EU approves Hungary's revised reactor plans

Hungary's plan for a €12bn nuclear power plant financed by Russia was revived on Tuesday after EU regulators approved a revised plan.

Brussels had blocked key elements of the project but confirmed on Tuesday it had approved a revision of the fuel contract with Russia at the centre of the dispute.

The decision removes a hurdle for the Paks II project, which was first announced by Viktor Orban, Hungary's prime minister, and Vladimir Putin, the Russian president, in 2014.

Mr Orban has made the project the centrepiece of his plan to drive down Hungary's utility costs by striking a series of energy deals with Mr Putin, who visited Budapest in February. The Paks II development is backed by a Russian loan covering 80 per cent of the costs.

Janos Lazar, Mr Orban's cabinet chief, said approval for the fuel contract was a "major milestone", adding: "Now every obstacle has been cleared."

The original agreement gave Rosatom, Russia's state-owned energy agency, a monopoly on supplying fuel for two reactors planned at Hungary's sole nuclear energy site.

But the Euratom Supply Agency, which oversees nuclear projects across the EU, said it would not authorise the deal unless Hungary diversified its sources by reducing the reliance on Russian suppliers.

Since then, Hungarian officials have worked to win Brussels' approval by cutting Rosatom's exclusive rights from 20 years to 10 years, said an official familiar with the talks. After this initial period, other suppliers would be entitled to bid for new supply contracts.

Officials also said the new deal would give other suppliers the right to test the suitability of their fuels in the reactors once they had started operating.

Anna-Kaisa Itkonen, EU energy and climate spokeswoman, confirmed on Tuesday that the ESA was satisfied that Budapest had complied with its requests for revisions to the plans.

"The ESA's analysis showed that their requests had been taken into account, notably concerning the duration of the contract and possibility to diversify the fuel supply," Ms Itkonen said. The revised contract had also been signed by Russian authorities.

Mr Lazar said work on the two reactors, scheduled to begin in 2018, had not been delayed. But he acknowledged that two additional inquiries launched by the European Commission into other aspects of the deal were under way.

Brussels is examining whether the awarding of contracts without a public tender for the design, construction and operation of plants complies with EU public procurement rules. There is also a separate investigation into whether the deal violates state aid regulations.

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