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Is the state-owned French energy giant EDF misusing EU rules to boot out foreign competition? South Korea’s nuclear industry thinks so, write Alice Hancock and Ian Johnston.
Context: The Korean state nuclear company KHNP won an $18bn contract to build a nuclear plant in the Czech Republic, but construction was temporarily halted in May after an eleventh-hour intervention by EDF that led to a challenge in the courts.
While construction at the Dukovany plant is now going ahead, EDF’s intervention led the European Commission to open a foreign subsidies investigation into the Korean company. EDF stated that KHNP would not have been able to guarantee such a low price for the project without “illegal state aid given the prices in the nuclear industry”.
The Korean nuclear trade association KAIF has now hit back at the accusations.
“We are concerned that foreign-subsidy regulation rules are being misused by EDF, especially in light of its own history of receiving generous subsidies and state aid in multiple jurisdictions,” KAIF told the Financial Times.
“Not only does this have serious negative implications for the EU’s ambition to advance its energy security, but it also risks the credibility of the FSR instrument as a whole,” KAIF added.
The statements come as the commission reviews how it uses rules on foreign subsidies, which allow the EU executive to investigate subsidies that could give an unfair market advantage to foreign companies.
KHNP has indicated that, should the commission launch a full probe into the company with a provisional ban on construction at Dukovany, it would challenge Brussels in the EU courts.
EDF declined to comment.
As a French state-owned company, EDF is not subject to the EU’s foreign subsidies regulation. It has received multibillion loans and grants from the British and French governments, although officials argue that these have been allowed under EU state-aid rules. It also receives significant subsidies in countries such as Brazil, the US, Vietnam and Chile.
In March this year, the French government committed to cover half the construction costs of six new EDF reactors via a subsidised loan expected to exceed €30bn, and which still needs to be approved by the European Commission.