Following a period of record losses, France nationalises EDF, its largest power provider.
France Nationalises EDF and Removes the Company from Trading on the Paris Stock Exchange. This is according to a statement released by the French Ministry of Finance on Thursday, the French government has successfully completed the nationalisation of EDF, which is the largest energy utility in the country. This action involves the official removal of EDF from the Paris stock exchange.
Nationalisation Urged Due to Excessive Losses and Decreased Nuclear Production
The nationalisation of EDF is a response to the enormous financial loss that the company endured in the preceding year, which established a new benchmark for the business. The decrease in nuclear power output, which has now reached its lowest point in the last 34 years, contributed to this setback.
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French Minister of Finance Lauds the Successful Completion of the State Takeover
Bruno Le Maire, the French Minister of Finance, has expressed his satisfaction with the nationalisation of EDF, describing it as a “success” and stating that the state takeover was essential for the future of the energy company.
Buyout Offer Made in the Amount of €10 Billion to Acquire Full Control
Late in the year 2022, the French government made an offer of approximately €10 billion ($10.9 billion) in order to acquire full control of the financially struggling electricity provider EDF. This was the first step in France’s plan to nationalise EDF and acquire the remaining 16% stake in the company. Before the buyout, the French government already owned nearly 84% of EDF. Private shareholders owned 15% of the company, and utility workers owned the remaining 1%.
The Lack of Nuclear Power Causes an Increase in the Price of Electricity
France has a nuclear fleet consisting of 56 reactors, all of which are operated by EDF. Historically, France’s nuclear fleet has been responsible for approximately 70% of the country’s electricity generation. However, numerous reactors have experienced persistent corrosion problems, which have led to shutdowns or maintenance work and caused a significant decrease in power production.
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Last year, as a result of decreased nuclear power output, electricity costs in France skyrocketed, which compelled EDF to purchase power from wholesale markets in order to compensate for the shortfall in production. This situation makes Europe’s ongoing energy crisis even more difficult to manage.
Under Increasing Financial Pressure Due to Record Losses
In the same year that EDF reported a record loss, the company’s net financial debt reached nearly $70 billion, an increase of nearly 50 percent from the previous year.
Estimates of future production are lower than those for the preceding years.
The estimates provided by EDF place annual production somewhere in the range of 300 to 330 terawatt-hours, with an anticipated increase to 345 terawatt-hours in 2024. These figures are still a significant decrease compared to the 380 terawatt-hours that were produced in 2019.
Increasing Dependence of France on Foreign Sources of Electricity in France
The experts predict that France, once a power exporter, will heavily depend on electricity imports from neighbouring countries, including Germany, to meet domestic demand during the upcoming winter.
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How did France nationalise EDF?
A resolution to fully nationalise the French energy company EDF, in which the state holds a majority stake, was approved by the lower house of the French legislature. The Socialist Party (PS), which is in opposition, was the party that proposed the bill, which received 205 votes in favour and one vote against it.
It has been plagued by never-ending problems. The total amount of the company’s net financial debt increased by 50% in 2022, rising to €64.5 billion.