France to lead €4 billion cash injection for EDF

France said late on Friday that it would lead a four-billion-euro capital increase for power company EDF, months after agreeing a similar cash injection for the other pillar of its nuclear industry, Areva.

France to lead €4 billion cash injection for EDF
The measures are designed to help EDF better plan for the future. Photo: AFP

EDF, which is 85 percent owned by the French state, also pledged to cut millions more in costs and sell off assets in a bid to reduce its huge pile of debt.

The electricity giant has been hit by weak European electricity prices and hefty investments, notably its plans to help build Britain's controversial Hinkley Point nuclear plant.

“EDF is a group that is already in debt — increasingly in debt — and it is vital that we bring this debt under control,” chairman Jean-Bernard Levy said in an interview with the Figaro newspaper published late Friday.

After hours of talks, the board gave the green light to raising €4 billion ($4.5 billion) of capital through a “market operation” to be carried out by the beginning of next year.

Paris will inject €3 billion, though where it will get the cash is unclear, following a similar capital increase for Areva in January backed by the French state.

In exchange, EDF will redouble its debt-cutting efforts, targeting cost reductions of at least a billion euros in 2019 compared to 2015 — well above original plans for €700 million of savings over three years.

The group also plans to raise €10 billion from selling off gas, coal and oil interests.

The measures are designed to help EDF better plan for the future, including paying for the maintenance of 58 French reactors and its takeover of the reactor arm of struggling nuclear giant Areva.

Unions, financial markets and even EDF's former finance chief — who resigned in March — have for months cast doubts on the company's ability to handle all its investments, particularly Hinkley Point.

France's Economy Minister Emmanuel Macron repeated his government's commitment Sunday to EDF's plans to build the plant in southwest England alongside China General Nuclear Power Corporation.

But questions have been raised about the financial viability of the £18 billion (€23.2 billion, $25.5 billion) project, which will use largely untested technology.


France’s EDF ‘knew’ about British nuclear plan delay

France's EDF were not taken by surprise by the British decision to delay a decision on its planned nuclear power plant.

France's EDF 'knew' about British nuclear plan delay
Photo: AFP

French energy giant EDF learned the British government wanted to delay its final decision on the Hinkley Point nuclear power plant the day before its board met to approve the plan, according to an email from its CEO seen by AFP.

EDF approved the £18 billion project ($24 billion, 21 billion euro) plan to build Britain's first new nuclear plant in decades — a project that had deeply divided the company's directors — on July 28.

But the British government immediately said it would wait until the autumn before taking a final decision.

In an email to EDF's executive committee, CEO Jean-Bernard Levy said he learned “late on the evening of Wednesday 27” that British Prime Minister Theresa May “was asking for a little more time, without reassessing the project, without giving the date when it could be signed,” and “that she would not discuss the matter”.

“We therefore cancelled the preparations for the signature (ceremony),” he wrote in the email, sent on Tuesday evening.

A ceremony to sign the deal on Hinkley Point had been planned in Britain on July 29, the day after the EDF board met to approve it, Levy said.

“So when the board voted, the afternoon of Thursday 28, we knew the ceremony would not go ahead the next day,” he wrote.

But he said the company was not aware of the content of the British government's statement issued in the hours after the EDF board decision.

Britain's business and energy minister Greg Clark said the government would “consider carefully all the component parts of this project and make its decision in the early autumn”.

May must approve the deal before it can go ahead.

The French government has been keen to get Hinkley Point approved as it sees the project as crucial for the long-term viability of France's nuclear industry, which employs 220,000 people.

Previous British governments have also been in favour because the reactors will cover up to seven percent of Britain's electricity needs while helping the government meet its CO2 emissions targets.

But British support is not unanimous, and criticism focuses on the growing difference between an electricity price guarantee for EDF, subsidised by the British taxpayer, and current falling energy prices.

There have also been national security concerns about Chinese involvement in the project — Beijing has a one-third stake in the plan.

Contacted by AFP, EDF declined to comment.