Electricite de France SA (EDF), the French utility, has been assured of financial bailout from the government. The bailout aims to help the indebted nuclear-power producer to proceed with its £18 billion plan for building the first nuclear reactors for 20 years in the UK. French Economy Minister Emmanuel Macron has confirmed the bailout program.
The Hinkley Point C project in southwest England is expected to be beneficial for EDF and leaving the plan may be considered as a mistake. Measures to support EDF in developing the project will be announced by May, reports The Guardia, quoting the economic minister from Civaux nuclear station in western France on Thursday. However, the minister has advised the utility to adopt steps in reducing costs.
Macron has been addressing the EDF staff during a visit to EDF's nuclear plant at Civaux. The plant produces 5% of French nuclear power.
France may agree to take dividends on its 85% EDF stake in shares in lieu of cash during the coming years. Meanwhile, EDF-owned electricity grid operator RTE may open its capital to the public sector and other partners, according to a report published in Reuters quoting the minister. EDF finances have reached under strain due to falling power prices while increasing industry competition threatens future earnings. EDF requires spending €50 billion ($57 billion) by 2025 to renovate its fleet of French reactors. Its Chief Financial Officer Thomas Piquemal following rejection of his plea to delay Hinkley Point project, reports Bloomberg. The French utility's net financial debt has reached to €37.4 billion at the end of 2015 compared to €34.2 billion a year ago. EDF has planned to finance new developments through selling assets and slashing down operational expenses by €700 million within 2018. The promise of state aid may infuriate British anti-nuclear campaigners while bringing relief to the British government. The UK government considers Hinkley as a vital part of its move towards lower carbon emitting secured systems. Jean-Bernard Lévy, the EDF chief executive, has mounted pressure on the French government last week. The pressure started to mount since he committed the EDF staff not to proceed with Hinkley unless receipt of state aid easing the group's creaking balance sheet. Some analysts from London have criticized the Hinkley project due to the promised subsidy level which will be ultimately paid by the energy consumers. The subsidies will eventually double the cost of wholesale electricity, argue the London based critics. However, French government considers Hinkley as a good deal since power tariff will rise in the future. Furthermore, many existing coal, nuclear and even gas fired power plants are closing down. Hinkley is expected to fulfill the vacuum grabbing the market stake.
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