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The new model of interfacial drag is proposed and implemented in the STEG code based on the 3D two-fluid model is presented. Experimental data obtained at the PGV test facility is used for validation of the modified STEG code. The PGV test facility comprises a model of the horizontal steam generator used for Russian type water-water energetic reactors. A quantitative comparison with experimental values of void fractions has been performed. It can be argued that the results generally indicate the relatively good predictive ability of the modified STEG code.