Hungary weighs replacing Rosatom in Paks nuclear expansion review

Traders Union
All News
Geopolitics & Trade
Hungary Paks nuclear review

Highlights

Hungary is reviewing the €12.5 billion Paks nuclear plant expansion and considering replacing Rosatom as main contractor, evaluating legal, technical, and financial consequences.
The project faces uncertainty after a 2025 European Court of Justice ruling annulled the European Commission's state aid approval, and changing contractors could cost Hungary €1.1 billion plus penalties.
The review impacts EU nuclear supply security as Russia supplied 23% of the EU's enrichment and 16% of its uranium in 2025, and alternative European contractors are being considered.

Paks review examines contractor change

As first reported by Reuters, Hungary is considering removing Russia's Rosatom as the main contractor on the Paks nuclear power plant expansion and is sounding out alternative suppliers as part of a broader project review, according to two people familiar with the matter.

The project was awarded to Rosatom without a tender in 2014 under former Prime Minister Viktor Orban, and it remains one of the Russian state company's most significant nuclear projects in the European Union. The expansion was originally estimated at 12.5 billion euros, and Hungary had spent more than 2 billion euros by the time first concrete was poured in February.

One person familiar with the review said all scenarios remain under consideration, including changing the main contractor. The review is assessing the legal, technical, financial and scheduling consequences of such a move, as well as whether the project remains financially viable.

The original contract with Rosatom has already been amended five times, while a sixth amendment has been prepared but not signed. The project also faces a legal setback after a 2025 European Court of Justice ruling annulled the European Commission's approval of state aid for the development.

A second source close to the administration said the government is leaning toward the view that the Paks expansion is necessary, but that Rosatom should not take part. If Budapest ultimately decides against Rosatom, Hungary could have to absorb the 1.1 billion euros already paid to the Russian company, along with any penalties for breach of contract.

Energy strategy and EU implications

Prime Minister Peter Magyar's pro-EU government strongly supports nuclear energy as a way to meet rising electricity demand and complement intermittent renewable generation. Zsuzsa Beres, deputy state secretary responsible for nuclear energy and international relations at the Economy and Energy Ministry, said last week that Hungary will continue to rely heavily on nuclear energy in the future.

The government is also exploring a stopgap measure while the expansion is under review, seeking approval for a 20-year extension of licences for four existing Russian-built reactors at Paks. Those licences expire between 2032 and 2037, and the issue has become more urgent after a drought in August nearly forced a shutdown of the plant's current reactors.

The review carries broader significance for Europe's nuclear supply chain and its efforts to reduce reliance on Russia. Since Russia's invasion of Ukraine in February 2022, EU member states have cut Russian oil and gas imports, but Rosatom has so far avoided EU sanctions. According to the World Nuclear Association, Russia supplied about 23% of the EU's enrichment deliveries and 16% of its natural uranium in 2025.

The sources did not identify potential replacement contractors, although one said a European supplier would simplify the foreign policy and sanctions backdrop. Rosatom chief Alexei Likhachev said earlier this month in Moscow that the company is waiting for Hungary to complete its review and that it has approached the new Hungarian government for talks without receiving a response so far.

Our earlier article on Mario Draghi’s warning about the macro policy dilemma explained how tight monetary and fiscal settings can end up suppressing the long-term investment Europe needs to sustain growth and resilience. It highlighted the risk that keeping interest rates above growth for too long can worsen debt dynamics, and argued for policy choices that protect productive investment alongside inflation control—an important backdrop as governments weigh big, strategic projects with major cost and financing implications.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.