Former EDF CFO cites Hinkley Point decision as reason for departure
By Paul Homewood
Thomas Piquemal, the former chief financial officer with EDF, has told a French parliamentary committee meeting that he left the company over a decision to go ahead with the Hinkley Point C nuclear power project, despite his advice to delay it.
The ex-CFO said that rather than resigning for personal reasons, as was thought at the time, he did so because he felt the risk to the company was unjustifiable.
"In January 2015, I proposed to negotiate a three-year delay with our client because we reasoned that it would weigh too heavily on EDF‘s balance sheet," Piquemal told the hearing.
"I could not sign off on a decision that could one day put EDF in the same situation as Areva, having to recapitalise the company a few months before defaulting on payments," he added.
"Who would bet 60 to 70 percent of his equity on a technology that has not yet proven that it can work and which takes 10 years to build.”
The Areva-designed European Pressurized Reactor designated for Hinkley Point C has ran into problems in France, Finland and China, with severe impact on schedules and budgets.
Since Piquemal’s resignation, EDF has announced a EUR4bn capital increase and the government has agreed to forego cash dividends for two years, in a capital boost estimated at generating around EUR7bn.
Final investment decision has now been put back yet again, this time to September. But it is clear that nobody would touch it on purely commercial grounds.
To make matters worse, PEI also reported last month:
Legal opinion commissioned by Greenpeace suggests that any French government financial support to EDF to enable the company to build the Hinkley Point C nuclear power station in the UK would almost certainly be blocked by the European Commission.
The legal viewpoint is that the commission would not agree to government assistance as it would constitute a breach of state aid guidelines.
The FT reports that the French government is this week discussing financial support for EDF, after Jean-Bernard Levy, chief executive, said the company needed fresh state help before it would give the long-awaited final go-ahead to the contentious £18bn Hinkley Point project.
Three barristers at London’s Monckton chambers said all possible routes for the government to support EDF would constitute state aid in the EU and therefore require review by Brussels.
“It would be difficult to justify such further measures as being compatible with the [EU] internal market,” says the opinion.
The barristers consider four different methods open to the French government to help support EDF, which is 85 per cent state-owned. The first is for the government to take future EDF dividends as shares rather than cash; the second is for a direct recapitalisation of the company; the third is for the state-owned bank CDC to provide support; and the fourth is for France to prop up the utility’s French operations.
The lawyers conclude that a private investor would not credibly provide EDF with investment in any of these ways, meaning the case will probably be brought to the commission.
Representatives from other legal firms were in consensus with that opinion. Tim Malloch, a commercial litigator at Mishcon de Reya, said: “The commission made clear in 2014 that they would have to go back and approve any future aid [for Hinkley Point]. But since then the British government has said that the project is not needed for keeping the UK’s lights on, so an approval would be less likely this time.”
Conor Quigley, a barrister at Serle Court specialising in European competition law, said: “Since the European Commission has looked at Hinkley Point financing in other respects, I’m sure they would want to do so in respect of any French government action.”
And back in March:
The white paper said that the “realistic service date was 2027” due to the size of the project, continuing design modifications to the European Pressurised Reactor system and the “very low” competency of French supplier Areva in making some of the large components.
The company’s engineers don’t believe in the existing design, pointing to the delays experienced in Finland and France. The paper, seen by the Financial Times, makes the case for a “new EPR”, calling on the company to redesign the current reactor technology to make it smaller, cheaper to build and less complicated.
A timely start-up at Hinkley Point, which will provide 7 per cent of UK electricity, is critical because the government has set 2025 as the date by which the last of Britain’s coal-fired power stations is due to close.
Despite the engineers’ input EDF said in a statement last night that it would stick to the planned timetable. “The date for the first operation of Hinkley Point C has not changed. It will be in 2025,” it said.
The majority of the 18-strong board is likely to vote in favour of the deal in May, according to people close to the group. The company is 85 per cent state owned, and the government wants the project to go ahead.
Internal opposition to the project to build another reactor to the same design as those under construction in Flamanville in northern France and Olkiluoto in Finland has always been strong. The logic is if those projects have not been completed, why take on all the risks of another?