French leader’s nuclear chalice
• Incoming president may be forced to sell state’s holdings in a number of companies to meet shortfall in industry
The new French president may find that one of his first tasks in office will be selling off some of the nation’s prized assets to prop up the state’s nuclear industry. The government was as much as €3bn short of the €7.5bn it has said it needs this year to fix the financial problems of Areva and Electricite de France, sources with direct knowledge said.
Whoever succeeds Francois Hollande as France’s president may find one of their first tasks in office will be selling off some of the nation’s prized assets to prop up the state’s nuclear industry.
That was because the government was as much as €3bn short of the €7.5bn it has said it needs this year to fix the financial problems of Areva and Electricite de France (EDF), said two government officials with direct knowledge of the matter.
Hollande would try to find an answer before he left office in June, one of the people said. If he was unable to do so, his successor would have to decide how to plug the gap, the other said.
France is preparing to rescue its nuclear industry after EDF was weakened by falling European power prices and Areva lost billions on a long-delayed project in Finland.
NATIONAL DEBT
The president must either increase the national debt or weigh politically sensitive privatisations of holdings in anything from car makers, such as Renault, to the former phone monopoly — a tall order with the first round of presidential elections just three months away.
“It’s not that simple to raise these funds, either because of market conditions or for strategic or social reasons,” said senator Maurice Vincent, a member of the ruling Socialist Party who sits on the finance committee.
“Half of the holdings are in the depressed energy sector,
which needs to be bailed out, and a quarter is in the defence sector, where you have limited divestment leeway, so that does not leave much wiggle room.”
While the government had enough in its privatisation account for the €3bn stimulus, it planned for EDF this quarter, it remained almost €3bn short of the €4.5bn it wanted to help its near-bankrupt reactor maker, Areva, complete its restructuring and meet debt repayments this year, the officials said.
Areva shareholders on Friday voted in favour of a
€5bn state-backed bailout that includes the amount of €500m from Japanese investors.
France depends on nuclear reactors for about threequarters of its electricity and the two state-controlled companies were supposed to be leading the charge to export the
technology around the world.
All three leading presidential candidates have said they will support the nuclear industry, at least in the medium term, as the best guarantee of energy security and a low-carbon future.
Hollande’s spokesman did not answer messages seeking comment. Representatives of Francois Fillon, the Republican Party candidate, Socialist Benoit Hamon and Emmanuel Macron, an independent, also declined to comment.
Marine Le Pen of the National Front would not sell state assets but instead ask state-controlled Caisse des Depots et Consignations to invest in Areva, her economic adviser, Bernard Monod, said.
ORANGE, RENAULT
The winner of the election runoff due on May 7 faces a difficult choice between increasing the national debt or selling stakes in public companies, valued at about €90bn.
While the government owns a piece of everything from the postal service to car makers Renault and PSA Group, manufacturer of Citroën and Peugeot, its privatisation options are constrained by shareholder pacts, politics and the financial circumstances of some of the companies involved.
Similarly, the government has been reluctant to sell down its stake in former phone monopoly Orange and would face obstacles to selling shares in aircraft-engine maker Safran because of a pending deal.
In its haste to raise money, the government sold a stake in energy group Engie for €1.14bn in January when the shares were near an all-time low.
The state retains about 29% of Engie, but now “is the worst moment to sell”, said Regis Turrini, who ran the agency that manages government holdings in public companies from 2014 to 2015.