PARIS — France will provide €2.1 billion to state-controlled energy incumbent EDF to help the company tackle financial difficulties and bear the cost of the construction of new nuclear reactors.
“This capital increase decision should open a new page in the history of EDF,” France’s Economy and Finance Minister Bruno Le Maire told reporters on Friday in announcing the decision.
“The objective is to allow EDF to restore its accounts, to invest in the future and to be able to carry out the investment projects announced by the President of the Republic in Belfort in the best possible financial, economic and technological conditions,” Le Maire said. French President Emmanuel Macron announced last week that EDF will build six new nuclear reactors.
Le Maire said EDF’s financial difficulties are mainly due to a drop of electricity production — due to the inactivity of some nuclear reactors — and that the company’s expected revenue from energy production in 2022 will be €11 billion less than projected.
EDF last week announced that it would further reduce nuclear energy production because of maintenance work on reactors. At the same time, the company also purchased GE’s nuclear steam turbines business, a deal which could cost more than €1 billion to EDF, according to French media.
But EDF also has to bear the cost of government measures to cap energy prices as the company committed to sell more energy to its competitors below market price — a measure that cost EDF €8 billion in lost revenue. Le Maire was quick to note the financial impact of that price-cap measure was not the main reason for helping EDF.
The state holds 83.88 percent of EDF’s shares. The public support comes as part of a wider €2.5 billion capital increase announced Friday. Le Maire hoped that the state support will send “a signal to private investors.”
Paris and Brussels discussed a reform of EDF to make France compliant with the bloc’s competition rules, but the project was abandoned last summer.