France ready to save nuclear group Areva whoever wins presidency
PARIS - Reuters
REUTERS photoA government-led rescue of French nuclear group Areva and the wider atomic energy industry may cost the state as much as 10 billion euros, but political support is almost certain whoever wins the presidential election in May.
While taxpayers will ultimately pick up the huge bill, the main election contenders - from the Socialists and conservatives to the far-right National Front - broadly back the bailout, which involves splitting up Areva.
On top of its dire financial state, Areva is beset by technical, regulatory and legal problems. But given its importance to a nuclear industry that generates three quarters of France’s electricity and employs 220,000 people, the next government probably has little choice but to stand by the scheme hatched under outgoing Socialist President Francois Hollande.
France has a small but fierce anti-nuclear movement and some critics oppose investing billions in extending the life of ageing reactors. Nevertheless, nuclear energy is broadly accepted, even though neighboring Germany has decided to ditch it altogether following the 2011 disaster at Japan’s Fukushima plant.
“I am convinced that the 21st century will need nuclear,” said conservative presidential candidate Francois Fillon.
“That is why we must support the industry during this difficult period,” the former prime minister wrote in his manifesto.
Although Fillon is a frontrunner, the election outcome remains uncertain. However, even if National Front candidate Marine Le Pen pulls off an upset, she too has promised to stand by the nuclear industry.
While Germany is replacing lost nuclear output with wind and solar power capacity, Le Pen said “so-called green energies are not realistic yet.” In her manifesto, she said nuclear was necessary in the medium term to meet targets for cutting carbon emissions and maintaining French energy independence.
The nuclear industry rescue also involves a cash injection for power utility EDF, which operates France’s 58 nuclear reactors and will buy part of Areva’s business. But for all the domestic support, Brussels must also rule on whether the bailout complies with European Union rules on state aid.
Shareholders of two companies that will emerge from the restructured Areva are due to vote on the plan on Feb. 3. The timing of the EU decision is unknown, but an Areva spokeswoman said: “We hope for an answer from the European Commission within a timeframe that is compatible with the shareholder meetings.”
Once the champion of France’s nuclear industry, 87 percent state-owned Areva has seen its equity wiped out by years of losses. Among its biggest problems is a nuclear plant it is building in Olkiluoto, Finland. Work is almost a decade behind schedule and huge cost overruns have led to Finnish utility TVO and Areva claiming billions from each other.
Areva’s rescue closely involves 85 percent state-owned EDF. The utility has agreed to buy a majority stake in the reactor unit Areva NP based on a value of 2.5 billion euros. The hope is that outside investors will buy minority stakes in Areva NP too.
Last week Russian nuclear group Rosatom also expressed interest in participating in Areva’s restructuring.
While EU sanctions on Russia would be a problem, Fillon has promised to pursue warmer relations with Moscow if elected.