by Staff Writers
Paris (AFP) April 25, 2016
Shares in French energy giant EDF plunged 11 percent Monday after the state said it would lead a four-billion-euro capital increase as the company tries to tackle a huge debt pile.
France, which owns 85 percent of EDF, announced the move late Friday, while the power company pledged to cut millions more in costs and sell off assets.
EDF chairman Jean-Bernard Levy said Monday that there would be no additional job cuts at the power company beyond the 3,350 posts which EDF has already announced are set to go by 2018.
EDF shares fell 11.07 percent to 10.885 euros at the close on Monday.
The power company's debt woes have weighed on its project to build a controversial 23-billion-euro ($26 billion) nuclear power plant at Hinkley Point in southwest England.
Hinkley Point, which EDF is to build in partnership with China General Nuclear Power Corporation (CGN), will be Britain's first nuclear power plant in decades and is to provide seven percent of its energy needs by 2025.
Questions have been raised about the financial viability of the project as EDF is struggling with a debt pile of more than 37 billion euros.
Economy Minister Emmanuel Macron on Sunday said EDF would give the final green light to the controversial investment decision in September.
The decision had been expected in May, but EDF announced the delay on Friday, saying it first had to consult with an internal committee as demanded by France's unions.
On Friday, the French government announced that it would plough three billion euros into the energy provider, as part of the four-billion-euro capital increase.
Falling electricity prices, low gas and coal prices and a rise in the use of renewable energies have all added to EDF's debt woes.
On top of that, the state last May decided that EDF would take over the reactor arm of struggling nuclear giant Areva, at a cost of 2.5 billion euros.
EDF is also racking up costs in the construction of a next generation nuclear powerplant in Flamanville in northern France, which started in 2007 and has been beset by technical delays.
The cost is now estimated at 10.5 billion euros, three times the initial cost, with completion expected in 2018.
The Flamanville design, considered the most advanced and safest in the world, uses the same design planned for Hinkley Point.
John Sauven, director of Greenpeace UK, said the latest delay to EDF's investment decision "may now be the sign that the entire project is coming to a grinding halt" and showed the British government "urgently needs to back renewable energy as a more reliable alternative."
Even if EDF could agree on the financing of the project, the European Commission could scupper it on the grounds that it was being built with "illegal state aid," Sauven added.
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