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Electricite de France (EDF) €33 billion debt, and more problems – its nuclear section to be nationalised.

Times 16th April 2019 A row erupted in France yesterday after it emerged that EDF’s board will discuss plans to renationalise the group’s nuclear activities and split them from the rest of its business. Unions reacted with anger to what they depicted as the first step towards the dismantling of the energy group that is building Britain’s new reactors at Hinkley Point in Somerset.

The board is due to review the restructuring plan next month before presenting it to senior managers and union representatives in June, according to a source. The scheme involves the creation of a parent company to run the group’s 58 reactors in France, as well as new ones that it may build.

This part of the group could be renationalised, rolling back the partial privatisation of EDF in 2004, which left the state with an 83.7 per cent stake. Most of the rest of the group’s activities then would be placed in a subsidiary that would continue to seek private investors under the plan, which has been codenamed Project Hercules, according to the newspaper Le Parisien.

People close to President Macron, who has the final say, claim that he broadly supports the idea, but may backtrack if the price of compensating shareholders proves to be beyond the means of France’s hard-pressed state budget. A fierce union reaction also could prompt him to retreat,
commentators said.

Although a source insisted that the restructuring would have no direct impact on Hinkley Point, it is likely to create short-term uncertainty for EDF Energy, the group’s British division.

EDF is struggling to meet the cost of renovating its ageing French nuclear fleet, which is estimated at between €55 billion and €75 billion. In addition, the group, which has a debt of €33 billion, is facing several other difficulties, not least that it is committed to funding two thirds of the estimated £22.3 billion cost of the new-generation European pressurised reactors being built at Hinkley Point.

A similar reactor at Flamanville in northern France was meant to cost €3 billion and come on stream in 2012. The reactor is still not operating and the budget has reached €10.9 billion. Last week, it emerged that experts had advised that EDF should repair faulty weldings at Flamanville, which would add hundreds of millions of euros to the bill and lead to a further delay.

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April 18, 2019 - Posted by | business and costs, France, politics

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