EDF Demand Help from French Government in Nuclear Power Plant Project
Electricité de France SA asked for financial support from French government. The company's subsidiary EDF Energy is currently facing financial problem in Hinkley Point nuclear plant project in England. Meanwhile all of its projects are experiencing budget overrun and years behind schedule.
Electricité de France SA, parent company of EDF Energy are under scrutiny from French government regarding its Hinkley Point nuclear plant project. The £18 billion ($25 billion) project was approved in October 2015, which EDF took 66.5% stake in the project, while Chinese utility company CGN have the remaining stake of 33.5%.
The project was initiated in 2013, as British government invited EDF Energy and CGN to participate in building two European Pressurised Reactors (EPR) in Hinkley Point, Sommerset.
EPR is a third generation of pressurized water reactor (PWR) designed by Areva, whose shared also owned by EDF. The reactor is built with focus on safety improvement and increased economic scale. Aside from Hinkley Point, there are four other reactors was being built in Finland, France, and China. Unfirtunately, None of the EPR reactors are ready and all of them are years behind schedule with budget overrun.
In audit report from French national audit office, Cour des Comptes said EDF should take a closer look at the risk in the Hinkley Point project. The report said as quoted by The Guardian, "Even though the [Hinkley Point] deal has not been finalised, the complexity of the deal and especially the way it could impact the responsibility of EDF suffice to raise serious questions."
French government holds 85% of the EDF and has questioned the decision to involve in the project. Prior to the report, EDF Chief Financial Officer Thomas Piquemal resigned from his position last week over worries for the company's ability to finance the project. Piquemal had concluded the £18 billion ($25 billion) project would put too much stress on EDF balance sheet and jeopardizing the company's financial condition.
Recently EDF has €37.4 billion ($41.70 billion) in net debt. Meanwhile Moody's Rating service put the company's credit rating on review last month for a possible downgrade.
Following unexpected decision from CFO Piquemal to resign, Chief Executive of Electricité de France SA Jean-Bernard Levy is reported on Friday to seek financial support from French government. Mr. Levy said EDF would not engage in the Hinkley Point project unless French government provides financial support. Wall Street Journal reported that two EDF officials in an anonymity confirmed statement from CEO Levy.
As all of its projects run overbudget, French energy company Electricité de France SA asked for financial support from French government. Particularly for the Hinkley Point nuclear plant project in Sommerset, England.