Areva, EDF Working on Plan for Closer Ties

Areva, EDF Working on Plan for Closer Ties, Energy Minister Says

Bloomberg | Tara Patel | February 9, 2015

(Bloomberg) — Areva SA and Electricite de France SA, the French state-controlled nuclear companies, are working on plans for closer ties, according to Energy Minister Segolene Royal.

“There is a large amount of work going on to bring them closer,” Royal told journalists in Paris. “We are working on it, I can’t announce anything now.”

The minister’s comments follow reports in recent days that the government is working on a plan for Areva that may involve asset sales. The Journal du Dimanche reported yesterday that mining, logistics and power plant dismantling are among units that may be offloaded under proposals to sell assets worth more than 1 billion euros ($1.1 billion). Areva may report losses of 3 billion euros for 2014, according to the newspaper.

Relations between the two nuclear companies were expected to improve with the nomination last year of Areva Chairman Philippe Varin to the board of EDF. Areva is one of EDF’s biggest suppliers and the two are developing new reactors together at Flamanville in Normandy and in China.

EDF Chief Executive Officer Jean-Bernard Levy said in November he wanted to “turn the page” on past hostilities with Areva. That same month, the companies announced a delay in the startup of the Flamanville reactor due to “difficulties” encountered by Areva including late delay of some equipment. The cost of the 1,650-megawatt reactor has already doubled to 8.5 billion euros from initial estimates.

Areva in November abandoned forecasts for 2015 and 2016 amid weaker-than-expected demand and said last week it probably needs to raise provisions for unprofitable construction projects.

Areva has been racking up losses in recent years after the Fukushima explosion in 2011 prompted nuclear plant closures in Japan and Germany. European utilities also cut nuclear plant maintenance spending and offshore wind investment in response to sluggish economic growth. Areva last year had its credit rating cut to non-investment grade by Standard & Poor’s.

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