Dispute Over State Aid for Nuclear Power Plant Paks II: Partial Victory for Austria

According to the opinion submitted on Thursday by the Advocate General at the Court of Justice of the European Union, Austria rightly argues that the EU Commission should have examined whether the awarding of the contract for the construction of the new reactors to the Russian "Nizhny Novgorod Engineering" was compatible with procurement law.

The General Court of the European Union dismissed the Austrian lawsuit (T-101/18) against Hungary's state aid for two new nuclear reactors at the Paks nuclear power plant in November 2022. Austria had argued, among other things, that a procurement procedure for Paks II should have been conducted and that the aid would lead to disproportionate distortions of competition. The federal government then took legal action against the ruling. The EU Commission had approved the Hungarian investment aid to the owner MVM Paks II in 2017.

Aid Inextricably Linked to Award to Russian Company

The construction of the new reactors was directly awarded to the Russian company "Nizhny Novgorod Engineering," according to an agreement between Russia and Hungary on cooperation in nuclear energy. In this agreement, Russia committed to granting Hungary a state loan to finance the new reactors.

The Advocate General of the EU Court proposes to annul the judgment of the court, which confirmed the approval of the aid by the EU Commission. The awarding was a modality of the aid, which had an inextricable link to it, she argued. In this case, the EU Commission would be obliged to also consider any violation of other EU regulations besides those on state aid.

The EU Commission should have specifically examined whether the direct awarding of the contract for construction to a Russian company was compatible with EU regulations on public procurement, according to the Advocate General. She also argued that the General Court of the European Union did not sufficiently control the Commission's assessment of the proportionality of the aid and that the contested judgment showed a lack of reasoning in this regard.

The online portal "VG.hu" wrote about an "attack by the Union" on the Hungarian nuclear power plant Paks II. In this context, Austria would not relent regarding the state support of the project. The Hungarian government is preparing its response on the matter, emphasized Minister of the Prime Minister's Office Gergely Gulyás at a press conference in Budapest.

The Hungarian Foreign Minister Péter Szijjártó criticized on Facebook that "Brussels" would constantly try "to block our energy cooperation with Russia." The construction of the new nuclear power plant is of crucial importance for Hungary's energy security. The project will continue to be built despite constant difficulties and obstacles, the minister emphasized. It just requires a little more effort. He had a phone call with the Secretary General of Rosatom, Alexey Likhachev, on Thursday, Szijjártó explained.

The environmental organization Global 2000 sees a possible precedent for the disregard of procurement law in nuclear power plants. "If the EU Advocate General criticizes the direct awarding of the construction contract for the Hungarian nuclear power plant Paks II to the Russian Nizhny Novgorod Engineering, then this criticism must also apply to all similar cases. Currently, for example, Poland is trying to directly award the country's first nuclear power plant to the US company Westinghouse. Both cases question competition and procurement law in the Common Market," said Patricia Lorenz, anti-nuclear spokesperson at GLOBAL 2000, according to a press release.

No Verdict Yet

The Advocate General's opinion is not yet a final decision, but in most cases, it is indicative of the judgment.

Austria had previously unsuccessfully opposed the construction of the British nuclear power plant Hinkley Point C. In 2015, the federal government demanded before the ECJ that the EU Commission's approval for these subsidies be declared void. The General Court of the European Union in Luxembourg dismissed the lawsuit in the first instance in 2018, and in 2020 the judgment was confirmed after an appeal by Austria. In this procedure, Austria was supported by Luxembourg.

(APA/Red)

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