Row over UK nuclear plant alarms EDF investors

7th March 2016, Comments 0 comments

The resignation of French energy giant EDF's finance chief sent its shares plunging Monday as concerns grew over the risks of its plan to build a next-generation nuclear plant in Britain.

Thomas Piquemal quit after a disagreement within EDF over the £18-billion (23.2-billion-euro, $25.5 billion) Hinkley Point project in Somerset, southwest England, which is set to produce seven percent of Britain's energy needs by 2025.

EDF confirmed his resignation with immediate effect, with a company source saying Piquemal had quit in a dispute over the "short-term feasibility" of the project.

Piquemal was reported to have been concerned that going ahead with Hinkley Point now could plunge heavily-indebted EDF's future into peril.

A source close to the finance ministry said Piquemal had argued that the company should wait another three years before making the final investment decision on the project.

But EDF chief executive Jean-Bernard Levy said in a statement Monday that EDF intended to take that decision "in the near future".

Investors took fright at the news of Piquemal's resignation and EDF shares ended the day down nearly seven percent at 10.12 euros.

The company said Piquemal will be replaced by Xavier Girre, currently finance director for its operations in France.

Unions at EDF, which is 84.5-percent owned by the French state, have also expressed their concerns over the impact of Hinkley Point on the company and called for the project to be delayed.

French President Francois Hollande and British Prime Minister David Cameron pledged their support for the project at a summit in France last week and both governments repeated that position on Monday.

"The state, as the holder of a comfortable majority of the shares, fully supports the management team," France's Economy Minister Emmanuel Macron said.

Hinkley Point will be "very profitable over the next 30 years", he added.

A spokesman for Cameron said while he would not comment directly on Piquemal's departure, the British government continued to "fully support" the project.

In October, EDF agreed in principle to build the plant with China General Nuclear Power Corporation (CGN), which will finance a third of the project after French group Areva pulled out amid its own financial problems.

- Untested technology -

The doubts over the project are linked to the largely untested Evolutionary Power Reactor (EPR) technology to be used at Hinkley Point.

There are no working versions of the technology in existence and other EPR plants currently under construction -- including one in Finland -- are years behind schedule and billions of euros over budget.

John Sauven, director of Greenpeace UK, said Piquemal's resignation should set off "alarm bells" for the French and British governments.

"If the finance chief thinks the project will be a disaster, the optimism from both governments that the deal will be imminent is irrational," he said.

EDF has suffered badly from the global slump in energy prices.

The company slashed its dividend for 2015 after unveiling sharply lower annual net profits of 1.19 billion euros compared with 3.70 billion euros in 2014.

In the longer term, EDF faces an estimated 50-billion-euro bill over the next decade to prolong the life expectancy of France's 58 nuclear power plants.

In January, EDF said it would cut five percent of its workforce over the next three years to reduce costs.

The group is also taking a financial hit after agreeing to buy the nuclear reactors business of its troubled fellow French firm Areva.

The source with knowledge of the discussions said Piquemal had urged waiting three years before deciding on Hinkley Point because EDF's new EPR reactor in Flamanville in northwest France should be completed by the end of 2018, which is a condition for the British government to guarantee part of the financing for the plant in England.

Moreover, two EPR reactors Areva has been building in Taishan, China, should go online in 2017.

"By waiting three years, the risk would drop considerably," said the source on condition of anonymity.

© 2016 AFP

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