Prof. Georgi Kaschiev to FACTS: The EU Court banned state aid for nuclear reactors without a tender for a contractor!

The project for the construction of the 7th and 8th units of the "Kozloduy" NPP, which is considered the largest not only in Bulgaria but also in the entire region, has full support at the institutional level. As is known, Hyundai Engineering and Construction will be the builder, and the reactors will be owned by Westinghouse Electric Company - the two companies together will provide an integrated service for engineering, supplies, construction and commissioning of the new facilities. But… Will it happen? Energy expert Prof. Georgi Kaschiev spoke to FACTI.

- Prof. Kaschiev, Bulgaria has experience in nuclear energy, because the "Kozloduy" NPP has been operating for years. The topic of the 7th and 8th units in Kozloduy is very is commented on by politicians, and you remain skeptical not for the first time? What makes you be like that?
- I want to have nuclear energy in compliance with the rules set out in European and national legislation. Let us explain the connection between the decision of the EU Court of Justice on state aid for the Paks 2 NPP and the project for units 7 and 8 at the Kozloduy NPP. In 2013, the Hungarian government decided to award the construction of two new reactors at the Paks NPP to Rosatom without a tender. In 2014, an intergovernmental agreement was concluded with Russia and it was agreed that the project would be financed through a loan and funds from the budget. The latter constitutes state aid to the sector, for which a procedure for approval by the European Commission (EC) has been launched. The Austrian government believes that providing state aid for nuclear projects is unlawful and disputes this before the EC.

- What is happening, can you explain? Austria appeals the granting of state aid for the construction of a nuclear power plant in Hungary?
- That's right, but it should be known that it is normal practice for member states to disagree with EC decisions and challenge them. In March 2017, the EC approved the granting of state aid for the construction of the “Paks 2“ nuclear power plant in Hungary. Austria and Luxembourg appealed this decision to the General Court of the EU, which rejected their appeals in 2022. The two countries then appealed to the Court of Justice of the EU in Luxembourg, which is the last instance in legal matters.

- And is there a decision now…
- Yes, it is from September 11, 2025. The Court of Justice of the EU annulled both the EC decision and that of the General Court for granting state aid for the Paks 2 nuclear power plant. The main argument of the court is that the direct award (without a tender) of the contract is in breach of EU public procurement law! The court says that the rules on state aid and those on public procurement have the same objective - to ensure undistorted competition in the internal market and must be considered together, which has not been done. An award with the participation of competitors could lead to completely different aid, in particular in view of its size and structure. And what's more - conducting a public procurement procedure could lead to other bidders being able to supply the two reactors with the relevant technology "under better conditions or at a lower price".

I believe that this decision is of key importance for the development of nuclear projects in the EU,

because in my opinion it actually says that nuclear reactors awarded without conducting a public procedure (tender) are in violation of EU legislation on public procurement and therefore cannot be approved by the EC.

- And what follows from all this. Will Units 7 and 8 of the "Kozloduy" NPP be a myth or a reality?
- The story in our country is similar. In early 2023, the National Assembly (NA) will decide to build Units 7 and 8 of the "Kozloduy" NPP with Westinghouse Electric Company AP1000 reactors. No tender is planned, no analyses have been presented, no consultations and public discussions have been held. Let me remind you that this is a decision worth tens of billions, which could collapse the budget. The selected reactors are the most expensive in world, much more expensive than those of other suppliers, at least this is what the data on completed reactors in the world in recent years shows.

For example, the final cost of the two completed AP1000 reactors in the USA is about 36.5 billion dollars.

In my opinion, in this case, the National Assembly acts as a convention and takes over the functions of the government, since according to our legislation, a decision to build a new nuclear power plant is made by the Council of Ministers, and after presenting a number of analyses and conducting public discussions. I believe that a group of lobbyists who protect their personal and foreign interests somehow managed to convince enough members of parliament to make this vicious decision. So far, it has cost us 1.5 billion leva, and billions more have been allocated in this year's budget. Given that it is said that there is no money for young doctors, nor for mothers who in the second year of motherhood receive just above the poverty line.

- And it turns out that we have violated EU rules, if I understand correctly?
- Yes, I also came to the conclusion that the requirements for public procurement in the EU have been violated, which makes the entire approach vicious and will hardly go unnoticed when presenting the project for approval to the EC. In October 2023, the government decided to build units 7 and 8 with AP1000 reactors, which, in my opinion, is in gross violation of the law. It has been challenged before the Supreme Administrative Court with a request to cancel it, the hearings have ended and a decision is awaited.

Due to these and other facts, I have always claimed that the entire structure of the local lobbyists for units 7 and 8 will collapse.

Unfortunately, after billions are spent and absorbed. Mainly due to the awarding of an order for tens of billions without a tender and an illegitimate decision of the government. In my opinion, after the decision of the Court of Justice of the EU in the similar case in Hungary, both decisions will also be in violation of European requirements.

- And what should we expect…
- In order for the project for the 7th and 8th units of the “Kozloduy“ NPP to be approved by the EC, it must receive its approval after conducting two separate procedures. The first is for approving the state aid for it, the next is for approving the investment project. In my opinion, the EC will 100% comply with the decision of the Court of Justice of the EU and will neither approve the granting of state aid for the 7th and 8th units, nor will it approve the investment project, due to the lack of a public procedure for selecting a contractor. Let us not forget that the decisions of the EC are monitored by many countries and non-governmental organizations. It is not out of the question for France to intervene, whose interests as a nuclear reactor manufacturer were grossly violated by the direct choice decisions. In my opinion, the collapse of the project is inevitable.

- What should we do? What is the outcome of this situation?
- In the coming months, we will monitor the actions of the EC regarding the Paks 2 NPP project and how it will comply with the decision of the Court of Justice of the EU. It also remains to be seen how the EC will react to Poland's request for state aid for the construction of three Westinghouse AP1000 reactors. The Polish government's decision was also made without a tender, contracts were concluded with Westinghouse and Bechtel worth 51 billion dollars. The procedure for approving state aid of 15 billion dollars by the EC was launched in 2023, a decision is awaited.
In my opinion, the government should reflect on the situation after the decision of the European Court of Justice on the Paks 2 nuclear power plant and the development of the two nuclear projects in Hungary and Poland, and as a first measure - not to allocate more funds for the project. If there is a drop of common sense left, the parliament and the government should cancel their decisions on the 7th and 8th units and start over by announcing a tender for the selection of a contractor. However, I do not see how this will happen, since the lobbyists have made promises and commitments to their benefactors, on which their political future depends, and they have probably received many benefits. In any case, I appeal to citizens and businesses who will feel bitter and deceived by the collapse of the project to direct their bitterness and anger towards those who created this situation and whose fault has already cost around 1.5 billion leva, for which no one will be held responsible.

The decision of the Court of Justice of the EU

The Court annuls the decision by which the Commission approved aid from Hungary for the Paks II nuclear power plant

The Commission should have checked whether the direct award of the contract for the construction of the two new reactors to a Russian company complies with the Union's public procurement rules



In proceedings brought by Austria, the Court of Justice annulled the judgment of the General Court of the European Union in that case, as well as the decision by which the European Commission approved aid from Hungary for the construction of two new nuclear reactors on the site of the Paks nuclear power plant. Since the construction of the two reactors was part of the subject-matter of the aid and the direct award of the construction contract to a Russian undertaking was inextricably linked to that subject-matter, the Commission was required to verify that that direct award without a public procurement procedure was in accordance with EU public procurement rules. By decision of 6 March 2017, the Commission approved the investment aid which Hungary intended to grant to the state-owned undertaking MVM Paks II2 for the construction of two new nuclear reactors on the site of the Paks nuclear power plant. These new reactors were to gradually replace the four existing reactors. MVM Paks II was to become the owner and operator of the two new reactors free of charge. Their construction was to be fully financed by the Hungarian State.

The construction of the new reactors was entrusted by direct award3 to the Russian company “Nizhegorodskaya engineering company“ under an agreement between Russia and Hungary on cooperation in the peaceful use of nuclear energy. In the same agreement, Russia undertook to provide Hungary with a state loan to finance the majority of the construction of the new reactors.

Austria appealed the Commission's decision approving the aid7 before the General Court. By judgment of 30 November 2022, the General Court dismissed the appeal. Austria then appealed the General Court's decision to the Court of Justice.

The Court of Justice annulled both the General Court's decision and the Commission's decision approving the aid.

It considers, in particular, that, contrary to what the General Court held, the Commission could not only verify whether the aid at issue was compatible with the EU rules on State aid, but should also have verified whether the direct award of the contract for the construction of the two new nuclear reactors was compatible with the EU rules on public procurement.

In fact, the construction of the two reactors is an integral part of the relevant measure notified by Hungary, the purpose of which is to provide them free of charge to MVM Paks II.

Moreover, the direct award of the works contract was absolutely necessary in order to achieve the objective of that aid and therefore constitutes a condition inextricably linked to it.

The Court emphasises that the organisation of an open procedure for the award of a public contract for the construction of infrastructure is likely to affect, in particular, the necessary infrastructure for that construction. investment costs and the characteristics of that infrastructure.

Therefore, such a procedure may have an impact on the scope of any advantage thus granted to an undertaking or group of undertakings.

Furthermore, in so far as the Commission considered in its decision approving the aid that the direct award of the works contract was in any event in accordance with the rules on public procurement, that decision is not sufficiently reasoned. Indeed, the mere reference to the infringement proceedings which the Commission initiated against Hungary in 2015 in relation to the direct award of the works contract, which it closed, considering that the award was in accordance with the rules on public procurement, is not sufficient, since it does not make it possible to understand the reasons which led to that conclusion.