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EDF Delisting Is an Option to Help Nuclear Giant, Minister Says

EDF Delisting Is an Option to Help Nuclear Giant, Minister Says

(Bloomberg) -- Electricite de France SA, the struggling state-controlled nuclear energy giant, may be delisted as part of a transformation aimed at restoring its investment capabilities, Ecology Minister Francois de Rugy said.

A 100% state-owned entity could include nuclear plants, and may also add hydroelectric dams and other assets, the minister said. The comments are the clearest to date that the government is considering regaining full control of the utility’s nuclear assets, which are the country’s electric backbone, amid reactor shutdowns and the expansion of renewable energy.

EDF Delisting Is an Option to Help Nuclear Giant, Minister Says

“One of the options, not decided at this stage, is to have a 100% state-owned company, with units on the other hand that could have private investors,” de Rugy said during a discussion of an energy and climate bill in Parliament late Wednesday. “It’s an operation that’s not easily done. It means you have to buy back some shares.”

The government is also “very seriously” considering putting all of EDF’s hydropower concessions that have expired in a separate state-owned entity, he said.

The company’s shares rose as much as 3.3% to 11.205 euros in Paris, and were trading 1.1% higher at 1:26 p.m. local time.

EDF Delisting Is an Option to Help Nuclear Giant, Minister Says

EDF, 83% owned by the state, is struggling to fund its 15 billion euros ($17 billion) annual investments with cash from its operations. Its debt is undermining growth, Chief Executive Officer Jean-Bernard Levy said this month. The government is split about the idea of nationalizing the utility because of the cost of buying out minority shareholders, people familiar with the matter said in March.

Overhaul

President Emmanuel Macron has given EDF until the end of this year to make proposals for an overhaul so that it can invest in new power generation while retiring 14 of its 58 aging French atomic reactors by 2035. He has also pledged to modify a regulation on nuclear output to reduce EDF’s exposure to declines in power prices, while limiting costs for consumers when they climb.

EDF Delisting Is an Option to Help Nuclear Giant, Minister Says

Levy has blamed the regulation, which allows its rivals to buy about a quarter of the utility’s French atomic output at a discount to current market prices, for the burgeoning debt. He has said a majority-controlled subsidiary, with assets such as distribution networks, could be created and using that company’s balance sheet to raise funds.

Amending the rules will require the approval of the European competition regulator. They were introduced almost a decade ago to loosen the former electricity monopoly’s hold on the market.

If the regulations under discussion in the French Parliament are adopted, the government could raise the amount of nuclear power that EDF must sell to rivals, but allow it to charge a higher regulated price. That current price of 42 euros per megawatt-hour hasn’t changed since the start of 2012.

A broader overhaul could also provide EDF with a floor price and a ceiling for the sale of its atomic output. The change would also require European antitrust approval.

Regarding hydropower, another contentious issue with the European regulator, it isn’t yet clear whether EDF’s expired concessions would be offered to other companies for bidding or if they should be placed in a separate government-owned entity, de Rugy said. If it’s the former, EDF would be also be able to participate in the tenders, he said.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, Reed Landberg

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