The European Commission’s notification regarding the investigation of the Paks II project regarding possible state aid has been released. The Hungarian Government takes the view that the summary contains a number of inaccuracies and misunderstandings as well as unfounded and misleading claims.
The summary of the Commission’s position related to the investigation which was launched into possible state aid provided for the Paks II project has been released today in the official journal of the European Commission. The publication of this document also means that the opportunity has emerged for third parties to make comments in response to the said notification in the coming month as to whether the Paks capacity maintenance project involves any state aid.
The Hungarian Government takes the view that the decision of the European Commissioner for Competition of 23 November 2015 and the summary published in today’s edition of the official journal of the European Union contain a number of inaccuracies, misunderstandings, and unfounded and misleading claims.
The Hungarian Government firmly believes that the Paks II project is competitive and offers an acceptable rate of return also amidst free-market circumstances, and there is therefore no need for resorting to state aid. It also transpires from the decision dated 23 November that even in the wake of preliminary consultations under competition law over a period of almost two years, the European Commission was unable to present a set of well-founded arguments which would refute the position of the Hungarian party which claims that the project involves no state aid.
As Commissioner Margrethe Vestager herself stressed, “with regard to the magnitude and significance of the Paks project”, the European Commission needs time to conduct a comprehensive investigation and to provide the opportunity for other Member States, market players and third parties to state their comments on the basis of the relevant Brussels procedure.
The Government takes the view that the revenues of Paks II will be sufficient to cover all costs, including the capital and capital costs, fuel costs, and the costs of operation, maintenance, waste disposal and disassembly, and the project’s anticipated rate of return is in harmony with the level expected by market investors.
This was also confirmed by the detailed economic analysis prepared by the Rothschild Group on the basis of international comparative data. The analysis is available in full on the project company’s website and on kormany.hu.
Regrettably, the European Commission’s decision of 23 November neglected the circumstance – which is relevant to the issue of state aid – that in the Hanhikivi 1 atomic power plant project in Finland, which is greatly comparable with the Paks II project in technical terms, private investors, too, undertook to play a role within the boundaries of a consortium who expect an adequate level of profitability from the Finnish atomic power plant project. Despite the fact that the consortium also features municipalities and Russian state-owned actors, the Commission does not call into question whether the “Finnish twin-project” is implemented on a market basis, without state aid.
It is most unfortunate that despite the intensive consultations which have been ongoing for almost two years, the European Commission’s decision and the summary published today contain a number of inaccuracies, misunderstandings and unfounded claims. For instance, the Commission misleadingly invites third parties to submit their comments regarding the possible involvement of state aid, despite the fact that they did not at all prove the existence thereof. During the course of the consultations held with the Commission, the Hungarian party pointed out a number of methodological errors related to the calculation of the project’s capital cost and rate of return, which call the well-founded nature of the Commission’s conclusion into question.
Further, in contrast to what the Commission implies in its notification, the Hungarian Government has made available all the information necessary for the purposes of the evaluation in line with the Commission’s requests in the past almost two years. The Government additionally notified the Commission earlier that some of the Commission’s presumed findings are incorrect, and will therefore respond to the misunderstandings item by item in its next submission.
The Hungarian Government is ready to face a formal investigation, as part of which we shall maintain that the project does not involve state aid.