Ex-EDF CFO Quit Over Financial Risks From U.K. Nuclear Project

  • Piquemal says French utility needs to strengthen balance sheet
  • EDF can't afford significant downgrade in rating: Piquemal

Former Electricite de France SA Chief Financial Officer Thomas Piquemal said he quit two months ago to highlight the risks of proceeding with the 18 billion-pound ($26 billion) Hinkley Point nuclear power project without additional financing.

The timetable pushed by EDF Chairman and Chief Executive Officer Jean-Bernard Levy for an investment decision on the U.K. project meant there wouldn’t have been time to strengthen the utility’s balance sheet, Piquemal told a hearing at the National Assembly in Paris. That would have left the company reliant on its 85 percent shareholder, the French state, providing funding and threatened EDF with the same fate as troubled nuclear-reactor builder Areva SA, he said.

“A new nuclear project is an extra risk for a company,” Piquemal said in his first public statement since quitting. “I didn’t want to approve a decision that could leave EDF in Areva’s situation one day.”

EDF said on April 22 that it will sell about 4 billion euros ($4.6 billion) of new shares by early next year and deepen cost cuts to shore up its balance sheet, while the government said it will receive its dividend in shares rather than cash over the next two years. Economy Minister Emmanuel Macron has said the decision to go ahead with Hinkley Point may be made in September.

Financial Strain

Speculation has mounted over the future of Hinkley Point since Piquemal resigned amid concerns the project would put EDF under too much financial strain, while labor unions have called for a three-year delay until similar nuclear plants built by the company start operating in France and China.

Piquemal said he unsuccessfully requested a three-year delay in the project in 2015 because a U.K. government loan guarantee to help finance Hinkley Point would only be available after a similar plant is completed in Flamanville, France.

Levy and Macron have said EDF would risk losing the Hinkley Point project that’s critical to both the utility and Areva if they asked for such a delay. Areva, 87 percent owned by the French state, posted a fifth year of losses in 2015.

EDF has held off on making a final investment decision even after forming a partnership with China General Nuclear Power Corp. and securing guaranteed power prices from the U.K. government at almost three times the current market rate for 35 years.

Rating companies will probably downgrade EDF because large nuclear projects such as Hinkley Point will increase its risk profile, the ex-CFO said. While EDF had no financing problems at the end of 2015, it can’t afford a “significant” downgrade that would push its hybrid debt into the “junk” category because it would complicate a potential refinancing from 2020, Piquemal said.

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