- Final investment decision should come before annual meeting
- France ready to provide EDF fresh financing if needed: Macron
Electricite de France SA still plans to make the final decision to go ahead with an 18 billion-pound ($26 billion) nuclear power plant in the U.K. before its annual general meeting in May, according to three people familiar with the matter.
Doubts about the viability of Hinkley Point were allayed by Economy Minister Emmanuel Macron, who said Thursday the state-controlled company can count on fresh financing from the French government if needed. Finance Minister Michel Sapin reinforced that message on Friday, promising to sell other holdings if necessary. Shares in the company rose the most in a month.
Approval for the project could come as early as this month, two of the people said, asking not to be identified because the matter is private. When asked Thursday if there will be a decision before EDF’s AGM, Chief Executive Officer Jean-Bernard Levy told reporters at the Civaux nuclear plant in Western France that it would come “soon.”
There has been speculation about the future of Hinkley Point since EDF’s Chief Financial Officer Thomas Piquemal resigned this month, saying the project would put the company under too much financial strain. The plant in southwest England would be “great” for EDF and dropping plans would be a mistake, Macron told reporters at the Civaux plant. Measures to support the company will be announced by early May, he said, adding that the utility must also make efforts to reduce costs.
EDF’s finances are coming under strain as falling power prices and rising competition threaten future earnings while it needs to spend 50 billion euros ($57 billion) by 2025 to renovate its fleet of French reactors. Piquemal stepped down after his plea to delay Hinkley Point was rejected.
The French government owns 85 percent of EDF, and Macron said Thursday that the government would back a capital increase of the company or receive its dividend in shares again to leave more cash in EDF if needed, while EDF will also have to sell assets. The government would sell other holdings to pay for any eventual investment in EDF, Sapin said Friday on Radio Classique.
EDF shares rose as much as 8.6 percent and were trading 7.7 percent higher at 10.52 euros as of 4:03 p.m. in Paris. That pared this year’s drop to 23 percent.
“We think the group will be able to match its positive free cash flow post dividend guidance in 2018, but in the short term, the stock is likely to remain volatile given uncertainties about the French government’s decision,” Emmanuel Retif, an analyst at Raymond James, wrote in an note Friday. EDF may cash in 2.5 billion euros by selling 49 percent of RTE, the French power grid operator, Retif wrote.
Macron is due to meet Levy Friday evening, a government schedule shows. The company’s U.K. chief, Vincent de Rivaz, will also be questioned by British lawmakers on March 23, Parliament’s Energy and Climate Change Committee said Thursday.
“Serious questions are being raised about the cost and viability of the Hinkley project and the value for money for taxpayers,” committee Chairman Angus MacNeil said in a statement.
EDF has repeatedly delayed making a decision on Hinkley Point. That’s in spite of forming a partnership with China General Nuclear Power Corp. and securing guaranteed power prices at about twice the current market rate for 35 years, as well as a government loan guarantee of 2 billion pounds for construction.
If electricity prices hadn’t fallen so much since October, the company would have already made a decision on the project, Levy said Thursday at the Civaux plant.