French state plans to take full control of EDF

France plans to take full control of the EDF power group, an expert in nuclear energy dealing with high debts, production stoppages and conflicting demands from its country’s shareholder as it prepares to try to process its largest orders for new reactors for decades.

The takeover, announced by Prime Minister Elizabeth Bourne on Wednesday, will close the former Monopoly roller coaster section, which included a government attempt shelved last year to reorganize the sprawling company, which is still 84 percent controlled by the state.

“I confirm to you today that the state intends to control 100 percent of EDF’s capital,” Bourne told lawmakers as she set priorities for the new government following the re-election of Emanuel Macron as president in April and the legislative elections in June. She did not specify how the surgery would be performed, and when.

Shares of the company, which was listed on the stock exchange in 2005, jumped 14.3% after Bourne’s speech. The share held by the minority shareholders is worth about 5 billion euros at current market prices.

Known as EDF When the service was created only after World War II, EDF’s capital was opened to private investors claiming it would bring more financial discipline and transparency to a group with a history of internal quarrels, and it is sometimes described as a kind of country-within-a-country.

But its position on the list proved increasingly problematic, including this year when the French government forced EDF to pay the bill on energy price quotas to protect households from soaring costs, now exacerbated by Russia’s war on Ukraine. Traffic Provoked an outcry Minority shareholders and the stock, which has sunk nearly 90 percent since its peak in 2007, suffered a blow.

In addition to giving the French government a greater license to intervene in the EDF, full nationalization – which the group’s strong unions have been in favor of in the past – could allow Macron to gain political points. The president’s center party lost its majority in the lower house of parliament in France in June and will now have to quarrel with lawmakers from left and right to try to pass bills.

“One of the reasons for doing it now is because of the symbolism of it. Nationalization in France, even if it is not really so since it is already state-owned, will make certain parts of the left and right happy,” said one banker who previously worked with the company.

Financially, full control of the state will also be the merit of further reducing EDF’s borrowing costs. The group, tasked by Macron to build six new nuclear reactors in France in the coming years at an estimated cost of about 52 billion euros, will have to find ways to fund the venture, beyond any government funding.

But the move may not solve all of EDF’s problems. The group has faced cost overruns and long delays in a handful of flagship mining projects in the UK and France, raising concerns about its ability to build more in the future. Corrosion Problems Some of its 56 existing miners in France have ripped a hole in its finances as production falls to a decade-long low – its core profit is expected to absorb a blow of 18.5 billion euros this year alone.

“It was a message to the unions and the left,” Dennis Florin of the Lavoisier Conseil energy consulting firm said of the nationalization plans. “Beyond that, the question is what will it do to change things operationally, beyond giving EDF a more secure financial structure.”

The French country has already participated in EDF’s capital injection this year. Over the years the company has branched out into renewable energy and sought to export its atomic technology to countries like the UK and China. She has had to deal with government pressure in the past, including after being pushed to absorb the ill-fated mining designer Areva in 2017.

Shaking in its capital structure may have consequences elsewhere as well. Energy experts in the UK have said it raises further questions about the speed with which new nuclear projects can move forward in the UK.

A planning decision on EDF’s proposed £ 20 billion plant at Sizewell on the east coast of England is due by the end of Friday.

Another report by Natalie Thomas in London

French state plans to take full control of EDF Source link French state plans to take full control of EDF

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