By Michel Rose and Tassilo Hummel PARIS (Reuters) -France will fully nationalise EDF, Prime Minister Elisabeth Borne said on Wednesday, in a move that would give the government more control over a restructuring of the debt-laden group while contending with a European energy crisis. EDF, in which the state already owns 84%, is one of […]
France plans full nationalisation of power utility EDF
By Michel Rose and Tassilo Hummel
PARIS (Reuters) -France will fully nationalise EDF, Prime Minister Elisabeth Borne said on Wednesday, in a move that would give the government more control over a restructuring of the debt-laden group while contending with a European energy crisis.
EDF, in which the state already owns 84%, is one of Europe’s biggest utilities and sits at the centre of French nuclear strategy that the government is counting on to blunt the impact of soaring energy prices exacerbated by the prospect of an abrupt halt to Russian gas supplies.
Instead of being an ace in the government’s hands, however, it has become a major headache owing to years of delays on new nuclear plants in France and Britain, with budget overruns in the billions of euros.
“I confirm to you today that the state intends to control 100% of EDF’s capital”, Borne said in her policy speech in the lower house of parliament as she set out her minority’s government priorities.
“We need to ensure our sovereignty in the face of the war (in Ukraine) and the looming colossal challenges,” she said, adding that full nationalisation would help EDF to carry out “ambitious and essential projects” for France’s energy future.
Half of EDF’s ageing reactors in France are currently offline, in some cases because of corrosion problems, forcing the company to cut planned nuclear output repeatedly this year at a time when Europe is scrambling to find alternatives to Russian gas supplies.
EDF has also been hurt by government rules forcing it to sell power to rivals at a discount as part of efforts to shield French consumers from a sharp increase in cost of living.
That is a big strain on EDF’s finances because the group sells forward its estimated nuclear output before the end of the budget year and has had to buy back sold electricity in a volatile market with prices at historic highs.
The company has estimated that output losses will reduce its core profit by 18.5 billion euros ($18.8 billion) and the discounted power sales will cost it a further 10.2 billion euros. Its debt is projected to rise by 40% this year to more than 61 billion euros.
The option of fully nationalising EDF had been flagged by President Emmanuel Macron, who intends to make the company the main pillar of a massive investment in new nuclear reactors.
Macron, who last month lost his absolute majority in parliament, already had to scrap an overhaul of EDF last year in the face of opposition from unions and doubts voiced by the European Commission.
That plan envisaged placing EDF’s profitable renewables business in a new company unburdened by the debt-laden nuclear assets.
Borne did not specify if the nationalisation would be carried out via special legislation or through a public tender to buy out minority shareholders. Nor did she provide a time frame.
The group was listed on the Paris bourse in 2005 at a price of 33 euros per share. Its stock traded at a little less than 9 euros on Wednesday.
Analysts and bankers have said that going straight to the market to squeeze out minorities and delist EDF would be a quicker process, while any legislation runs the risk being held up in parliament.
Shares in the group, which were down 5% before Borne’s announcement, rose as much as 9% on the news.
($1 = 0.9839 euros)
(writing by Silvia AloisiEditing by Jason Neely and David Goodman)