EDF could be liable for 80% of EUR 5bn overrun costs at Hinkley Point - The Times (London), Journal du Dimanche (France)
EDF (EPA:EDF) may be on the hook for a greater portion of liabilities relating to its Hinkley Point C nuclear project in the UK than was previously thought, The Times reported, citing Le Journal du Dimanche. EDF owns a 66.5% stake, but would reportedly take on 80% of a potential EUR 5bn overrun in costs, with state-owned Chinese partner CGN taking a lesser proportional hit.
If Hinkley Point is delayed for six months, CGN would be in line for a refund of several hundred million euros from EDF, the item reported. It added that the French company’s ability to finance the GBP 18bn project is increasingly being called into question.
The government of Austria has alleged Hinkley Point is receiving illegal state aid; should its challenge to the European Commission succeed, CGN will be in line for a further EUR 1.6bn payment, the report said. The information came from a note written by former EDF Chief Financial Officer Thomas Piquemal to the group’s audit committee, the report said. It noted that Piquemal, who handed in his resignation earlier this month, believes the Hinkley Point project may jeopardise EDF’s financial situation as a whole.
The report from Le Journal du Dimanche cited a person in the know as saying that the effective rate of return on the projects, estimated at 9% by the French Finance and Economy Minister Emmanuel Macron, now amounts to 8% and is expected to be equal to 6% by the end of the project.
The report also noted that EDF has given CGN several veto rights regarding the management and governance of the project, and in particular concerning the accounting, the budgeting, the payment of dividends and the payment of the board members. The report claimed that CGM would also be able to vote measures even if EDF is against it if it manages to convince the independent board members.
According to the report, several members of the board of EDF are not in favour of voting for the project in its current form and are asking to delay it by two to three years. The delay would give the group time to view how the EPR nuclear project in China is running and how the construction of the similar EPR project in Flamanville, France, progresses. The newspaper claimed that a majority of nine EDF board members, out of the total 17, could be in favour of the delay. However, the government and the management of EDF are pressuring to sign the deal
The Times (London), Journal du Dimanche (France)