EDF concerns for socialist victory in France

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French utilities giant EDF appears increasingly concerned over Socialist Party presidential candidate's plans to reduce reliance on nuclear energy.

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Judging by Henri Proglio's sudden burst of public lobbying in defence of nuclear power over the past week, the chief executive of EDF is a worried man, reports The Financial Times.

As an ally of Nicolas Sarkozy, France's president, and one of the most powerful figures in French business, Mr Proglio is used to getting his own way. But the prospect of a socialist victory in next spring's presidential elections has left him rattled.

François Hollande, the socialist candidate with a hefty poll lead over Mr Sarkozy, is promising to cut France's reliance on nuclear energy for its electricity from about 75 per cent to just half by 2025. And for a company that still makes two-thirds of operating profit domestically, mostly from its 58 atomic reactors, this has profound implications.

EDF's French concerns are certainly weighing on the share price - alongside uncertainty about local electricity tariffs and worries about the soaring cost of safety measures after Japan's Fukushima nuclear disaster. The shares have lost 35 per cent of their value in a year, compared with a 19 per cent decline by the CAC-40 index, even though profits are healthy and Mr Proglio has won praise for cutting its net debt from €34.4bn at the end of 2010 to €29.2bn by June 30.

Emmanuel Turpin, utilities analyst at Morgan Stanley, says: "There is short-term concern around EDF about the elections in France and what the socialists will do if they come to power. There is currently little visibility about where tariffs are going, and investors have the sense that until you get more visibility, they may not be prepared to take the risk."

EDF, the world's leading supplier of nuclear power, says Mr Proglio will not comment directly on Mr Hollande's plans for reasons of political propriety. The company is still majority-owned by the French state.

Nevertheless, its lobbying machine was at full throttle last week. The French electricity trade body warned that a cut to 50 per cent supply would create additional costs of €60bn for France, while Mr Proglio raised the spectre of soaring electricity bills and "1m jobs in peril" should the country abandon atomic power completely.

Allies of Mr Hollande accuse the EDF boss of engaging in "catastrophisme" to win the argument. However, one industry executive believes it is politicians who have "lost their heads a little bit" since Fukushima. "They need to be a bit more realistic about what are the alternatives," he adds.

Read more of this report from The Financial Times.

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