Friday

21st Sep 2018

Investigation

Commission still silent on Hungarian nuclear contract

  • Hungary's prime minister Viktor Orban (l) concluded a deal with Russian president Vladimir Putin (r) in January 2014 on the nuclear plant Paks II without a public tender (Photo: kremlin.ru)

The European Commission is dragging its feet in sharing reasons why it gave a green light to the Paks II nuclear plant project in Hungary and why vice-president Guenther Oettinger travelled with a lobbyist working for the Hungarian government.

In November last year, the EU executive ended an infringement procedure against Hungary over an alleged non-compliance with EU public procurement rules when the contract to extend the Paks plant was awarded to Russia's Rosatom.

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It cited "technical exclusivity", agreeing to Hungary's argument that that only Rosatom's reactor fitted the requirements for the building works.

Paks II is a controversial project of Hungary's prime minister Viktor Orban, who concluded the deal with Russian president Vladimir Putin in January 2014 without a public tender.

Rosatom will build two 1,200-megawatt reactors at the old Paks nuclear facility, some 100 km south of Budapest. Russia is also to provide Hungary with a €10 billion loan to finance the investment.

Construction is expected to start early next year.

Earlier this year the Commission gave a definitive green light by closing a separate investigation into possible illegal state aid.

Looking for a justification

A Hungarian MEP, Benedek Javor, has been trying to find out for almost a year why the Commission decided to clear Hungary on the public procurement case, and what "technical exclusivity" means.

On 21 September, the Green politician sent a new request for access to document to the Commission.

The Commission has 15 working days to answer, according to EU rules.

In January, the EU executive denied Javor access to documents, arguing that the infringement procedure can be reopened at any time. It also said that the state aid investigation, which was still open at the time, was another reason for not disclosing the information.

The Commission added that it saw no overriding public interest in the disclosure of the documents about the € 12 billion nuclear project.

Javor contested the Commission's legal arguments and has pursued his request in the same procedure, which was met by several delays by the Commission.

Unusual move

The end of the infringement procedure into public procurement, last November, was announced by a Hungarian minister. It was an unusual move from the Commission to let the investigated member states' government reveal the findings of an EU probe.

In a subsequent email to the press, the Commission said that it had "concluded that the direct award of the Paks II project is compatible with EU public procurement legislation."

It said that "Hungary has sufficiently justified the need to apply the technical exclusivity provision in the part of the Paks II project, in line with the conditions laid down in Directive 2004/17/EC," referring to the EU rules on public procurement procedures.

"Indeed, following the final definition of the needs and taking into account the continuous improvement of nuclear safety following the Fukushima disaster, only the Russian technology could technically fulfil the final Hungarian requirements," the Commission told EUobserver when asked about the justification for the technical exclusivity.

In Hungary, an energy NGO – raising awareness about energy efficiency – called Energiaklub is demanding access to documents exchanged between Hungary and the Commission relating to the "technical exclusivity", and appeared in court on 26 September to demand the data.

The state secretary steps in

On the same day, Hungarian state secretary for the Paks nuclear power plant's expansion, Attila Aszodi, published a note on his blog to explain the reasons behind "technical exclusivity".

He argued that certain technical specificities and security guarantees were only provided by Rosatom's VVER-1200 reactors.

Among other things he pointed out that two covers will be built and the outer casing will be hermetically closed as well. With this additional security measure the spent fuel storage pool has significantly better protection against the external shocks, provided only by Rosatom.

But environmentalists dispute his arguments.

"The Hungarian government's refusal to release these documents – and the Commission's own reluctance to disclose information – give the impression that there is something to hide," said Jan Haverkamp, Greenpeace's expert on nuclear energy.

"The truth is there was no real objective reason to choose Rosatom," he added. "Claims that other nuclear designs would not fulfil safety criteria don't add up. The lack of any secondary containment, let alone sealed double-walled containment, was not an obstacle in Hungary's decision to prolong the lifetime of the four ageing reactors of Paks I."

"There is no VVER that is currently tested for these requirements. It is at least bizarre that Hungarian authorities can decide in advance that it is good for the requirements, when it is not yet tested," Greenpeace EU legal adviser Andrea Carta told EUobserver.

He added that the VVER model has not received a construction licence in Finland, significantly delaying the project there.

On the Commission's lack of transparency, Carta was critical.

"The problem is being reluctant to be open about it, we haven't seen an explanation that would be convincing in relations to the scale of the issue and the problem," he said.

"The bigger the project, the bigger safety, financial and political implications it has, and on top of that you have geopolitical considerations, the more detailed and open the Commission's explanation should be," Carta added.

MEP Javor also told EUobserver that the Hungarian government should have revealed its requirements for the nuclear plant years ago, and not in an obscure blog post in 2017.

"It could have served as an argument for not having a public procurement in the first place, and could have been used to avoid the infringemement procedure," he said.

The Commission's lack of answers has not come as a surprise to everyone.

Paul Dorfman, honorary senior research fellow at the Energy Institute at the University College London and founder of the Nuclear Consulting Group said "the term technical exclusivity is essentially a last resort".

"It means that safety requirements can only be met by one company, but in reality it is a catch-all phrase," he told this website.

Dorfman recalled that the Commission has used this argument in France's Flamanville case, the only other time the EU executive resorted to this clause.

In 2007, France's state energy utility EDF awarded Areva the contract to build the Flamanville reactor in Normandy, without inviting bids from other companies.

"It is an argument used when you need some sort of reason that you need to go with one provider, this is what you can use, and the Commission allows it," Dorfman added, saying Hungary knew the Commission would "roll-over, as it did in the Flamanville case".

Dorfman said the reason behind the Commission's decision is that "it is not in the business of going against the nuclear lobby, even if it is Russian lobby."

No answer on Oettinger

The EU Commission has been equally tight-lipped about why its vice-president Guenther Oettinger took a private jet in May last year with a lobbyist working for the Hungarian government, Klaus Mangold.

Despite official requests filed by Transparency International to the Commission last November for documents that could explain the flight, which was revealed by EUobserver, the EU executive has so far failed to clarify the issue.

Javor accused Mangold and Oettinger of advising Orban on how to handle a commission probe into the Paks II project. Both the Hungarian government and Oettinger have denied that Paks was discussed with Mangold, who was dubbed "Mr Russia" by the German press.

According to EU rules, the executive would have 15 days to answer in substance, but that has been extended several times.

The latest Commission letter, early August said that it needed more time as it has not "finalised internal consultations".

"They simply don't want to give me that information," Daniel Freund, Transparency International's head of advocacy on EU integrity, told EUobserver.

"I don't expect an answer at this point," he added.

"It is difficult to defend in front of the public why a commissioner is flying with a lobbyist," he said about the reasons for not getting an answer.

Freund added that under Commission president Jean-Claude Juncker's recently proposed new code of conduct, while it covers air taxis, monitoring individual trips might be difficult or impossible.

EU officials say the assessment of both the Paks and the Oettinger requests are currently ongoing.

MEP barred from questioning Oettinger on plane trip

The Hungarian Green MEP who uncovered EU Commissioner Oettinger's flight to Budapest on a private plane of a lobbyist was not allowed to ask the German politician on the issue in the EP.

Investigation

The mysterious German behind Orban's Russian deals

Klaus Mangold, a German businessman with good connections in Russia, and who provided a jet for Commission vice-president Guenther Oettinger, played a crucial role in Hungary's controversial Paks nuclear deal with Russia, Direkt36's investigation has found.

Austria sues Commission over Hungary's nuclear plant

Anti-nuclear Austria takes the EU Commission to court over Hungary's controversial Paks II nuclear plant, financed and built by Russia. But it is the Euratom treaty itself that could be on trial.

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