Hungary announced Tuesday it will start work on two new reactors at its only nuclear power plant in Paks in 2018, despite speculation that Western sanctions may put the largely Russian-funded project at risk.

Russia's Atomenergoproekt, a subsidiary of state nuclear company Rosatom, signed on Tuesday two deals with Paks in Budapest on the plant's design, operation and maintenance, the Hungarian government commissioner for the project, Attila Aszodi, told journalists.

"Construction is expected to start in 2018," he added, insisting that financing for the 12.5-billion-euro ($15.5 billion) project was not in jeopardy.

Moscow is to supply the lion's share of the funds, in the form of a 10-billion-euro loan, but has also faced biting Western sanctions over the crisis in Ukraine and falling oil prices, which have exacerbated its economic woes.

"The Russian side made it clear to us that the necessary financial resources are ready, the current financial situation does not affect this project, it is already a part of their 2015 budget," Aszodi said.

The rest of the financing will come from Hungary's state budget.

The expansion of the Paks plant, some 100 kilometres (60 miles) south of Budapest, will add two 1,200-megawatt reactors to the existing four, more than doubling its capacity.

The first reactor is to come into operation in 2023.

Critics see the deal, which was signed by Moscow and Budapest in January, as another example of Hungary's Prime Minister Viktor Orban cosying up to Russian President Vladimir Putin.

Budapest on the other hand says the project is aimed at securing energy supplies.