France on late Friday said it would lead a 4 billion euro (US$4.5 billion) capital increase for power company Electricite de France SA (EDF), months after agreeing a similar cash injection for the other pillar of its nuclear industry, Areva SA.
EDF, which is 85 percent owned by the French state, also pledged to cut millions more in costs and sell off assets in a bid to reduce its huge pile of debt.
The electricity giant has been hit by weak European electricity prices and hefty investments, notably its plans to help build Britain’s controversial Hinkley Point nuclear plant at a projected cost of £18 billion (US$26 billion).
On Friday, the company again postponed its final decision on whether to continue with the project, in which the China General Nuclear Power Corp (中國廣核集團) is also a partner.
Chairman and chief executive officer Jean-Bernard Levy told the board he would first consult with EDF’s works council as demanded by trade unions who have questioned the project’s feasibility.
A source close to the group said the decision, which had been expected by early next month, would now take “several weeks.”
“EDF is a group that is already in debt — increasingly in debt — and it is vital that we bring this debt under control,” Levy said in an interview with Le Figaro newspaper.
After hours of talks, the board gave the green light to raising 4 billion euros of capital through a “market operation” to be carried out by the beginning of next year.
Paris is to inject 3 billion euros, though where it is to get the cash is unclear, following a similar capital increase for Areva in January backed by the French state.
In exchange, EDF is to redouble its debt-cutting efforts, targeting cost reductions of at least 1 billion euros in 2019 compared with last year — well above original plans for 700 million euros of savings over three years.
The group also plans to raise 10 billion euros from selling off gas, coal and oil interests.
However, questions have been raised both about its financial viability and use of largely untested technology.
John Sauven, director of Greenpeace UK, said the latest delay to EDF’s investment decision “may now be the sign that the entire project is coming to a grinding halt” and showed the British government “urgently needs to back renewable energy as a more reliable alternative.”
Even if EDF could agree on the financing of the project, the European Commission could scrap it on the grounds that it was being built with “illegal state aid,” Sauven added.
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