Paks II Under Review: Hungary's New Government Reopens the EUR 12.5bn Rosatom Nuclear Contract

In megaproject finance, 'under construction' is supposed to mean the risky decisions are behind you. Hungary is about to prove otherwise. Five months after crews poured first concrete at Paks II, the country's new government wants construction suspended and every contract reopened. Europe's largest live nuclear order, roughly EUR 12.5 billion on paper and perhaps double that in reality, has become an open question.

The order that outlived the government that signed it

Paks II was a political decision before it was an engineering one. Hungary awarded the two-unit, 2.4 GW VVER-1200 project to Russia's Rosatom in 2014 without a public tender, with about 80% of the EUR 12.5 billion financed by a Russian state loan. The change of government in May 2026 changed the sponsor. Incoming Economy and Energy Minister Istvan Kapitany told parliament the administration would reassess 'the financing and costs of Paks II and the conditions of its implementation,' adding: 'These are secret contracts that we have not yet seen, and we need to examine them.' (Reuters, 11 May 2026.) A government decree laying the groundwork for the review has already been issued, and the analysts closest to it argue construction should stop while it runs.

What the review is actually testing

The headline number is cost. The original EUR 12.5 billion budget is no longer credible, and unofficial estimates now run as high as EUR 25 billion, with several related costs sitting outside the official total, according to an 8 July 2026 analysis by Perger Andras for the Heinrich-Boll-Stiftung's EnergyTransition.org. Against the original schedule the project is roughly a decade late; units meant to be generating by 2026 are now vaguely dated to the 'early-to-mid 2030s.'

Two harder problems sit underneath the cost. First, the instrumentation and control (I&C) system, the plant's nervous system, lost its supplier when Siemens exited, and no EU-compliant replacement is yet visible. Second, in September 2025 the Court of Justice of the EU annulled the European Commission's 2017 approval of state aid for Paks II, in a case brought by Austria, on the grounds that the Commission never properly examined whether the no-tender direct award to a Russian contractor complied with procurement rules. That reopens the state-aid file and threatens another multi-year standstill whatever Budapest decides.

Three exits, none of them clean

The review's own logic points to three scenarios, and each carries a bill. Cancel outright, and Hungary faces compensation claims on ordered work and equipment, softened only partly by sanctions and force-majeure arguments, plus the cost of making a half-built site safe. Swap the contractor, and a new reactor type means fresh licensing, fresh EU scrutiny and years of delay, with much of the completed work unusable. Continue with Rosatom on revised terms, and the track record of delays, quality issues, sanctions exposure and lost suppliers makes that the least feasible option of all. Rosatom, for its part, has said it is ready to answer every question and justify the price (World Nuclear News).

The real lesson is sponsor risk

Paks II is a reminder that on politically sponsored megaprojects, the contract is only as durable as the government behind it. Lenders and contractors priced Russian financing and geopolitical exposure into this deal; almost nobody priced the sponsor itself changing and demanding to read the fine print. For anyone financing or building state-backed infrastructure across Central and Eastern Europe, the takeaways are immediate. Assume contracts signed without competitive tender carry latent legal risk that can surface a decade later. Treat single-source technology suppliers as a first-order project risk, not a footnote. Model a change-of-government scenario the way you already model currency and interest rates. The next few months of disclosure from Budapest will tell contractors and investors how much of the EUR 12.5 billion, and how much political capital, is recoverable. Watch whether construction is formally suspended, whether the contracts are published, and how Brussels handles the reopened state-aid case. Each answer will reprice nuclear and large EU-funded builds well beyond Hungary.