French nuclear power giant EDF which is nearly 37 billion euros in debt, hopes it will lead other European countries to rethink their nuclear strategy - and green-light projects for which it can provide the technology
Paris (AFP) - The board of energy giant EDF votes Thursday on a hugely controversial project to build a nuclear power station in Britain which critics say could bankrupt the French utility.
EDF's directors are deeply divided over the planned construction of two nuclear reactors at Hinkley Point for £18 billion (21.4 billion euros, $23.8 billion), with the French government's board representatives strongly in favour, unions strongly against and independent directors expected to tip the balance.
Adding to the tension, one board member resigned just before the key meeting, saying he disagreed with the plan.
In a letter seen by AFP, Gerard Magnin said he could no longer support France's strategy to push nuclear energy at the expense of other options.
"As a board member backed by the shareholding government I no longer wish to support a strategy with which I disagree," Magnin said in the letter.
The plan to build the EPR latest generation reactors, signed in 2013, is to be carried out by EDF with Chinese partner CGN, but has hit several snags since.
Weighing on its viability is the decision of French nuclear company Areva to drop out because of financial difficulties and the subsequent takeover of Areva's obligations by EDF at the behest of the French government, which owns 85 percent of EDF.
This pushed EDF, which was already struggling under a debt mountain of 37.4 billion euros at the end of last year, to go further into the red, leading some to question the group's ability to juggle all its liabilities, including the renovation of France's nuclear operations and the takeover of Areva's reactors amid falling energy prices.
- 'Extremely tense' -
Needing cash, EDF is in talks to sell just under half of its power unit RTE for over four billion euros, a source close the negotiations told AFP Thursday.
And earlier this week, the French government said it would foot three billion euros of a four-billion capital increase by EDF.
But unions still fear for EDF's financial survival and have asked for a delay of at least three years of any decision on the British nuclear plans, even waging a court battle to stop the momentum.
The Hinkley Point project is one of the world's most costly nuclear power plant projects.
"The situation in the company is extremely tense, and the chairman is more than ever isolated from his top managers and from unions," said one union source.
EDF chief financial officer Thomas Piquemal resigned in March over the threat the project represents to the company's finances, and chairman Jean-Bernard Levy acknowledged that the company's "financial trajectory is taut".
EPR reactors, developed mostly by France's Areva, are the latest generation of nuclear reactors and among the most powerful in the world, and according to Areva, the safest.
There are only two other ongoing EPR reactor projects in Europe, one in Normandy in France and the other in Finland, and both have been plagued by delays and cost overruns.
- Doggedly determined -
The French government is doggedly determined to get Hinkley Point approved as it sees the project as crucial for the longterm viability of France's nuclear industry, which employs 220,000 people.
The British government is also in favour because the reactors will cover up to seven percent of Britain's electricity needs while helping the government meet its CO2 emissions targets because of relatively low carbon emissions from nuclear energy.
But British support is not unanimous, and criticism focuses on the growing difference between an electricity price guarantee for EDF, subsidised by the British taxpayer, and current falling energy prices.
EDF would be guaranteed £92.50 per megawatt hour produced by Hinkley Point over 35 years, giving it an estimated nine percent of return on its capital.
But Britain's National Audit Office has warned that the potential cost of this subsidy had risen to £29.7 billion from a 2013 estimate of £6.1 billion because of the drop in energy prices.
A decision to back the project will require a simple majority among EDF's board members.
- Government one down -
The departure of Magnin means that the government representatives at Thursday's meeting are down to just five, who are expected to vote in favour of Hinkley Point.
The six staff representatives are firmly expected to vote against, with the leanings of the six independent board members uncertain.
The board meeting got underway at 1230 GMT and a decision may only come late in the evening.