Complete nationalization of the Electric Power Corporation following 17 years
Plan to build six new reactors by 2050
Difficulty in securing budget at Yeosoya University
The French government has decided to fully nationalize the Electric Power Corporation (EDF) once more following 17 years in order to strengthen energy security. It is interpreted as a measure to overcome the energy crisis triggered by the Ukraine war.
French Prime Minister Elisabeth Born said in a speech to the House of Representatives on the 6th (local time) that “the government plans to fully nationalize the EDF by increasing its stake in EDF from 84% to 100%.” “This is a measure to ensure energy sovereignty in the face of the difficulties that the war in Ukraine will bring,” he added.
“Wars in Europe are a reminder of how fragile peace is,” he said. Prime Minister Born on that day did not disclose how the stake was acquired and when it would be implemented. EDF shares soared more than 14.5% following Born’s speech.
French business magazine Regecco estimates that the government will need 5 billion euros to buy the remaining 16 percent stake. EDF is responsible for the construction and operation of nuclear power plants in France. After the oil shock in the 1970s, the company expanded its business by investing heavily in nuclear power.
EDF promoted partial privatization by listing some of its shares on Euronext, a French multinational exchange, in 2005. The purpose was to improve corporate transparency and check negligent management. However, reliability has bottomed out due to frequent nuclear power plant failures and increased debt. The share price, which was 33 euros per share at the time of listing, has fallen to 9 euros (as of the 6th).
The war in Ukraine has escalated tensions between the government, the largest shareholder, and private investors. Shareholders demanded an increase in electricity prices, but the French government refused to do so on the grounds of price stability. Archyde.com estimates that the electricity discount policy will cost EDF an additional 10.2 billion euros. Debt is projected to increase by 40% compared to the previous year, reaching 61 billion euros (regarding 80 trillion won). This is higher than the market cap of 33.8 billion euros (regarding 44 trillion won).
President Emmanuel Macron plans to resolve the conflict through the renationalization of the EDF. He plans to secure a 100% stake so that the government will strengthen its ability to control electricity rates. He also set a goal of building six new reactors by 2050, at a cost of 52 billion euros (regarding 69 trillion won) from the government. This is good news for debt-ridden EDFs.
The key is to secure a budget. France’s ruling party failed to secure a majority in the general election held on the 20th of last month. It is predicted that the 50 billion euro budget will not be easily passed in the current situation. Some experts agreed that the delisting of EDF was a shortcut to nationalization.
Reporter Oh Hyun-woo
