The article comments on the outlook for partial privatization of Electricité de France. When France’s centre-right government announced in 2002 its intention to part-privatise Electricité de France (EDF), the giant state-owned electricity group, its task was never going to be easy. But the government and the company were unprepared for just how hard it would turn out to be. In recent weeks EDF’s workers have taken to the streets in protest against the passing of a bill, soon to be enacted, that paves the way for part-privatisation. As well as causing carefully targeted blackouts, including of the private homes of government ministers, they have restored supply to consumers disconnected for non-payment. The most sensitive feature of the bill is that it changes the status of EDF from a public enterprise, under which it is exempt from French bankruptcy laws, into a limited company governed by ordinary company law. This will remove the state’s de facto guarantee of EDF’s debts, to which Europe’s competition authorities had objected because it amounted to illegal state aid. The guarantee is important because EDF’s balance sheet is under strain: its net debts are around €24 billion ($30 billion) and exceed its shareholders’ funds. EDF is not being broken up into separate generation, transmission and distribution and supply businesses. In theory the generation market is open to competition. However, there is over-capacity, EDF has a near monopoly and its electricity is produced mostly by low-marginal-cost nuclear-power stations. EDF will also retain France’s grid, which distributes electricity. Rather than trying to raise new capital, EDF would do better to accept that it is unprivatisable and seek instead to sell some of its overseas businesses. Its British assets would fetch billions. That would be hard for French pride to swallow. But a controversial sell-off that could go horribly wrong? That would be harder still.
Read More
