France launches part privatisation of EDF utility

28th October 2005, Comments 0 comments

PARIS, Oct 28 (AFP) - France launched on Friday the controversial part privatisation of electricity utility EDF, saying the state's holding would not fall below 85 percent for the moment, and hoping that the group's top position in European electricity markets would attract investors.

PARIS, Oct 28 (AFP) - France launched on Friday the controversial part privatisation of electricity utility EDF, saying the state's holding would not fall below 85 percent for the moment, and hoping that the group's top position in European electricity markets would attract investors.

Finance Minister Thierry Breton said on Friday that the state had no foreseeable plan to reduce its holding in the electricity giant to 70 percent, the maximum allowed by law, from 85 percent planned under part privatisation.

The overall sale of shares is expected to raise one billion euros (1.22 billion dollars) for the state and seven billion euros for the group.

Early on Friday the government announced a launch price range for subscription, which opened later in the day for trading by November 21 at the latest.

The price range values the entire group at 55.0-63.5 billion euros (67.0-77.5 billion dollars) on a basis of a subscription price range of 28.50-33.10 euros per share.

Once the operation has been completed, up to a maximum of 15 percent of the group will be in private hands.

Most of the shares are to be made available to private investors and to French and foreign investment funds. In addition the state is to offer a smaller slice of shares, at a 20 percent discount, to EDF staff to raise money for the ailing public finances.

The company's president Pierre Gadonneix said on Friday that he hoped more than half of its employees would buy shares, while unionists strongly opposed to the privatisation accepted that their members may take up the offer.

"There's no big contradiction between the fact that an employee buys shares and the fact that he's battling against privatisation," said Eric Roulot, federal secretary of the company's biggest CGT union.

Roulot said that the proposals were very attractive and some unionists would probably buy shares.

On Friday, the finance minister sought to reassure that the government would not reduce its final share in EDF from 85.0 to 70.0 percent.

"For the moment, really it is not in prospect and I think that it won't be for some time," Breton said on France Inter radio.

Asked about how electricity prices may change after a five-year-long public service contract preventing the EDF from increasing its energy prices to consumers by more than inflation, the minister said that "this will continue".

He said that France produced its own electricity and this explained why there could be a price guarantee. France generates most of the electricity it uses with its own nuclear power stations.

The public service contract included a clause for a revision in 2007 "only because the law says that from 2007 the energy market is being opened up, and so legally we are obliged to do so".

This was a reference to EU regulations requiring member countries to open their energy markets to competition.

Breton said: "Legally, the contract will have to be re-signed but the guarantee is that it will be exactly what it is today, that is to say no more than inflation in the next five years."

The offering, which is highly controversial because of a long tradition of state-owned public services in France and advantageous employment conditions for staff, comes four months after flotation of the national gas utility Gaz de France (GDF), which attracted 3.0 million French shareholders.

On Friday, Breton authorised an increase in GDF's gas prices of 12.0 percent but said that the company would make reductions elsewhere for its customers, such as cutting annual subscriptions.

This meant the actual price increase would be 3.8 percent "on average", taking into account all the reductions requested by the government, he said.

Copyright AFP

Subject: French news

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