EU clears Hungary to build Russia-backed nuke reactors

Brussels: The European Union has cleared Hungary to provide state aid to build two nuclear reactors with Russian help after Budapest made commitments to safeguard competition in the energy sector.

The Hungarian deal for Russia to build the two additional reactors at the Paks nuclear plant, which was struck three years ago, had been held up because of the EU's regulatory demands. Prime Minister Viktor Orban has said he hopes to start construction soon once approval is agreed upon.

EU Antitrust Commissioner Margrethe Vestager said that "the Hungarian government has made substantial commitments, which has allowed the Commission to approve the investment under EU state aid rules."

The expansion of Hungary's nuclear power plant will be financed mostly with a loan from Russia of 10 billion euros ($10.6 billion) and carried out by Russia's Rosatom.

Orban's government says a failure to replace the four Soviet-built reactors at the Paks plant would increase Hungary's dependence on Russian natural gas to generate electricity.

Environmental activists opposed to the project say it is too expensive, further ties Hungary's energy sector to Russia and that its huge cost means Hungary will not invest enough in sustainable energy sources. Orban and Putin announced the deal in January 2014.

As part of its commitments to the EU Commission, Hungary will have to make sure that profits cannot be used to reinvest in additional generator capacity and sell at least 30 percent of its output on the open power exchange. The running of the new operations must also be separate from that of the existing Paks nuclear plants.