The Macron government plans to fully nationalize Electricité de France (EDF), which has caused a sharp rise in the shares of the electricity company, which is heavily indebted. Before the Paris Assembly, the French Prime Minister, Elisabeth Borne, announced this Wednesday that “the State intends to control 100% of the capital of EDF“.
This company, of which the State already owns 84%is facing budget delays and overruns at new nuclear power plants in France and the UK, as well as corrosion problems at some of its older reactors. Half of its reactors in France are currently out of service.
EDF has also been hit by government rules that force it to sell power to rivals at discounts as prices hit record highs. The company has estimated that production losses will reduce its profit by €18.5bn and discounted energy sales will cost it €10.2bn. Your debt will increase by 40% this yearto exceed 61,000 million euros.
Bet on nuclear energy
The prime minister, who has considered that total nationalization will allow EDF to design “ambitious projects”, has insisted that “the energy transition goes through nuclear energy” which “is a decarbonised, sovereign and competitive energy”.
French President Emmanuel Macron has set the company the challenge of commission six new nuclear reactors by 2035with an estimated cost of at least 52,000 million euros.
And that without forgetting the approximately 50,000 million additional euros that will be necessary to keep the current atomic park in service, made up of 58 reactors that normally generate 70% of the country’s electricitybut now they produce a much lower percentage due to the stoppage of many of them due to maintenance work and detected failures.
ditch fossil fuels
Borne has emphasized that his Executive wants to control the production of electricity and guarantee its sovereignty against the effects of the Russian invasion of Ukraine: “We cannot continue to depend on Russian oil and gas”, he has stated.
In turn, he has advanced that in September the objectives of reducing carbon emissions by sectors and by territories will be defined: “We want to be and will be the first great ecological nation that will abandon fossil fuels.” “It is the guarantee of our energy sovereignty, of the preservation of purchasing power,” he indicated before affirming that new industrial activities that generate jobs will be built to replace them.
The announcement of the increase in the State’s stake to 100% has had a sudden impact on EDF’s listing on the Paris Stock Exchange. In a few minutes, the shares of EDF, which traded lower since the opening of the session in the morning, even below 7.3 euros, have jumped, going up about 8% up to about 8.6 euros.