By Benjamin Mallet and Gwladys Fouche
PARIS (Reuters) -The French state has pledged to stand by EDF (PA:EDF) and will support the company in facing difficulties due to French policy measures to cap power price hikes for consumers, the French finance minister said on Wednesday.
Bruno Le Maire’s comments came one week after the government of President Emmanuel Macron – facing a re-election battle in three months – ordered the utility to sell more cheap nuclear power to rivals, prompting the state-owned company’s CEO to openly criticise the government.
“If prices are low and less lucrative, the state will stand by EDF’s side,” Le Maire told RMC radio.
The main trade unions at EDF have called for strikes, adding to criticism by EDF Chief Executive Jean-Bernard Levy who called the latest government decision a “real shock” and announced measures to defend his company’s interests.
Le Maire added on Wednesday that no EDF staffer needed to worry about their future.
“We will support this great public company which is the pride of the French people,” he said.
“We will continue to invest in EDF because we have the objective of building new nuclear reactors that, from a strategic perspective, are absolutely decisive for EDF.”
Le Maire’s comments came as the head of the French nuclear watchdog warned on Wednesday the sector may need a “Marshall Plan” in order to implement planned new projects.
France produces most of its power at ageing nuclear reactors that have faced repeated shutdowns. Some 18.9% of their production capacity was offline as of Wednesday according to a Reuters calculation, limiting supply amid record power prices.
The watchdog’s head, Bernard Doroszczuk, warned more reactors could be shut after corrosion was found on four of them, and being probed on a fifth, describing the issue as “serious”.
The sector faced multiple challenges, he added, from finding enough storage for nuclear waste and recycling, to hiring the close to 4,000 engineers the sector needed every year and how to ensure the expected increase in demand for power was met.
Given all these challenges, a decision to shut 12 reactors “needs to be reassessed”, Doroszczuk told reporters. “Should we close them? Do we need them? … Is it safe to do so? We need to anticipate this.”
The French state owns 84% of EDF’s shares, which have lost almost 40% of their value since October.
Norway’s $1.4 trillion sovereign wealth fund, EDF’s sixth-largest shareholder according to Refinitiv Eikon data, told Reuters it “was looking into how this will affect us as a minority shareholder,” without offering specifics.
The fund, which generally refrains from commenting on its individual investments, had a 0.23% stake worth $112 million in the company at end-2020, according to the latest available fund data.
EDF forecast last week that the government decision would knock around 8 billion euros ($9.13 billion) off its 2022 core earnings before interest, taxes, depreciation and amortisation.
French state pledges to stand by EDF – finance minister Le Maire
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.