French Prime Minister Elisabeth Borne has unveiled plans to nationalise debt-ridden power company EDF to address France’s energy crisis, which has been exacerbated by the Russia-Ukraine war.
Borne made the announcement during her first address to the National Assembly.
Reuters quoted the Prime Minister as saying: “I confirm to you today that the state intends to control 100% of EDF’s capital.
“We need to ensure our sovereignty in the face of the war (in Ukraine) and the looming colossal challenges.”
The government already owns an 84% stake in EDF, which is one of the largest power utility companies in Europe.
Reuters reported that the government’s acquisition of the remaining stake is estimated to cost nearly €5bn ($5.09bn).
Borne did not specify if EDF nationalisation would be done through special legislation or through a public tender to buy out minority shareholders, or specify a time frame for this acquisition.
EDF is said to have been facing many challenges, one of them concerning some of its ageing reactors, which are currently offline due to corrosion.
This issue has forced the French utility to reduce its nuclear power output at a time when Europe is seeking alternatives for Russian gas supplies.
To protect the French people from a sharp price rise in their cost of living, the government has directed EDF to sell its electricity to its business rivals at a discounted cost.
EDF’s profit are estimated to fall by €18.5bn this year due to less output, while the discounted power sale would cost the company a further €10.2bn.
In March this year, EDF lowered its annual profit outlook in view of increasing wholesale power prices and lower nuclear power generation.
The company reassessed the cost of the government’s mandate to raise power prices by less than the rise in wholesale prices, projecting losses of €10.2bn.