The future of EDF is weakened by the costly project to build two new generation EPR in England. This is the opinion of his former CFO, Thomas Thornton, which is explained on Wednesday for the first time since his resignation in March. He had taken the decision to terminate a project he considers unsustainable under present conditions marked by a collapse in the price of electricity and too risky for the finances of the electricity giant.
Interviewed by the economic Affairs Committee of the national Assembly, Thomas Thornton said he had resigned “in despair”, unable to get the CEO Jean-Bernard Levy postponement of three years of Hinkley Point project 23 billion strongly contested by EDF unions also favor a shift.
a colossal project … for an uncertain technology
“what is three years for a project that takes ten years to build, has sixty years of life [...] over twenty years of possible extension as do the Americans, that is to say, a project of ninety years? “Argued the former bagman EDF. Rather, its CEO had estimated in April that the project is “ripe” and that the report would call into question in its entirety, making EDF enter “a major uncertainty in the zone.” The electricity giant would start work early 2016.
In all, EDF has already invested 14 billion euros in the French EPR technology, 58% of its equity . In this context, “add an extra project, Hinkley Point or another, seemed impossible. Who would bet 60%, 70% of its assets on a technology that we still do not know if it works then it’s been ten years we are trying to build it? “Said the former CFO.
” While Hinkley Point represents only 15% of the investments of EDF, but this is not the only project of this nature in which EDF invests ” , said Thomas Thornton, referring to the problems in Flamanville, but also on the construction of the EPR built by Areva in Finland. The same conditions of the project has changed since the signing of a Franco-British agreement in 2013: it has conditioned its startup funding guarantee EPR Flamanville (Manche), scheduled for late 2018, and nuclear manufacturer Areva has waived to its 10% due to its own woes, forcing EDF to build the gigantic investment in its accounts.
the state will have to increase its stake
in fact, the former number two of the group has “traveled the world”, in vain, hoping to find other investors willing to engage in Hinkley Point, alongside EDF and the Chinese CGN, which bear one third of the investment. To make the project unsustainable, it also offered a stake in the French nuclear industry or a “significant strengthening of capital,” but this proposal has not been accepted by management, as incompatible with the will CEO to launch the project in January, 2016.
for the CFO, this wish of Jean-Bernard Lévy making a final investment decision without secure financing plan could have led the group to ” in the position of Areva, which should be considered a recapitalization [...] when the company is a few months of cessation of payments. ” Rejecting such a scenario, “so I have a clear conscience decided not to do so, and on Tuesday 1 March 2016, I submitted my resignation,” he said. “What I should have done? Silence me? Go ? I would have committed professional misconduct. “
Since then, EDF announced in late April that the French State, its principal shareholder, undertook to refloat under a proposed capital increase of EUR 4 billion to strengthen its capital base and fund its investments. Under pressure from the unions, the CEO of EDF also agreed to consult the central works council (CEC), which will meet on May 9 to September possibly shifting the ultimate green light to the Hinkley Point project, supported by Paris and London.
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