The European Commission has approved Hungary's modified Recovery and Resilience Plan (RRF) that will allow the country to receive €0.9bn in pre-financing of the REPowerEU funds after the approval from the European Council before the end of 2023, it was announced on November 23. The projects approved in the RePowerEU chapter aim to ensure affordable, secure and sustainable energy supplies, among others.

Hungary is slated to receive a combined €10.4bn from the scheme, which includes a €6.5bn lion's share in grants and €3.9bn in loans covering 67 reforms and 47 investments. The EC stressed that the remaining part of the RRF payments will only be disbursed if Hungary meets 27 “super milestones”, in order to ensure the protection of the Union's financial interests. The funding was suspended because of Hungary's violation of the EU's fundamental values, notably the rule of law and judicial independence.

Hungary, which is one of the last countries to receive RRF funds, has proposed changes to 19 measures contained in its original Recovery and Resilience Plan submitted in May 2021.

The country’s modified plan has a very strong focus on the green transition, allocating 67.1% of available funds to measures that support climate objectives, up from 48.1% in the original plan, the EC said, adding that this is the third-highest ratio after Luxembourg and Denmark.

Hungary's REPowerEU chapter includes measures to strengthen and modernise the electricity sector, accelerate deployment and use of renewable energy, improve energy efficiency, promote sustainable transport, upskill and reskill the workforce for the green transition, decarbonise industry and invest in green technologies and value chains linked to the green transition, the EC said.

The government has committed to install 520,000 smart meters in households, compared with 290,000 originally planned. Among other things, the Hungarian government has pledged to further expand the electricity network in line with the revised plan, build new tram and trolleybus infrastructure in Budapest, construct new waste treatment infrastructure and create 3,500 places in nurseries.

The revised plan also relies heavily on measures that contribute to the digital transition (around 30% of the plan's total allocation), including digital solutions at energy companies to improve the security of electricity supply and the operational efficiency of the electricity system, and for the development of digital learning materials for green skills.

Tibor Navracsics, the regional development minister in charge of the talks, welcomed that the EU was "finally allowing Hungary to access funds".

"We will, of course, continue talks, since our goal is to ensure that Hungary receives the entire amount of the funding it is entitled to as soon as possible", he said.

As for the timeline of potential access to EU funds, EU finance ministers are expected to decide on the approval of the loan part of the recovery fund December 8, independent Hvg.hu’s column on EU issues, Eurologus, writes.

The European Commission will prepare a comprehensive assessment by 15 December on the state of play of the 27 super-milestones pledged by Hungary a year ago.

In the next few weeks, the EU’s executive is expected to assess steps taken by the government to restore the independence of the judiciary. If assessed positively, Hungary could get access to  €13bn from the seven-year budget, it added.

In related news, the European Commission's review found that while there has been some improvement in the use of EU funds in Hungary, certain systemic irregularities are still present, Portfolio reported. The online financial website obtained the findings of an inspection covering the funding period between 2014 and 2020.

The EC noticed a lack of proper cooperation in that the managing authorities regularly ignored reports of suspected irregularities coming from the ministry responsible for overseeing public procurements as well as other bodies. As a result, 70% of the cases with reported irregularities were closed without substantive investigation.