EDF chief plans imminent bid for Areva’s atomic-reactor business

Paris: Electricite de France SA plans an imminent offer to take control of Areva SA’s unprofitable nuclear-reactor unit, according to chief executive officer Jean-Bernard Levy.
“I will propose that EDF buy the reactor business,” Levy said on Tuesday in a Europe 1 radio interview. “Areva is today clearly in difficulty. We have to make decisions quite quickly.”
EDF, the operator of France’s 58 reactors, has held talks with Paris-based Areva following record losses at the atomic- plant builder. The state-controlled companies and the government have studied ways to shore up the beleaguered business after mismanaged projects in France and Finland, as well as a retreat from nuclear energy in several countries, dented its finances.
Levy plans a “just” price, he said. The reactor division, which employs 15,000 people to design, build and maintain atomic plants, would become a majority-owned unit with “autonomy” to forge partnerships with other companies, he said.
President Francois Hollande has called for greater cooperation between EDF and Areva as France adopts a new nuclear policy. Lawmakers have passed legislation aimed at lowering reliance on atomic energy, which accounts for about three- quarters of the country’s power production.
Following decisions about the future structure of the nuclear industry, the state will “recapitalize” Areva, according to Levy, who addresses EDF’s annual meeting of shareholders in Paris on Tuesday.
June decision
If EDF gains control of the unit, called Areva NP, it would seek guarantees to guard against risks such as Areva’s costly reactor project in Finland, Levy said in a separate interview in Le Figaro. Alternatively, EDF could absorb some of Areva’s staff of about 1,200 engineers who work on reactor design and safety, according to the CEO, who sees a decision as early as 3 June.
While Areva has multiple units including uranium mining, EDF has no “industrial” role to play in the other divisions, the newspaper reported, citing Levy.
Areva’s net loss widened to a record €4.83 billion ($5.42 billion) in 2014, and the company said this month it will reduce global staff by as much as 6,000 in three years.
EDF and Areva are each struggling to build a new reactor model, called the EPR, in the northern French region of Normandy and in Finland. Both projects are over-budget and behind schedule. A new EPR model needs to be developed that’s less expensive, Levy told Le Figaro.
In the latest setback for the Normandy reactor, French regulators found faults in the core vessel and asked for additional tests. These will be done this summer and will show there are no safety risks, Levy said on Europe 1 radio.
EDF plans to start running the EPR in 2017. It may then have to shut two aging reactors at its Fessenheim plant, he said.
France’s reactor fleet needs maintenance to extend plants’ operating life beyond 40 years. To pay for the work, the government must grant EDF increases of 2% or 3% in state-set power tariffs once or twice a year, Levy said. Bloomberg
Source: Mint; 19 May 2015

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