French energy giant Veolia has agreed to buy a 430-megawatt, gas-fired power plant in Hungary from German company Uniper. It is the latest move by Paris to further its involvement in Hungary's energy sector, which is largely dependent on Russia.
The gas-fired, combined-cycle power plant is located in Gonyu, north-west Hungary.
"This agreement is right in line with our ambitions to develop flexibility capacities, an essential complement to the stability of the European power grid," said Estelle Brachlianoff, Veolia's chief executive officer.
Financial details were not disclosed. The purchase agreement was done via Veolia's Hungarian subsidiary and the transaction is subject to obtaining the necessary authorisations and complying with regulations, the firm added.
According to the International Energy Agency (IEA), Hungary was "among the first countries globally, in June 2020, to make a legal commitment to become carbon neutral by 2050" and plans to "phase out coal by 2030 at the latest".
Veolia acquires power plant in Hungary from Uniper https://t.co/4RMKZtwhVb pic.twitter.com/bT40wZoS7R
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Enter France
Hungary receives most of its energy resources from Russia: 75 percent of its natural gas, 80 percent of its oil and all of its nuclear fuel.
Hungary's energy dependency on Russia partly explains Prime Minister Victor Orban's reluctance to support EU sanctions on Moscow in response to its war against Ukraine.
In July last year, Hungary received European Commission approval to amend contracts for new reactors at its nuclear power plant (NPP,) awarded nine years ago to Russia's Rosatom.
The agreement includes building two reactors with a capacity of 1.2 gigawatts at Paks, which already has four reactors.
Last November, Moscow and Budapest signed a schedule for the construction of new reactors at the NPP, expected to be completed in the 2030s.
But France, the EU's largest nuclear power provider, was quick to jump in.
Coinciding with the Paks expansion deal the Hungarian news agency MTI reported that Hungary would increase French involvement in the project.
Legitimacy
According to Ilona Gizinska, writing for the Center for Eastern Studies, Paris's commitment goes back further. "France’s role in the implementation of the Paks II project has grown since 24 February 2022," she says.
After cooperation with Germany's Siemens stopped, "Hungary ... sought to give the French part of the company a greater role in the project," she explains.
Gizinska says the French cooperation gives the project more legitimacy in the eyes of the European Union.
The exclusion of Russia from nuclear projects like the Paks reactor is unlikely, she says.
"It is possible that the government in Budapest may be interested not so much in finalising Paks II as in extending its cooperation with Moscow," Gizinska argues, as "Hungary has been benefiting from a Russian loan since 2019, and the work on preparing the plant has proved lucrative for oligarchs linked to the government".
Strategic partnership
Meanwhile, last September, French multinational Framatome announced in a press release the signing of a Memorandum of Understanding (MoU) with the Ministry of Energy of Hungary for the development of a strategic relationship in the nuclear field.
This MoU "lays the foundation to facilitate the extension of the cooperation between Framatome and Hungary" in various segments of nuclear energy, including R&D, the implementation of new technologies, fuel supply and related nuclear materials, as well as long-term operation," according to the company.
