PARIS, May 3 (Reuters) - Energy group EDF’s share of the French power market is at risk of plummeting if a restructuring plan to improve its financing situation does not go ahead, its chief executive said in a letter to unions.
Under the terms of the plan, which faces strong opposition from unions who fear it could lead to job cuts, France hopes to place state-run EDF’s debt-laden and capital-hungry nuclear business into a holding company that would be fully state owned.
The holding company would control a separate entity housing the more lucrative parts of the business, such as renewable energy, and free of its liabilities. Investors would be invited to acquire up to 30% of that unit.
The utility, which is nearly 84% owned by the French state, has warned that the reforms are crucial to prevent the group from falling behind rivals, such as Total, in renewables and becoming a second-tier power player.
“To remain a major player in the French electricity sector, EDF must be able to invest in these new forms of electricity production”, CEO Jean-Bernard Levy said in a letter sent on April 28 to unions.
“Otherwise EDF’s market share of electricity production in France would quickly fall.”
The French government and the European Commission have been wrangling for months over an overhaul of EDF partly aimed at improving the way its nuclear arm funds itself.
French ministers are now hosting a series of meetings with labour representatives to try and find some support for a deal and pass it through parliament over the summer, before France enters a campaign period ahead of 2022’s presidential election.
The deal would also involve resetting the price at which EDF sells on nuclear power to third party distributors.
Levy told unions that the price would allow EDF to cover all the costs of its existing nuclear park in France, including its next-generation nuclear reactor at Flamanville.
EDF declined to comment on Levy’s letter. (Reporting by Benjamin Mallet; Writing by Sarah White and Matthieu Protard; Editing by Jan Harvey)