MACRON’S ELECTORAL SETBACK WILL COMPLICATE EDF’S REORGANIZATION
PARIS (Reuters) – The loss of the absolute majority of the party of Emmanuel Macron and his allies in the National Assembly will probably complicate the implementation of the plan to reorganize EDF because the process involves a number of legislative changes. , according to sources familiar with the matter interviewed by Reuters.
The government had to put a previous reorganization plan, called “Hercules”, on hold last summer due to persistent disagreements with Brussels and the unions.
According to its promoters, the project was to give EDF new resources by housing its nuclear fleet in a public structure – whose current regulations do not cover the costs and force the group to go into debt – while its activities in renewable energies and distribution of electricity would form a whole open to private investors.
Emmanuel Macron hoped to relaunch the reorganization of EDF after his re-election in April, in a context of war in Ukraine which threatens the security of energy supplies in Europe and makes prices jump, but the legislative elections on Sunday will force the government to compromise and risk slowing down the progress of the reforms desired by the Head of State.
“It is difficult to measure the consequences [des législatives sur la réforme d’EDF], it’s a bit early and the government has never given the details of its new project. But it doesn’t seem ideal,” a source close to the group’s management told Reuters on Monday.
One of the major challenges in the coming weeks will be Emmanuel Macron’s ability to conclude a coalition agreement with Les Républicains – who have so far rejected this hypothesis -, failing which negotiations will have to be initiated on each draft law.
“The real risk is to see all of President Macron’s proposals rejected by the opposition (…) and to leave EDF in a form of status quo, which worries us”, indicated Sébastien Michel, federal secretary of the FCE CFDT. in charge of energy policy and ecological transition.
“MUCH MORE DIFFICULT TO PASS”
EDF’s structural financing difficulties have prompted the government to consider a complete renationalisation of the group, which could involve buying back the shares held by minority shareholders, without having to go through Parliament. But this would only be a first step.
“The reorganization project promises to be much more difficult to pass because a certain number of subjects should involve a vote of Parliament”, estimates a source familiar with EDF’s reorganization scenarios, citing in particular the revision of the regulations supposed to guarantee nuclear selling prices.
A spokesman for EDF insisted on Monday on “the need to have a reform for (the group), quickly”.
He also underlined that it would be a global process including the implementation of new regulations and a new organization of the company to continue to register it within the framework of the European market of electricity and enable it to fully play its role in the energy transition.
EDF is also suffering from the unavailability of around half of its historic nuclear fleet and the government’s decision to force it to sell more nuclear power at low prices to its competitors to limit the rise in electricity prices.
In this context, at the beginning of the spring, it had to carry out a capital increase of 3.16 billion euros, to which the State subscribed up to approximately 2.7 billion, and the French Minister for the Economy and Finance, Bruno Le Maire, said of a possible nationalization that “all options (were) on the table”.
JPMorgan analysts said on Monday they expect the President of the Republic to pursue the complete renationalisation of EDF and the executive to set a guaranteed price for all French nuclear production, although a green light from the European Commission is needed on this point.
In any case, the timing and course of the process “are uncertain at this stage”, however, they added in a note.
(With Silvia Aloisi, edited by)