Paks II financing contract to be modified

Under a new modification to the financing contract for the upgrade of the Paks nuclear power plant, Hungary will start repaying the Russian loan for the project in 2031 rather than from 2026 as originally planned, the finance ministry said on Thursday.

Pushing back the start of the repayment period means that the project will ultimately pay for itself, the ministry said in a statement. The changes do not affect the loan’s interest rate, and Hungary will still have the option of repaying the loan early, it said, adding that the availability fee has been made more flexible.

The ministry cited delays in earlier European Union investigations into the project as the main reason for the rescheduling of the financing.

It said the project would contribute significantly to the production of safe, affordable and climate-friendly electricity in Hungary. The plant’s upgrade will make it possible for the government to uphold its policy of reducing household utility fees, it said, adding that the project would also create new jobs and boost the regional economy.

The ministry noted that altogether 10 billion euros of the 12.5 billion euro investment will be covered by the low-interest loan from Russia.

Because Hungary has so far repaid every invoice early, the contract can be modified following parliament’s approval without any indebtedness to Russia, the ministry said.

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