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No EDF investment in the two European pressurized water reactor (EPR) Hinkley Point (southwest England) without an effort by the state shareholder on the dividend or its agreement to sale of certain assets, such as electricity transmission network (RTE) 100% controlled by EDF. This is the heart of the negotiations that the CEO of the electricity giant has committed it a few weeks ago, the minister of the economy.
Jean-Bernard Lévy spoke again with Emmanuel Macron, Thursday, March 17, during the visit to the Civaux nuclear Power plant (Vienna), long anticipated as part of the week of Industry. And will perhaps move Friday during a tête-à-tête at Bercy, towards an agreement that would pave the way to the final investment decision in the British project.
“the state shareholder was short-term approach”
a Civaux, the economy minister announced that the state will make an effort. “If there is need to recapitalize, we will” , he said. And “if need still give dividends, we will” , he added during a visit where he was welcomed by EDF employees whistles angry against his recent statements on the overly generous wage increases of recent years. “We will all make efforts. The state shareholder has started doing “, the minister said, referring to the decision of the State to waive its dividend in cash.
In recent years, “the State shareholder was too short-term approach” in its strategy in respect of EDF, he ruled. “The wage dynamics has been disconnected” the evolution of the economic situation of the company and “social compromise was too generous” , he has reiterated, without mentioning the predecessor of Mr. Levy, Henri Proglio, who had granted generous wage increases. Mr Macron said he would decide to help EDF to here in early May, while warning that renounce Hinkley Point would be “error” .
this project was however behind the surprise resignation – and qualified for “scandalous” by the State – Chief financial Officer of EDF in early March. Thomas Thornton thought, indeed, that the group’s situation did not allow him to embark as quickly in an operation to 24 billion euros, of which two thirds will be the responsibility of the electrician (16 billion) next . CGN its Chinese partner who will finance the remaining third (8000000000)
Read also: EDF CFO resigns disagreement on the bottom around the proposed Hinkley Point
This rejection of any precipitation is shared by some leaders and all the unions in the house (with the exception of the CFDT), though favorable to the revival of nuclear in the UK by EDF Energy subsidiary.
Faced with this unprecedented revolt, Mr. Levy had to explain internally. In a letter to employees on March 11, it states that it requested “commitments” to the state shareholder of the electrician to 84.5% for “secure financial position “ group. Only then will it be able to launch Hinkley Point and have a chance to put the plant into service in 2025, as it undertook to the British government.
” it is clear that I will not engage in this project EDF as these conditions will not be met , “he says.
And that, although Hinkley Point will represent only 15% of annual investments of the group.
Since the launch of the English project, the economic environment has deteriorated. Electricity prices have collapsed in Europe. EDF fails to reduce a debt of 37.5 billion euros, or to reach a positive free cash flow, even if it is his goal from 2018. A situation that Mr. Levy had singled out soon his appointment in late 2014. now the company must also finance the “major overhaul” of its 58 french reactors to enhance security. This operation will cost 100 billion euros over the next fifteen years, just calculated the Court of Auditors
Read also:. The Court of Auditors highlights the financial fragility of EDF
According to the business magazine Challenges , the state could be paying its dividend in shares and not in cash for five years, which would allow it to retain some 11.7 billion euros in its coffers – the equivalent of a capital increase. BNP Paribas is working on the file, according to a source quoted by AFP. “Everything is on the table” , say several sources at EDF or the Agency interests of the State (EPA). Mr. Levy has refuted Thursday the amount of such recapitalization does its business
A costly project
Other serious and complementary track. L opening RTE capital. The sale of 50% of the Manager of the power lines to a public institution such as the Caisse des Dépôts would yield between two and three billion. “The sale of a 25% share in RTE could deleverage the electrician to some 3.5 billion euros” , says Natixis bank.
Finally, an appointment capital is expected in late May. As the law now provides, the Energy Regulatory Commission (CRE) offer higher regulated prices of the 28 million individual customers of EDF. This increase will reflect the costs of the company. Or it is possible that one year of the presidential election, the state will put his veto if he considers too high. The Minister for Ecology, Segolene Royal, has already warned that the increase was limited.
Even expensive and risky, the proposed Hinkley Point is vital to EDF and the revival of the French nuclear industry, said Xavier Ursat, Director EDF executive in charge of engineering and new nuclear projects. To abandon heavily mortgaging the chances of France in India, South Africa and Eastern Europe, who are interested in EPR, he said Wednesday at the annual conference of the French Society nuclear energy (SFEN).
And it would also undermine the strategic partnership with China, which will build half of reactors planned worldwide over the next two decades, according to Ursat. An analysis shared by the government, which insists that EDF goes after his approach in Britain.
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