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The Committee recommended to ratify the Protocol on the 5-year extension of the loan to Hungary for the construction of nuclear power plants

The International Affairs Committee at a meeting on November 11 recommended ratifying the Protocol on Amendments to the Russian-Hungarian intergovernmental agreement on the extension of Hungarian state credit for another 5 years to finance the construction of a nuclear power plant. The document, signed in Moscow and Budapest on May 7, 2021, was submitted for consideration by the Government of the Russian Federation.

As stated in the explanatory note, in accordance with the agreement dated March 28, 2014, the Government of Hungary was provided with a state export loan in the amount of up to 10 billion euros to finance the construction of two power units of the Paks nuclear power plant. There are no overdue obligations of the Hungarian party under the agreement. As of May 14, 2021, Hungary has disbursed a loan of € 320.4 million. The current debt of Hungary under the agreement was also not fixed due to the early repayment of the used part of the loan by the debtor.

Due to a significant delay in the start of NPP construction due to the protracted procedure for obtaining approval from the European Commission for this nuclear project, Hungary on January 30, 2020 applied to the Ministry of Finance of Russia with a request to extend the loan use period by five years (until the end of 2030) and postpone the start of repayment the principal debt on the loan from 2026 to 2031, while keeping the final maturity of the loan unchanged (September 15, 2046). The Russian project executor, Rosatom State Corporation, has agreed on changes to the NPP construction schedule.

Thus, the intergovernmental Protocol provides for an extension of the period for using the loan for 5 years – until the end of 2030 – and setting the date for the start of repayment of the principal debt on the loan no later than March 15, 2031 without changing the final loan repayment date – September 15, 2046.

To ensure the observance of the interests of the Russian Federation as a creditor, the Protocol includes a provision on the obligation of the Hungarian side to repay the current debt in the amount of 72.7 million euros no later than April 30, 2021 and to pay interest accrued on this amount as of the date of repayment. This obligation was fully fulfilled by the Hungarian side within the specified time period (April 30, 2021) – before the date of signing the protocol.

In addition, the Protocol provides for a provision on the possibility for the parties, at the initiative of the borrower, to agree on a decrease in the previously agreed amount of the annual use of the loan no later than July 1 of the current budget period equal to the calendar year, which complies with the rules for the provision of state loans by Russia to foreign borrowing countries.

The Committee invited the State Duma to consider the issue of ratifying the Protocol at a plenary meeting on November 25.

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