France to nationalise electricity giant EDF amidst energy crisis: PM Borne

As the repercussions of the Russia-Ukraine war are being felt globally, including food, fuel and financial crisis, the Prime Minister of France, Élisabeth Borne said the French government intends to nationalise the heavily indebted France's electrical behemoth EDF amidst the widespread energy shortage which is made worse by Moscow’s invasion of Kyiv. According to The Guardian report, despite the political upheaval caused by French President Emmanuel Macron after losing control of the parliament in the current legislative elections, Borne is committed to mitigating the effects of rising energy costs.  

In her inaugural state of the nation speech to parliament on Wednesday, Borne emphasised, “We must have full control over our electricity production and performance,” in an effort to win over opposition parties and avert a stalemate in the legislature, The Guardian reported. Further, she said, “We must ensure our sovereignty in the face of the consequences of the war (in Ukraine) and the colossal challenges to come. ... That’s why I confirm to you the state’s intention to own 100% of EDF’s capital,” as per an Associated Press report.  

France seeking alternatives to fight energy crisis worsened due to Russia’s Ukraine war

Electricity giant EDF is one of the largest power generators in the world, the firm today has 84% of its shares owned by the French government, Associated Press reported.  Shares of EDF, which lately had a string of nuclear plant shutdowns and other issues, surged in response to the announcement.  

Notably, French PM's statement came at a time when France and Europe are frantically searching for alternative energy sources to lessen their reliance on Russian oil and gas amid worries about a winter energy crisis.  

According to the Associated Press report, the large fleet of nuclear reactors operated by EDF in France is afflicted by a number of technical and non-technical issues. Reactors of the next generation are decades behind time and vastly over budget. EDF, which provides services to millions of consumers in France and numerous other nations, generated 84.5 billion euros (or $86 billion) in revenue and 5.1 billion euros (or $5.2 billion) in earnings last year. In the early 2000s, a portion of it was privatised. 

Besides this, investors appear to anticipate that the government will provide a premium to purchase the remaining stock, as seen by the increase in the price of EDF's shares. The shares reached their highest point ever in 2007 but have subsequently fallen by 90%, dropping even lower than the price at which the French government sold EDF to the public in 2005 as part of a European Union-led privatisation drive. 

France, which depends more on nuclear power than any other nation for its electricity, made significant investments in nuclear energy during the 1970s oil shocks, Associated Press reported. However, during the past few months, a succession of reactor shutdowns for repair and inspections forced EDF to continually lower its production projections. Investigations are being conducted on many reactors that have pipe corrosion issues. 

Meanwhile, the nationalisation decision, according to Borne, was made as part of a plan to establish "energy sovereignty" and forge "a stronger France in a more independent Europe." “We cannot rely anymore on Russian gas and oil,” she asserted, further continuing, “We will gain our sovereignty thanks to nuclear and renewable energies.” 

Her declaration came shortly after the European Parliament adopted an EU initiative to list nuclear and natural gas generation as sustainable practices for the Union. Environmental organisations vehemently opposed the initiative, which France and Germany backed. 

(Image: AP/ Representative Image)