The State will bail out EDF to the tune of 2.1 billion euros, while 2022 promises to be difficult

The State is bailing out the electricity giant EDF. The group announced this Friday an “action plan”, with government aid to strengthen its finances as the year 2022 promises to be difficult.

“We have been encountering difficulties since the start of 2022 and we have decided to put an action plan in place,” said the CEO of the electricity production and supply company, Jean-Bernard Lévy.

Restore accounts and reinvest

EDF, almost 84% owned by the State, has therefore unveiled a capital increase project of around 2.5 billion euros. The State will participate to the tune of 2.1 billion, announced Friday morning the Minister of the Economy, Bruno Le Maire.

“This capital increase will open a new page in the history of EDF,” he assured during a conference call. “The objective is to allow EDF to restore its accounts, to be able to reinvest in the future and to be able to carry out the investments announced by the President of the Republic in Belfort under the best conditions”, he added. , in reference to the nuclear recovery plan unveiled by Emmanuel Macron.

Not enough for unions

“Obviously that’s not enough, but it’s a very strong signal for private investors,” said Bruno Le Maire. This announcement was critically received by the unions. “Certainly, we are strengthening equity, but in a very weak way and that will not solve the financial equation, faced with the wall of investments that EDF has to make”, reacted to AFP Amélie Henri, secretary national CFE-Unsa energies for EDF.

“Apart from the family jewels, EDF no longer has much to give up,” she added. For Fabrice Coudour, federal secretary of the FNME-CGT, “it is not with these decisions that we are going to act in a lasting way on user bills and on future issues around the climate, environment and energy transition.

Government measures on electricity bills

“The weeks, the months that we are currently experiencing are difficult” and “our objective with this action plan is to overcome this moment”, admitted Jean-Bernard Lévy. EDF will indeed suffer from a French nuclear production at half mast, with in particular corrosion problems on the safety systems of several reactors, which led to prolonged shutdowns for several of them.

Above all, the group will suffer from government measures to limit the rise in electricity bills to 4% this year. This recent government promise, in the midst of a debate on purchasing power and with the approach of the presidential election, will force EDF to sell more nuclear electricity at discounted prices to its competitors, while prices are very high on the markets. wholesale.

11 billion drop

Its results should thus be amputated this year by around 11 billion euros because of the drop in nuclear production and eight billion because of the exceptional measures of the government. On the other hand, EDF should benefit from high prices for around six billion.

The group also offered on Friday an option to pay dividends in shares (and not in cash) for the 2022 and 2023 financial years, which the State accepted as far as it is concerned. Finally, EDF announces disposals of approximately three billion euros in total over the years 2022-2023-2024. These measures to strengthen EDF’s finances come at a time when the group is heavily indebted, at 43 billion euros at the end of 2021, but must invest heavily.

Profit multiplied by eight

President Macron has just announced his intention to build six EPR reactors in France, with studies for eight more. EDF announced solid results for 2021 on Friday, with a net profit multiplied by eight, benefiting in particular from good nuclear production in France. The group does not give a forecast for 2022 beyond these indications, given the strong uncertainties.

“A lot of other things can happen first, operational etc., and secondly there is extreme volatility”, with “a very strong sensitivity to price changes”, explained the financial director, Xavier Girre . Electricity prices have soared on the markets since the fall, a surge fueled by those of natural gas prices as well as CO2 emission quotas, rights to pollute.