In late 2014, Russia and Hungary signed an agreement to construct units 5 and 6 at Paks, Hungary’s only nuclear station, with Russian-designed VVER-1200 reactors. Russia will make a €10bn loan to Hungary to finance the project. Located 100 km away from Budapest and only 5 km away from the Hungarian town of Paks, the nuclear station was designed by Soviet engineers and operates four units with VVER-440 reactors.

According to Vladimir Putin, two new units to be built by Russia at Paks will improve Hungary’s national energy security. “Rosatom is now in the course of developing a comprehensive refurbishment and construction program employing the latest Russian technologies. Their commissioning will double the power output in the country and strengthen its energy security. The project will create thousands of jobs and gave momentum to the national economy,” President Putin said at a press conference after the talks with Hungarian Prime Minister Viktor Orbán.

“As you all know, the Paks nuclear station needs 12 billion euro to finance the expansion project. 80% of this amount will be covered by the Russian loan. I have confirmed at today’s meeting that Russia is committed to its obligations,” Putin added.

Viktor Orbán:Hungary views Paks expansion as a number one project of the current century. We have been cooperating in this area since the 1960s and plan to replace the reactor units whose service life is expiring. We are thankful to Russia that it is prepared to continue our cooperation started back in the 1960s.

For reference: Russia provides Hungary with a €10bn loan to finance 80% of total project costs (€12.5bn). According to the 21-year agreement, the loan is offered at a lower-than-market interest rate of 4.5% with a grace period expiring only after the new capacity is commissioned. Hungary will definitely benefit from the terms offered as no global financial institution makes a loan for more than 15 years.

Earlier the European Commission approved a Russian-Hungarian contract to supply fuel to Paks-2.