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A general view shows the chimney of the Areva combustible fabrication plant in Saint-Paul-Trois-Chateaux April 20, 2011. (BENOIT TESSIER/REUTERS)
A general view shows the chimney of the Areva combustible fabrication plant in Saint-Paul-Trois-Chateaux April 20, 2011. (BENOIT TESSIER/REUTERS)

France ready to save nuclear group Areva, regardless of election outcome Add to ...

A government-led rescue of French nuclear group Areva and the wider atomic-energy industry may cost the state as much as €10-billion ($13.94-billion Canadian), but political support is almost certain whoever wins the presidential election in May.

While taxpayers will ultimately pick up the huge bill, the main election contenders – from the Socialists and conservatives to the far-right National Front – broadly back the bailout, which involves splitting up Areva.

On top of its dire financial state, Areva is beset by technical, regulatory and legal problems. But given its importance to a nuclear industry that generates three quarters of France’s electricity and employs 220,000 people, the next government probably has little choice but to stand by the scheme hatched under outgoing Socialist President Francois Hollande.

France has a small but fierce anti-nuclear movement and some critics oppose investing billions in extending the life of aging reactors. Nevertheless, nuclear energy is broadly accepted, even though neighbouring Germany has decided to ditch it altogether following the 2011 disaster at Japan’s Fukushima plant.

“I am convinced that the 21st century will need nuclear,” said conservative presidential candidate François Fillon. “That is why we must support the industry during this difficult period,” the former prime minister wrote in his manifesto.

Although Mr. Fillon is a frontrunner, the election outcome remains uncertain. However, even if National Front candidate Marine Le Pen pulls off an upset, she too has promised to stand by the nuclear industry.

While Germany is replacing lost nuclear output with wind and solar-power capacity, Ms. Le Pen said “so-called green energies are not realistic yet.” In her manifesto, she said nuclear was necessary in the medium term to meet targets for cutting carbon emissions and maintaining French energy independence.

The nuclear industry rescue also involves a cash injection for power utility EDF, which operates France’s 58 nuclear reactors and will buy part of Areva’s business. But for all the domestic support, Brussels must also rule on whether the bailout complies with European Union rules on state aid.

Shareholders of two companies that will emerge from the restructured Areva are due to vote on the plan on Feb. 3. The timing of the EU decision is unknown, but an Areva spokeswoman said: “We hope for an answer from the European Commission within a time frame that is compatible with the shareholder meetings.”

Once the champion of France’s nuclear industry, 87-per-cent state-owned Areva has seen its equity wiped out by years of losses. Among its biggest problems is a nuclear plant it is building in Olkiluoto, Finland. Work is almost a decade behind schedule and huge cost overruns have led to Finnish utility TVO and Areva claiming billions from each other.

A similar project in Flamanville, France is also running years late, with costs spiralling. Areva has also had to take heavy writedowns on its African uranium mines while foreign orders have generally slumped since the Fukushima accident.

On top of this, U.S. and other regulators are investigating possible safety problems related to the suspected falsification of documents at Areva’s Le Creusot plant, which makes components for reactors worldwide.

In a restructuring that means an end to Areva as an integrated nuclear group, the firm will sell its reactor unit Areva NP to EDF. The French state will effectively nationalize the Olkiluoto liabilities and Areva will receive a mainly state-funded cash injection of €5-billion to refloat it as a uranium mining and nuclear fuel group.

The government is also seeking Japanese and Chinese investors to buy minority stakes in the fuel group, provisionally called NewCo, for £1-billion euros.

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