France will completely nationalize the energy company EDF, Prime Minister Elisabeth Borne said on Wednesday (6th).
The company needs to restructure its debts at a time when several European countries are experiencing an energy crisis.
The future of nuclear energy
The option to fully nationalize the EDF was signaled by President Emmanuel Macron earlier this year. Borne, the prime minister, has not indicated whether the nationalization will be through special legislation or through a public tender for the purchase of minority shareholders, and has not given a deadline.
The French state already controlled EDF with 84% of the company’s shares.
“I can confirm today that the state intends to control 100% of EDF’s capital,” Borne said in a speech to the Chamber of Deputies.
At current prices, the cost of acquiring the shares is around EUR 5 billion (Real 27.6 billion).
According to the Prime Minister, French sovereignty should be guaranteed during the war in Ukraine and the challenges ahead.
This is one of the largest public utilities in Europe. In addition, the operation of EDF is central to France’s nuclear energy strategy the country’s quest to mitigate the impact of rising generation prices and the prospect of disruption to Russia’s gas supplies.
The problem is that the new nuclear power plants have been delayed and the costs have increased.
EDF faced several issues this year. Half of the reactors in France are disconnected from the system, partly because of technical problems related to corrosion.
Nuclear power generation had to be shut down several times.
The company was also hit by decisions that forced it to sell energy to competitors at a reduced price (the government is trying to avoid a spike in inflation).
The problem is that EDF has had to buy back energy and prices are high.
The company says lost production will eat into its profits by 18.5 billion euros. Their debt is expected to increase by 40% this year.