November 26, 2019 / 3:16 PM / 13 days ago

Exclusive: Hungary makes EU bid to soften nuclear licensing rules to ease Paks expansion

BUDAPEST (Reuters) - Hungary has submitted draft legislation to the European Commission to amend the country’s nuclear safety protocols to custom-fit a 12 billion euro Russian-led nuclear plant expansion project that it wants to speed up, eight sources told Reuters.

FILE PHOTO: Hungarian Prime Minister Viktor Orban and Russian President Vladimir Putin shake hands after a news conference following their talks in Budapest, Hungary, October 30, 2019. REUTERS/Bernadett Szabo/File Photo

The draft legislation was detailed to Reuters by the Hungarian Atomic Energy Agency (HAEA), and corroborated by several sources with knowledge of the matter who wanted to remain unidentified.

The EU review was confirmed by an EU official requesting anonymity, as well as several Hungarian government sources. Eight sources, including high-ranking government officials, confirmed the plan.

Hungary wants to expand its 2-gigawatt Paks nuclear power plant with two Russian-made VVER reactors, each with a capacity of 1.2 gigawatts.

The project, awarded in 2014 without a tender to nuclear giant Rosatom, an arm of the Russian government, is often cited as a sign of exceptionally warm ties between Hungarian premier Viktor Orban and Russian President Vladimir Putin, a connection that has unnerved Western allies.

However, Rosatom struggled to meet EU and Hungarian safety criteria, delaying the project by several years, and the Russian and Hungarian governments now want to accelerate it.

Under the proposed new rules, license applications to build the reactor hole and surrounding insulating slurry wall could be considered before the entire project receives the green light - a break with prior protocol, which only allowed partial licenses to be considered once the construction license was granted.

Hungary’s top official in charge of energy policy, Technology Ministry State Secretary Peter Kaderjak, confirmed to Reuters the government was working with the European Commission to recast nuclear power plant construction rules.

Kaderjak called the Paks 2 project “the cornerstone of Hungary’s energy and climate strategy”.

“We are seeking ways to cut the project execution time as short as possible, fully respecting nuclear safety,” he said. “That explains this draft amendment.”

RISKY MOVE

The modification carries risks and makes the project much more difficult to abandon or modify as the framework, literally, will be set in stone, according to seven sources with knowledge of the matter who spoke to Reuters on condition of anonymity.

But the move could help the Hungarian government in its haggling with Moscow to modify the current build-and-finance package. Hungary wants to extend the current payment start date of 2026, which was fixed when the project was first conceived.

Russia wants to avoid paying delay penalties - by putting off the completion deadline to about 2029 and by having Hungary ease regulatory hurdles such as this one, these sources said.

The changes will appear in a government decree called the Nuclear Safety Regulations once the European Commission’s nuclear arm, the Euratom Supply Agency, approves the changes.

An EU source also confirmed the Commission was assessing draft legislation against the EU’s latest Nuclear Safety Directive, adding it had three months to make recommendations, a deadline that is not yet up.

“In this framework, the Hungarian authorities have made several such notifications to the Commission in recent years,” the EU source told Reuters. “The latest of these notifications was received this year and is currently being assessed.”

Asked about the changes, the HAEA told Reuters that reactor hole and slurry wall work, and some equipment that takes a long time to manufacture, may undergo the licensing process parallel with the evaluation of the construction license application.

“Licenses cannot be granted before the construction license is issued - except for work on soil solidification, soil removal, and the water insulation work to section off the work area, especially the slurry wall permits.”

Experts estimate the reactor hole to be several hundred metres wide and several hundred metres long, up to 100 metres deep, surrounded by a concrete slurry wall more than a metre thick. This phase alone could take a year or more to execute.

The changes are designed to save time so once the overall construction license is issued work can begin on the power plant buildings.

But experts warned the slurry wall and reactor hole could cost hundreds of millions of euros, and hastening them carries risk: if the HAEA find faults with the overall design, it may require changes that conflict with the concrete already poured, causing a potential cost spike and long delay.

“Even with these permits Paks 2 carries responsibility for any work it executes, as the ongoing construction licensing process could influence all other licensing,” the HAEA said.

Reporting by Marton Dunai; Editing by Dale Hudson

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