Sarkozy plans 8-11bn capital hike for EDF

24th November 2004, Comments 0 comments

PARIS, Nov 23 (AFP) - French Finance Minister Nicolas Sarkozy said Tuesday he would announce plans for a capital increase for Electricite de France (EDF), paving the way for a partial privatisation of the state-owned utility.

PARIS, Nov 23 (AFP) - French Finance Minister Nicolas Sarkozy said Tuesday he would announce plans for a capital increase for Electricite de France (EDF), paving the way for a partial privatisation of the state-owned utility.

Sarkozy said the proposal would be put to ministers at a cabinet meeting on Wednesday.

He did not give details of the planned size, however.

"If EDF needs money for its industrial development, an option of a limited capital increase could be provided," Sarkozy told parliament.

"That is the proposition I will put forward tomorrow to the cabinet with the prime minister's approval."

On Friday EDF and its sister company Gaz de France officially adopted the legal status of private, limited liability companies.

Tuesday's announcement comes after a high-level commission found last week that EDF needed to reinforce its shareholders' equity with EUR 8.0 to 11.0 billion (USD 10.5-14.4 billion) to fund development in Europe.

However, it is unlikely the financing would come from the cash-strapped French state, which has not given funds to the company for more than 20 years.

Prime Minister Jean-Pierre Raffarin said Monday he hoped to sell stakes in EDF and GDF on the stock market "before the end of 2005". However, the government has promised to hold onto 70 percent of EDF's capital.

Sarkozy said there were three ways to finance EDF: "raise the tariffs for consumers, and I imagine that is not what you want, increase the company's debt, which would be irresponsible.

"That leaves only one solution: take advantage of the opportunity allowed by law."

© AFP

Subject: French News

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