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EDF's union board members to oppose Hinkley Point - sources

Stock MarketsFeb 02, 2016 20:30
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© Reuters. EDF's union board members to oppose Hinkley Point - sources

By Geert De Clercq

PARIS (Reuters) - The six union members on EDF's 18-seat board would vote against the French utility's plans for two nuclear reactors in the UK, but other board members do not want to postpone the project, sources familiar with the situation said.

The unions want EDF (PA:EDF) to put off the 18 billion pound ($26 billion) project to build two Areva-designed European Pressurised Reactors (EPR) at Hinkley Point in southwest England until it has strengthened its balance sheet and started up at least one of the four EPRs it has under construction elsewhere.

A united front of EDF's unions opposing a major investment decision would be unprecedented, but the lack of support from other board members removes a major element of uncertainty for the plan.

"If the Hinkley Point project was put to the board today, the six union representatives would all vote against it," one of the sources told Reuters on Tuesday.

EDF first announced Hinkley Point in 2013 and said in Oct. 2015 that Chinese utility CGN would take a 33.5 percent stake in the project, but it has not yet taken a final investment decision as it struggles to find financing.

On Monday, EDF's dominant CGT union, which has three board members, called on the firm to postpone the project, saying EDF should prioritise upgrading its ageing nuclear fleet in France, start up the long-delayed EPR it is building in Flamanville, and design a new-model EPR reactor.

The more radical FO union, which as one board seat, also said on Monday it was "urgent to wait" and said that going ahead with Hinkley Point could put EDF's very survival at risk.

The CFE-CGC manager's union had issued a similar warning last month. The moderate CFDT union has not made any statements about the UK project.

With six seats on the 18-member board the unions are a large minority block and would need to get at least three other board members to side with them.

Since EDF board member Philippe Varin is also chairman of Areva, he cannot vote on the UK project, which means that nine votes could block it.

Besides the six union members, EDF also has six independent board members - including its chief executive Jean-Bernard Levy, Varin and the chairmen of listed French firms Vallourec and Lafarge (PA:LAFP) - while six other members are appointed by the state. Three of these people are government officials.

Two sources familiar with the situation told Reuters that none of the other independent or state-appointed board members would side with the unions.

No date has been set for when EDF will decide on Hinkley Point. Levy said "soon" in October, which he repeated last month, but he has repeatedly let deadlines slide.

Sources familiar with the situation said that EDF wants to finalise the financing as soon as possible, as it worries that the UK government might have second thoughts about the deal.

The Oct. 2013 Hinkley Point contract guarantees EDF a 92.5 pound per megawatt-hour power price, which was more than twice the current market price at the time. Power prices have since fallen to about 34 pounds/MWh.

"The UK government may want to respect its contract, but public opinion might pressure it to make it less favourable with a nuclear tax or other measures," one of the sources said.

Last week a Department of Energy and Climate Change (DECC) spokesperson told Reuters:

"Good progress continues to be made so that Hinkley can provide clean, affordable and secure energy that hardworking families and businesses can rely on now and in the future."

EDF's union board members to oppose Hinkley Point - sources

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