Inside the surprise change at the top of Hungary’s nuclear plant

An unpleasant situation awaited Csaba Lantos on January 12, who had only been in charge of the newly formed Ministry of Energy for a few weeks. He was about to fire the head of a state-owned company with an impeccable work track record. Géza Pekárik had previously been awarded by the Orbán government and had been in charge of the Paks nuclear power plant, a key player in Hungary’s energy supply for more than four years.

According to several sources familiar with the events, the minister replaced the head of the nuclear power plant because Pekárik’s position was needed for someone else. According to one source, Lantos spoke to Pekárik in a cordial tone at the meeting in the ministry’s building in Budapest, but the gist of his message was that the CEO should leave his post.

The next day, the government announced that Péter János Horváth would be appointed to head the nuclear power plant and that Pekárik would continue to be employed as a consultant. Mr. Horváth was until then president of the Hungarian Energy and Utility Regulatory Office (MEKH) which oversees the domestic energy market, but in addition to his professional background, he was also known to have good connections with the government. He has met Fidesz politicians at sports events and for a while he led the Szolnok unit of Fidesz, which is an important grassroots base for Fidesz.

Horváth left the Energy and Utility Regulatory Office under turbulent circumstances. Last fall, a decision by the office he headed led to a drastic increase in municipal energy bills which, according to Direkt36 research, also infuriated Fidesz municipality leaders.

The government did not want to leave Horváth, who subsequently resigned as head of MEKH without an important post. They chose the Paks nuclear power plant for him, which is nevertheless currently facing a rather complicated task. The plant will soon start its refurbishment, to avoid the closure of Paks I in the 2030s. Mr. Horváth, a petroleum engineer, has no experience in the nuclear field, so he is unlikely to have a say on certain issues.

We have sent several questions to Horváth through the Paks nuclear power plant and to Lantos through the Ministry of Energy but have not received any reply. When contacted, Mr. Pekárik said he did not want to comment on the matter.

The complicated Paks renovation

Last summer, the Orbán government announced that it would like to extend the operating time of the Paks nuclear power plant. This was partly due to energy insecurity caused by the war between Russia and Ukraine. The operating licenses for the four units of the nuclear power plant expire between 2032 and 2037, and the extension aims to prolong the various deadlines for each unit by at least 10, maximum 20 years. According to the Parliament’s decision, the extension of the operating period will also reduce dependence on Russian gas.

Until his resignation last November, Minister for Technology and Industry László Palkovics oversaw the issue. To speed up the preparation of the project, Palkovics held a series of private meetings with influential nuclear experts last summer (Direkt36 previously reported that István Kocsis, who is currently serving his sentence for economic crimes and was in charge of the nuclear power plant in the early 2000s, attended several of these meetings).

The extension of the operating time will be a major technical challenge. According to a source with close knowledge of the nuclear power plant, it will be more difficult to carry out than the previous renovation in the early 2000s. The work carried out at that time pushed out the operational lifetime by 20 years to the current deadline of 2032-2037. “The nuclear plant aged 20 years, things have become worn and corroded inside it,” the source said.  According to the source, this time the old equipment will also need to be replaced, meaning that problems that did not need to be addressed at the time of the previous lifetime extension will have to be addressed now.

However, this more challenging work will no longer be carried out by Géza Pekárik, who worked at the plant since 1987 and led it since 2018, but by János Péter Horváth, who has good government connections but no experience in the nuclear industry.

Always in position

Horváth has been around Fidesz for decades. In the 1990s, he even headed the Szolnok unit of Fidesz, when Attila Várhegyi was the mayor of the city. “Horváth is a longtime Fidesz member. He was a confidant of Várhegyi, they did almost everything together,” an acquaintance of Horváth told Direkt36.

Várhegyi is considered one of Fidesz’s leading figures and although his political career was cut short when he was convicted of embezzlement in 2002, he retained his influence in Fidesz. Szolnok was an important Fidesz stronghold not only because of Várhegyi himself but also because it’s the hometown of Anikó Lévai, Viktor Orbán’s wife. Zsolt Nyerges, a lawyer and friend of the Orbán family, is also from Szolnok, and was an important player in the Fidesz-close economic empire for a while.

According to an acquaintance, Horváth’s appointment as the head of the Hungarian Energy Office after Fidesz came to power in 2010 was partly due to his relationship with Nyerges. At that time, Nyerges was the right hand of Lajos Simicska, who controlled Fidesz’s economic holdings, and the Simicska-circle was trying to acquire several important positions in the energy sector. (Nyerges declined to comment upon our inquiry).

Horváth’s appointment in 2010, previously working as a mid-level manager at the Hungarian oil company Mol, came as a surprise to many. Horváth was less known at that time, even Mol’s CEO Zsolt Hernádi “did not know him,” according to a former government official.  According to the source, Hernádi asked him about what should be known about Horváth when he was appointed the new head of the Energy Office. (We contacted Hernádi through Mol’s press department but received no reply to our inquiry.)

In this position, Horváth played a major role in the utility price reduction, which became a symbolic element of the Orbán government’s policy from the beginning of 2013. The Energy Office is in charge of setting the tariffs, so it was the organization led by Horváth that started to force suppliers to make various energy price cuts. Renamed to Hungarian Energy and Public Utility Regulatory Office (MEKH) and given more powers, the agency was headed by Horváth until the summer of 2013. Followingly, he was also appointed as the CEO of the state’s electricity company for gas issues. From 2015, he also headed the state-owned utility holding company for a shorter period, a position he left after the Orbán-Simicska conflict led to the loss of positions of figures close to Simicska.

Horváth returned in 2019 as the CEO of the Mátra Power Plant owned by Lőrinc Mészáros. In July 2020, Orbán reappointed him as head of the Energy Office. One of his acquaintances explained his return by saying that although he was close to the Simicska-Nyerges circles, his loyalty to the prime minister was never questioned. A Fidesz politician highlighted Horváth’s very good political and professional embeddedness. He has built his network of contacts among others at sports matches. According to the government source, Horváth often appears at the matches of the Szolnok basketball team where he also regularly meets Fidesz politicians.

Did not dare to take the risk

Although Horváth enjoyed the confidence of the Prime Minister, the office he headed made a decision last year that angered many in the Fidesz circles, according to Direkt36’s information.

This was linked to the publication of a ministerial decree on September 30 last year regarding the price of district heating. Residential rates remained unchanged, but the rates for nurseries, kindergartens, theatres, and social institutions, which are typically owned by municipalities, were increased. Mayor Gergely Karácsony said after the publication of the decree that it would lead to a thirteen-fold increase in district heating costs for the capital’s institutions.

The reason why municipalities became angry at the MEKH headed by Horváth was that before the heating season, the MEKH tells district heating companies at what price valid on a certain date to buy the gas they needed to produce district heating. Last summer, MEKH set the date between August 22 and 26 when the market price of gas was extremely high as the Russians were restricting gas supplies to Europe.

“They picked the wrong day. They should have taken the risk that gas prices would become cheaper later,” a former energy official told Direkt36 about the agency’s decision. According to the source, MEKH did not want to take the risk for supply security reasons, as they did not expect the gas price to fall as quickly as it did in September.

MEKH’s decision did not only affect the opposition-led Budapest but also the Fidesz-led cities. A municipality led by the governing party told Direkt36 that while their gas costs in the previous winter were 13 million euros, this expenditure had risen to 103 million euros by the winter of 2022. The Fidesz mayor said that they feared what would happen if some institutions and businesses could not pay their heating bills. “There was a lack of understanding as to why the energy office set the price linked to that period,” the politician said and added the problem also generated tension in other Fidesz-run municipalities using district heating. According to the source, the situation was however more nuanced after the government paid compensation to district heating companies for the cost increase.

Without nuclear energy experience

Subsequently, last fall it was suggested in state energy circles that Horváth would leave MEKH, among others because of the decision on district heating, and that he would take over the management of Paks. A source familiar with the nuclear power plant’s operations said he heard such rumors as early as last November. “It seemed absurd,” he said, referring to the fact that Mr. Horváth had no nuclear energy experience, even though the law requires three years of such experience for various-level managers of a nuclear power plant.

One expert in the field said that this alone did not rule out Horváth’s appointment. According to the source, the legislation states that decisions on nuclear safety issues will not be taken by the new CEO but by the lower management of the nuclear power plant with sufficient experience. However, several experts in the field told Direkt36 that the government appointed Horváth to head Paks at a sensitive time of the extension of the plant’s lifetime. Moreover, the government’s announcement of the appointment of the new CEO also stated that Horváth “will be responsible for the successful implementation of the extension of the operating time which is in preparation.”

This is “a very complex task. And then you send someone with no experience of Paks, and you take a big risk,” said one of them. He was referring to the fact that it was not a good idea to change managers during the extension period as this could have a demoralizing effect. According to the source, the risks also increase when a manager without sufficient experience in nuclear power plants is forced to rely on others to make decisions on more complex issues.

Illustration: Szarvas / Telex

  • András Szabó

    András worked eight years as a journalist at Origo, a then prestigious online news site, but also spent several years at Index and news outlets. At Direkt36 he covers Russian-Hungarian relations, activities of business circles close to Fidesz, and political decision making processes of the Orbán government. In 2011 he received the Gőbölyös Soma Award dedicated to investigative journalism in Hungary, and in 2010 he won the Quality Journalism Award, both for a series of articles that focused on a corruption case connected to the former Socialist-led government.