EU Court strikes down Commission’s approval of Hungarian nuclear power station: ‘Wrong to approve state aid’

(co-authored by Emanuele Bonini ) Brussels – Hungary’s state aid for the construction of two new nuclear power plants in the town of Paks cannot be approved, the EU Court of Justice ruled, annulling the favorable ruling of the General Court and rejecting the green light the European Commission granted in 2017 for the development of nuclear energy in the country. The EU executive, the judges in Luxembourg criticize, “should have ascertained whether the direct award of the contract for the construction of two
new reactors to a Russian undertaking complies with EU public procurement rules,” something which was not done.

In its judgment, the Court ruled that the European Commission, in its assessments, “could not confine itself to ascertaining whether the aid at issue complies with the EU rules on state aid,” but should have ascertained whether the direct award to the Russian company Nizhny Novgorod Engineering complied with EU public procurement rules. 

The European Commission was therefore wrong, and now the favorable decision has been annulled. For the government in Budapest, it is a question of starting over, as the green light no longer applies. There is a risk that the amount at the center of the agreement between Russia and Hungary may now have to be recovered.

The construction of Parks II, the two reactors for nuclear energy production, falls under a Russia-Hungary cooperation agreement whereby Russia pledged to provide Hungary with a state loan to finance the majority of the development of the new reactors. Specifically, Moscow committed to providing a EUR 10 billion revolving credit line. Hungary was also to provide an additional EUR 2.5 billion from its own budget. Aid that, in light of the ruling, Brussels may now have to request to be recovered, potentially triggering new tensions with Viktor Orban’s government.