UK government eyes Areva’s stake of Hinkley Point C – sources

06 Mar 15 – The UK government is considering buying Areva’s [EPA:AREVA] 10% equity stake in the Hinkley Point C nuclear power plant project, according to two people familiar with the situation.

Earlier this week Areva, a French state-controlled company, announced EUR 4.83bn of losses in 2014. There are concerns over how Areva will fund its share of the project’s GBP 16bn capex requirements.

The size of the equity stakes that will eventually be held by Hinkley Point C’s partners are still being determined. EDF [EPA:EDF] now holds 45-50%, China General Nuclear Corporation and China National Nuclear Corp 30-40%, and Areva 10%. Discussions are under way with other parties who could take up to 15%, according to Areva’s website.

In response to Mergermarket’s enquiries about the potential deal, an Areva spokesperson said, “It is EDF who is leading the negotiations and will decide who has a seat at the table.”

A final investment decision on Hinkley Point C has been delayed several times.

EDF said in a statement, “EDF and the UK government are working hard to finalise all agreements on Hinkley Point C and are making significant progress in all areas with the shared objective of finalising documents in the coming weeks. This will allow a final investment decision to be possible in the next few months. EDF is also making progress in discussions with future investment partners in the project. In particular, progress is being made with Chinese partners on all aspects of their nuclear industrial co-operation in the UK, which is part of the wider partnership between EDF and Chinese companies.”

The project was also awarded a lucrative subsidy scheme by the UK government, which the European Commission also signed off on. The decision, however, faces legal challenges from several EU member states who argue the subsidies constitute illegal state aid. The deal for Hinkley Point C is being subsidised through a “contracts for difference” (CfD) subsidy scheme. It gives EDF and the other firms a guaranteed index-linked price of GBP 92.50 per megawatt hour of energy produced by the power plant. Energy suppliers will buy energy from Hinkley Point C at the market price but the remainder of the funds will be topped up by the government. The 40-year deal has been estimated to be worth upwards of GBP 40bn by analysts.

UK government’s Department for Energy and Climate Change (DECC) did not respond to requests for comment.

by Katie McQue

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