russian-made VVER reactors, each with a capacity of 1.2 GW. The construction project was awarded to Rosatom without a tender in 2014 and has since faced delays.
In late summer 2022, Hungary granted Rosatom a license to build Paks-2, despite the company’s involvement in the seizure of the Zaporizhzhia nuclear plant in Enerhodar.
In May 2023, the EU allowed Rosatom to continue construction of Hungary’s Paks-2.
In November 2023, Hungary and Russia signed an agreement on the construction of Paks-2, with Rosatom promising to dedicate special attention and its best resources to the project.
