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Britain’s Energy Policy In Doubt As EDF Finance Director Resigns

Francois De Beaupuy , Bloomberg

Electricite de France SA Chief Financial Officer Thomas Piquemal resigned last week, the nuclear-plant operator said in a statement.

Piquemal quit after expressing concern that a final investment decision on the U.K. Hinkley Point reactor project could be announced as early as April, a move he said might jeopardize EDF’s financial situation, people with knowledge of the matter said.

The Paris-based power company “provisionally” appointed Xavier Girre, who was in charge of the group’s finances for France, to replace Piquemal, it said Monday. Girre, 47, joined EDF last year after being CFO of La Poste Group and CEO of XAnge Private Equity SA.

EDF shares dropped as much as 9.6 percent in Paris trading, the biggest intraday decline since June 2014.

Going ahead with new atomic plants in the U.K. would strain the balance sheet at a time when electricity prices have plunged in Europe, reducing cash flow just as EDF needs to fund billions of euros of maintenance at its French reactor fleet. Yet dropping the Hinkley venture could further damage the image of a French-designed reactor that’s already faced setbacks at projects elsewhere.

The internal disagreements add to doubts about the timing of Hinkley Point, originally planned for completion in 2017 and now unlikely to be built until at least 2025.

Financial Pressure

The two 1,600-megawatt power plants proposed for the site would cost about 18 billion pounds ($26 billion), with China General Nuclear Power Corp. paying for a third. Proceeding with the venture as soon as this year would mean that almost 60 percent of EDF’s equity capital would be tied up in new nuclear projects by 2018, the people said.

Piquemal, a 46-year-old boxing fan, joined EDF six years ago under Chief Executive Officer Jean-Bernard Levy’s predecessor Henri Proglio following stints at Arthur Andersen LLP, Lazard Freres Gestion and Veolia Environnement SA. He’s been instrumental in untangling EDF’s problematic investments in the U.S. and Italy, and setting a target to bring free cash flow after dividends back into positive territory in 2018.

The company is borrowing money to pay its dividend and plans asset sales to finance new developments. It cut annual operational expenditures by 300 million euros, or 1.4 percent, last year and plans to reduce them by a further 700 million euros by 2018. On Feb. 16, it reduced its estimate for how much it will spend to extend the life of its French reactors by 5 billion euros to 50 billion euros.

EDF shares, 85 percent of which are owned by the French state, sank to a record low on Feb. 25 and have lost almost 90 percent of their value since peaking in 2007. Standard & Poor’s has threatened to downgrade the company’s credit rating if the U.K. project, which has been planned for more than eight years, goes ahead.

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