France plans to nationalize debt-ridden French electric utility EDF amid a wide-ranging energy crisis exacerbated by Russia’s invasion of Ukraine, French Prime Minister Elisabeth Borne has said.
The French state now owns an 84% stake in the company, one of the world’s largest electricity producers. Shares in EDF, which has recently endured a series of nuclear reactor shutdowns and other troubles, jumped into the news.
“We need to have full control over our electricity production and performance,” Borne said as she set out her government’s priorities in her first major speech to the French parliament. “We must guarantee our sovereignty in the face of the consequences of the war” [in Ukraine] and the colossal challenges ahead… That is why I confirm to you the state’s intention to own 100% of EDF’s capital.”
The move comes as France and Europe are scrambling to find other energy sources to reduce dependence on Russian oil and gas, amid fears of an energy emergency next winter.
EDF manages France’s large fleet of nuclear reactors, which are facing technical and other problems. The new generation reactors are years behind schedule and billions over budget.
EDF last year had 84.5 billion euros in turnover and 5.1 billion euros in profit, serving tens of millions of customers in France and several other countries. It was partially privatized in the early 2000s.
The rise in EDF’s share price was a clear sign that investors expect the government to pay a premium to buy up the remaining shares. Shares hit a record high in 2007 but have since fallen by 90%, even below the price at which the French government floated EDF in 2005 as part of an EU privatization attempt.
France invested heavily in nuclear power during the oil shocks of the 1970s and depends on nuclear power plants for 70% of its electricity, more than any other country.
But EDF has had to repeatedly lower its production forecasts in recent months after a series of reactor shutdowns for maintenance and inspections. Research is being conducted into various reactors that have problems with pipe corrosion.
Borne described the nationalization decision as part of a strategy to gain “energy sovereignty” and build “a stronger France in a more independent Europe”.
“We can no longer rely on Russian gas and oil,” she said. “We will gain our sovereignty through nuclear and renewable energy sources.”