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EC approves construction of new units at Hungary’s Paks nuclear power plant

BRUSSELS, March 6. /TASS/. The European Commission has approved the construction of two new power units at Hungary’s Paks II nuclear plant.

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"The European Commission has concluded that Hungary's financial support for the construction of two new nuclear reactors in Paks (Paks II) involves state aid. It has approved this support under EU state aid rules on the basis of commitments made by Hungary to limit distortions of competition," the European Commission said in a statement on Monday.

According to the document, Hungary has undertaken to fulfill three conditions on limiting potential distortions of competition. Thus, "any potential profits earned by Paks II will either be used to pay back Hungary for its investment or to cover normal costs for the operation of Paks II," the document says. "Profits cannot be used to reinvest in the construction or acquisition of additional generation capacity."

Apart from that, "to avoid market concentration, Paks II will befunctionally and legally separated from the operator of the Paks nuclear power plant (the incumbent MVM Group) and any of its successors or other state-owned energy companies," the European Commission ruled. "To ensure market liquidity, Paks II will sell at least 30% of its total electricity output on the open power exchange. The rest of Paks II's total electricity output will be sold by Paks II on objective, transparent and non-discriminatory terms by way of auctions."

Russia and Hungary agreed on the construction of new power units at Paks nuclear power plant in January 2014. For the implementation of the project, the Russian party will provide the Hungarian government with a loan worth up to 10 bln euro. Overall investment in the construction of two units at Paks will not exceed 12.5 bln euro. The agreement provides for the use of borrowed funds in 2014-2025.

The Paks nuclear plant was built in the late 1980s and now accounts for about 40% of Hungary’s electricity consumption. Additional power units when commissioned will make it possible to double electricity generation and create some 10,000 new jobs.

Hungary’s Prime Minister Viktor Orban said earlier construction of new power units at Paks will begin in 2018.

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