EDF bailout paves the way for £18bn nuclear power deal

THE French government is expected to agree the terms for a bailout for EDF this weekend so the energy firm can go ahead and start building the £18billion nuclear power station at Hinkley Point in Somerset.

EDF might sell part of its stake in France’s equivalent of the National Grid – called RTE – to state-owned bank Caisse des Depots et Consignations with EDF keeping at least 51 per cent.

A second option is for the French government, which already owns 85 per cent of EDF, to take future dividends in shares rather than cash. This is very likely, according to sources close to the company.

It is not thought that CGC would take a stake in Hinkley Point – as suggested in some quarters – since EDF is already majority-owned by the French state.

It has been claimed that France might subsidise the price of power generated by EDF’s French nuclear operations in the same way that the UK’s ‘contracts for difference’ operate – with an agreement for the energy giant to be paid a minimum price for electricity generated – however this is seen as unlikely.

Under a deal agreed with the British Government, EDF will receive £92.50 per megawatt hour for 35 years for electricity generated from Hinkley Point, which will account for 7 per cent of the UK’s electricity. This is almost triple the current wholesale price of electricity though this also includes cleanup and decommissioning costs.

The political repercussions of the deal – which will see EDF awarded as much as £1billion a year funded by higher electricity bills – has led to a clamour on both sides of the English Channel for the entire deal to be cancelled. However, both the British and the French governments are committed to the deal.

Last week EDF’s chief executive Jean-Bernard Levy wrote to staff to tell them he would not go ahead with the project without more help from the French state.

The letter is likely to have been agreed with the French government and is seen as an attempt to placate French unions which are against Hinkley Point because of job fears.

EDF employs 220,000 people in France but is facing a huge bill to replace ageing nuclear power plants there in 15 years.

There have been reports that the French government may inject cash into EDF through French bank BNP Paribas. The bank has declined to comment.

EDF’s chief financial officer Thomas Piquemal quit this month over the cost of the Hinkley Point deal at a time when EDF already has debt of £29billion.