The Court of Justice of the European Union (CJEU) decided to annul the European Commission’s approval of state aid for the construction of two new nuclear units at the Paks nuclear power plant in Hungary. The reason given by the Luxembourg court is that the EU executive did not sufficiently check whether the direct award of the contract to the Russian company Rosatom complied with EU public procurement rules.
The decision strikes at the heart of one of the Viktor Orbán-led government’s most ambitious energy projects. In March 2017, the Commission approved financial support that Budapest intended to grant to the state-owned MVM Paks II to develop two new reactors to gradually replace existing units. Austria, backed by Luxembourg, challenged the approval, citing not only technological risks but also strict compliance with EU law.
CJEU calls for transparency in awarding contracts
The judges emphasized that the direct award, without tendering, of the construction works to the Russian company Nizhny Novgorod Engineering – part of the Rosatom group – was “inextricably linked” to the object of the state aid. The Commission was therefore obliged to examine whether this procedure complied with public procurement rules. Mere reference to a previous infringement procedure, closed in 2015, was not considered sufficient justification.
The court thus annulled the Commission’s decision, recalling that the way in which infrastructure contracts are awarded can influence both the costs and the economic advantages obtained by the operator.
Budapest’s reaction: ‘There is no legal reason not to continue’
The government in Budapest has said that the Paks II project will continue “at the planned pace” but that it is willing to cooperate with the EU executive to demonstrate compliance. “The court did not say that the project does not comply with the law, only that the reasoning of the Commission’s decision was not satisfactory,” European Affairs Minister János Bóka said, according to nucnet.org. “There is no legal reason not to go ahead with the Paks investment.”
For its part, the Commission said it will carefully analyze the ruling and decide the next steps.
Hungary is banking on nuclear power for long-term energy security and to reduce dependence on gas imports. In late 2024, Foreign Minister Péter Szijjártó announced that the nuclear regulator had approved the preliminary safety report for Paks II, paving the way for work to start in early 2025.
According to the current plan, Rosatom will supply two VVER-1200 generation III+ units, which would gradually replace the four older reactors already in operation. They provided almost half of Hungary’s total electricity production in 2023, according to International Atomic Energy Agency data.