French auditor deals blow to EDF's Hinkley Point plans
France's public auditor has raised concern over EDF's plans to build two new nuclear reactors in Britain, citing disappointment from the company's other recent foreign investment.
EDF
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16:30 25/09/24
The Cour des Comptes - France's national audit office - said EDF needed to take a close look at the risks of spending billions of pounds on two nuclear reactors at Hinkley Point in Somerset.
EDF is publicly traded in France, though it remained 85% owned by the state. The Hinkley Point project was worth £18bn, with a third of the cost being met by project partner China General Nuclear Power Group.
The report focused on the five year period up to 2014, which was before EDF struck a deal with the Chinese utility. It said the financing around Hinkley Point could be risky, with EDF's cashflow and high debt limiting its investment capacity.
It made mention of the massive cost needed in the coming years to upgrade the company's ageing nuclear assets in its native France.
"Even though the deal has not been finalised, the complexity of the deal and especially the way it could impact the responsibility of EDF suffice to raise serious questions," the auditor was quoted as saying.
It was the second alarm bell for the project in a week. On Sunday, the firm's finance director Thomas Piquernal stood down from his position after opposing to board members who wanted to green-light the project "within weeks".
EDF had initially wanted a minority stake in the Hinkley Point project, but as China General would only take one third, it was forced to assume the bulk of the construction of two European Pressurised Reactors (EPR).
Four other EPRs were under construction in China, Finland and France, and were billions over budget and years behind schedule.
"[This] makes one wonder whether Hinkley Point can respect its deadlines," the auditor said.
It was understood EDF planned to overhaul its French nuclear stock in the medium term, so was building nuclear reactors overseas to sustain France's industry and skills in the interim.
The auditor said the company's rate of return on foreign projects was 12% in 2014 and had been steadily falling, compared with a 30.6% rate of return at home.