France announces part-privatisation of EDF

24th October 2005, Comments 0 comments

PARIS, Oct 24 (AFP) - The French government announced on Monday the part privatisation of Europe's biggest power utility, Electricite de France (EDF), finally moving to abide by EU market liberalisation laws -- and provoking the wrath of trade unions in the process.

PARIS, Oct 24 (AFP) - The French government announced on Monday the part privatisation of Europe's biggest power utility, Electricite de France (EDF), finally moving to abide by EU market liberalisation laws -- and provoking the wrath of trade unions in the process.

The operation, which Economy Minister Thierry Breton said would be launched on Friday with the shares being sold by November 21, will result in up to 15 percent of the huge company being sold on the stock market.

Breton said it should raise "at least seven billion euros (8.4 billion dollars)."

EDF chief Pierre Gadonneix, speaking in a joint media conference with French Prime Minister Dominique de Villepin, said the utility would invest 40 billion euros (48 billion dollars) over five years to boost electricity production.

The company -- the biggest producer of civilian nuclear power in the world -- currently has 160,000 employees and a debt of 19.7 billion euros largely due to an aggressive international investment strategy. It has forecast a net profit of 2.6 billion euros this year, on revenues of 25.2 billion euros.

EDF generates more than 70 percent of its output from nuclear plants, and exports energy to other countries.

Villepin, keen to dampen the labour unrest certain to follow the long-anticipated announcement, said a contract signed on Monday between the government and EDF would ensure that the utility will respect "three rules" for the public.

Those are: to ensure rates do not soar, to maintain a similar pricing policy across the country and to provide electricity for the poor.

The state, he said, would keep "at least 85 percent of the capital."

Although the privatisation brings France into line with EU rules opening national energy markets to competition, French unions are resisting what they see as an attack on a basic public service and a safety risk for the nuclear power plants dotted around the country.

One of the biggest, the General Labour Confederation (CGT), has accused the government of seeking to rush through the sale despite union opposition and without a proper public debate.

Its energy branch said it would respond to the government's announcement with a media conference of its own later Monday, during which it would "set out its thoughts on the government's arguments -- the public service contract, nuclear safety and the treatment of the socially vulnerable."

A small left-wing group, the Revolutionary Communist League (LCR), issued a statement calling for nationwide protests against the privatisation.

A large demonstration in Paris is already planned for November 19.

The leader of the opposition Socialist Party, Francois Hollande, called the privatisation decision "an economic mistake and a serious political error."

Privatisation in general, and of big public utilities in particular, is a highly sensitive political issue in France.

One of the reasons why the government is pushing ahead with such operations as the part privatisation of EDF is that public finances are under severe strain from high debt, deficits and pressure from the European Union for overspending to be reduced to within eurozone limits.

In an editorial, the left-leaning Liberation newspaper said the scene was now set for a struggle between the government and the unions, or, as it put it, "one of those wars of religion of which the country is so fond."

Le Figaro, sympathetic to Villepin's conservative government, noted that the previous privatisations of Air France and France Telecom had passed reasonably well, despite union anger. "In fact, privatisations aren't a necessary evil, as is too often thought in France. They are more an opportunity, especially for French groups which have a European stature.

"We hope that is the case for EDF, which is already among the biggest electricity groups in the world."

Copyright AFP

Subject: French news

0 Comments To This Article