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Decisions, decisions

March 23, 2016

Should an indebted French utility company invest in the construction of the world's priciest nuclear reactors at Britain's Hinkley Point? France has said its energy giant EDF will make a final decision in early May.

England Atomkraftwerk Hinkley Point
Image: Getty Images/M. Cardy

A decision on the development of the 23 billion-euro ($26 billion) project in southwest England had already been expected by the end of March.

But as France's EDF utility company struggles with a debt pile of more than 37 billion euros, it has yet to set out how it intends to finance the construction of what would become the world's most expensive nuclear power plant.

"It must be decided before the EDF general assembly and we must give our British partners full visibility on this investment which is absolutely critical for them," French Economy Minister Emmanuel Macron said this week.

EDF's initial agreement to undertake the development of Hinkley Point, in partnership with China General Nuclear Power Corporation (CGN), dates back to October last year.

If plans go ahead, the site in southwest England would be Britain's first nuclear power plant in decades and would be expected to provide 7 percent of the country's energy by 2025.

Beset with problems

But concerns have been mounting about the growing price tag of the project. These prompted EDF's finance chief, Thomas Piquemal, to quit last month. Piquemal reportedly thought little of pushing ahead with the scheme, because in his view the project "would jeopardize EDF 's financial situation."

EDF, which is 85 percent state-owned, has had to borrow billions of euros just to pay dividends to its shareholders in recent years, and its earnings are under enormous pressure from record-low wholesale electricity prices.

The company is also behind on other international projects, with two reactors currently under construction in France and Finland already years behind schedule and billions of euros over budget. Two more such reactors EDF is building in China have also suffered long delays.

Meanwhile, back at home the French utility needs to spend some 55 billion euros to upgrade aging nuclear plants. Another chunk of its finances will have to be allocated to a planned smart meter rollout in the country.

The French government says that it has not ruled out injecting fresh capital into EDF if necessary.

The French energy giant has yet to signal its final approval for the costly British project. Both French President Francois Hollande and British Prime Minister David Cameron publically threw their support behind the planned development of the nuclear plant earlier this month.

hch/cjc (AFP, Reuters)