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France launches hunt for new EDF CEO, sets money aside for full nationalisation

·3-min read
FILE PHOTO: Steam rises from cooling towers of the Electricite de France (EDF) nuclear power station in Belleville-sur-Loire

By Jean-Stéphane Brosse and Leigh Thomas

PARIS (Reuters) -EDF and the French government are seeking a new boss to overhaul the power utility and build more nuclear reactors, they said on Thursday, with billions in public money earmarked to help finance a full nationalisation of the debt-laden company.

EDF, in which the state already has an 84% stake, is one of Europe's biggest utilities and is central to France's nuclear strategy, which the government is banking on to blunt the impact of soaring energy prices exacerbated by the war in Ukraine.

But the utility is beset by outages at its ageing nuclear plants, has suffered costly delays on new reactors, and borne the brunt of government measures to shield households from surging energy costs.

Less than two decades after EDF was floated on the stock market to much fanfare, the government announced on Wednesday it would bring it fully back under state ownership.

"The roadmap for the future leader of EDF is to produce more ... as quickly as possible; it is the construction of six new EPR nuclear reactors and it is the continuation of the commitment in renewable energies", Finance Minister Bruno Le Maire told Europe 1 radio.

He did not suggest a replacement for Jean-Bernard Levy, 67, who has been at the helm of the company since 2014 and was due to step down by March 2023, but he outlined some job requirements.

"It has to be someone who masters the major industrial programmes ... and who has a sense of compromise. With the trade unions, with the European Commission, it will be necessary that we all find a compromise on the transformation of this company."

NO QUICK FIX

EDF said Levy, who criticised the government this year for making it sell nuclear energy at below-market prices, was prepared to step down as soon as a successor was found.

Le Maire said changing CEO was not a punishment for his criticism.

Citi analyst Piotr Dzieciolowski said France was likely to fully nationalise EDF via a share offer rather than law, calling it an "easier and probably cheaper option."

Buying the shares the government does not already own at the current prices would cost about 5 billion euros ($5.1 billion), but analysts expected the government to pay a premium.

Barclays analysts put a price target of 11.10 euros on EDF shares. Shares traded at about 9 euros on Thursday, 90% down from a 2007 high and far below the 32 euros per share listing price in 2005.

The government is already increasing the amount of money available for financial operations related to its state shareholding portfolio by 12.7 billion euros in the second half of the year, a bill updating the 2022 budget showed on Thursday.

The bill does not say what operations are anticipated but the funds would potentially be available to finance a market intervention such as the nationalisation of EDF.

The French state injected around 2 billion euros into EDF earlier this year.

Analysts said taking full control of EDF would not solve the utility's problems overnight.

($1 = 0.9791 euros)

(Additional reporting by Michel Rose, Silvia Aloisi and Tassilo Hummel;Writing by Ingrid Melander;Editing by David Goodman and Jane Merriman)

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