Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Delaying Hinkley Point would risk losing contract - France's Macron

Published 22/03/2016, 20:40
© Reuters. The logo of EDF is seen on a security helmet of an employee in the Electricite de France (EDF) nuclear power station at Civaux
EDF
-
AREVA
-

By Geert De Clercq

PARIS (Reuters) - French utility EDF (PA:EDF) should not delay the investment decision on plans to build two nuclear reactors in Britain as it could risk losing the contract, French Economy Minister Emmanuel Macron said on Tuesday.

Macron said he could understand calls to delay the 18 billion pound project until problems with two nuclear projects in Flamanville, France and Olkiluoto, Finland are sorted out, but the British government would see this as a renunciation of the project.

"We need to understand that a delay would create a strong risk that we would lose the contract," Macron told parliament in a briefing about EDF, which is 85 percent state owned.

The project was first announced in October 2013, but a final investment decision has been delayed as EDF struggled to find partners and financing. Chinese utility CGN signed up for a one-third stake in Oct. 2015, leaving EDF to fund the rest.

Macron said Chinese nuclear firms - which already have a strong presence in Britain - would be ready to take over the contract, which he said has an excellent return on equity.

He added that losing the contract would have grave consequences for investment and employment in the French nuclear industry and for its credibility.

Macron said EDF should make the Hinkley Point investment decision in early May, not at the next board meeting on March 30.

He hoped that by early April there would be an agreement about conflicts relating to Olkiluoto, which is the subject of an arbitration suit in which reactor builder Areva (PA:AREVA) and its Finnish customer TVO claim billions from one another.

The conflict is one of the elements delaying the planned takeover of Areva's nuclear reactor division by EDF.

Macron reiterated the French state is willing to recapitalise EDF and possibly renounce a cash dividend, but this should not be seen as an easy solution for EDF and that the firm would have to sell assets and cut costs first.

Macron also said France is considering supporting EDF with a mechanism modelled on the Contract for Difference (CfD) scheme the UK has put in place for Hinkley Point.

"The British have managed to negotiate long-term guarantees for nuclear newbuild with the European Commission, at a high price level, which opens perspectives," Macron said.

He said a CfD-style legal framework could facilitate investment in new nuclear reactors in France.

© Reuters. The logo of EDF is seen on a security helmet of an employee in the Electricite de France (EDF) nuclear power station at Civaux

EDF CEO Jean-Bernard Levy has repeatedly said that at current low power market prices it is not possible to invest in new power generation assets.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.