Russian state nuclear corporation Rosatom is to start building two new units at Hungary’s Paks nuclear power plant in 2018, Hungary’s Government Commissioner, Attila Aszodi, said on 17 November.

The Paks plant supplies about 40% of Hungary’s electricity. Paks has four operating Russian-designed VVER-440 units (model V-213), which started up between 1982 and 1987. Unit 1 was granted a life-extension to 2032 in 2012, and unit 2 to 2034 in 2014. Units 3&4 are likely to be granted similar extensions in 2016 and 2017.

The government, in January 2014, signed an agreement with Rosatom to build two further reactors at Paks, with Russia providing 80% of the finance. The government said the EU had already approved a draft plan for building the units of up to 1200MWe each, at an estimated cost of €12bn ($12.8bn), with the first unit scheduled for start up in 2023.

In December 2014 plant operator MVM Paks II signed three implementation agreements with Russia’s NIAEP-ASE of Nizhny Novgorod formalising the design, procurement and construction parameters for the units, operation and maintenance support, and details regarding fuel supply and the handling and storage of used nuclear fuel.

Russia agreed to provide €10bn in financing deal to cover 80% of the anticipated project cost, with Hungary to repay the loan over 21 years of operation. The interest rate is below 4% for 11 years then 4.5% then 4.95%. "Construction would start in 2018 and assuming about six years, we can get the fifth block online by the end of 2023 or the start of 2024," Aszodi told a news conference. "We expect the blocks to start commercial operation in 2025 and 2026."

Hungary, which covered about a third of its electricity needs from cheaper imports last year, has yet to win approval from EU regulators over issues concerning state aid and public procurements to select suppliers. "We still believe that the project can be implemented without the provision of state aid," Aszodi said. EU regulators could rule over the issue in the coming weeks, the government has said.

Aszodi said Hungary would use some part of the Russian loan, which can be tapped until 2025, before construction starts in 2018 as it also covers the costs of planning and authorisation. The first repayment is due in March 2026. Rosatom opened an office in Hungary earlier this year to organise work related to the construction project.

Fuel was to be supplied solely by Rosatom, but this aspect of the deal was challenged by the EU’s Euratom Supply Agency, backed by the European Commission. As a result, the fuel provision had to be renegotiated so that it was open to other suppliers. The contract was then approved by Euratom.

Rosatom subsidiary, Rusatom Service, in October signed a contract with Paks NPP for manufacture and supply of equipment to upgrade the existing VVER-440 reactors. Russia will supply 24 guide vanes GTsN-317 for delivery by 2020. Rusatom Service deputy director general Mikhail Poznyakov said the contract was "the first large-scale project in the area of servicing the existing reactors of Paks plant.