Macron’s failure in the elections will complicate the reorganization of the EDF

PARIS, June 20 (Reuters) – The loss of an absolute majority in the party of Emmanuel Macron and his allies in the National Assembly is likely to complicate the implementation of the EDF reorganization project, as the process involves a number of legislative changes, sources say. familiar with this issue, gave an interview to Reuters.

Last summer, the government had to shelve a previous reorganization plan called “Hercules” due to constant disagreements with Brussels and the unions.

According to its sponsors, the project was supposed to give EDF new resources by placing its nuclear park in a government entity whose current rules do not cover costs and force the group into debt, while its activities in the field of renewable energy and electricity distribution would form whole, open to private investors.

Emmanuel Macron had hoped to restart the EDF reorganization after his re-election in April in the context of a war in Ukraine that threatens the security of Europe’s energy supplies and drives up prices, but Sunday’s legislative elections will force the government to compromise and risk stalling the head of state’s desired reforms .

“It is difficult to assess the consequences [des législatives sur la réforme d’EDF], it’s a little early, and the government has never released details of its new project. But it doesn’t seem ideal,” a source close to the group’s management told Reuters on Monday.

One of the main issues in the coming weeks will be Emmanuel Macron’s ability to strike a coalition agreement with Les Républicains, which have so far rejected this hypothesis, otherwise negotiations will have to start on every bill.

“The real risk is that all the proposals of President Macron will be rejected by the opposition (…) and leave the EDF in the form of a status quo, which worries us,” said Sebastien Michel, Federal Secretary of the FCE CFDT in charge of energy policy and environmental transition.

“MUCH HARDER TO PASS”

EDF’s structural financial difficulties have prompted the government to consider a complete renationalization of the group, which could include a buyout of shares held by minority shareholders without having to go through parliament. But this will only be the first step.

“The reorganization project promises to be much more difficult to pass, because a certain number of issues must involve a vote in parliament,” estimates a source familiar with the EDF reorganization scenarios, referring, in particular, to the revision of the regulation, which should guarantee selling prices for nuclear fuel. .

An EDF spokesman on Monday insisted on “the need for rapid reform (of the group).”

He also underlined that it will be a global process, including the introduction of new rules and a new organization of the company, in order to continue its registration within the European electricity market and allow it to play its full role in the energy transition.

EDF is also suffering from the unavailability of about half of its historic fleet of nuclear power plants and the government’s decision to force it to sell more nuclear power at low prices to its competitors in order to limit rising electricity prices.

In this context, in early spring, he had to carry out a capital increase of 3.16 billion euros, to which the state subscribed for about 2.7 billion, said French Economy and Finance Minister Bruno Le Maire. possible nationalization that “all options (were) on the table”.

Analysts at JPMorgan said Monday they expect the president of the republic to push for a complete renationalization of EDF and the executive to set a guaranteed price for all French nuclear products, though a green light from the European Commission is needed.

In any case, the timing and progress of the process is “unknown at this stage,” however, they added in a note. (with Silvia Aloisi, edited)