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By Geraldine Amiel and Sebastian Moffett
Of DOW JONES NEWSWIRES
PARIS -(Dow Jones)- France's Electricite de France (EDF.FR), the world's biggest electricity provider, has enough cash on hand to finance an ambitious new program of nuclear investments and reactor maintenance projects around the world over the next 10 years, according to the company's new chief executive, Henri Proglio.
In an interview the day he took office at EDF, Proglio also said he was confident he could navigate the political dimensions involved with running one of France's biggest companies, which is still 83% owned by the French state.
"I think I have some leverage," said Proglio, who before his current position was the chairman of French utility and waste-management company Veolia Environnement (VE). "I'll grant myself some, but that will be less easy," he added.
When other countries gave up on nuclear energy in the 1980s -- largely on security concerns after a string of nuclear accidents -- France continued developing its fleet of reactors. Some 80% of the country's electricity comes from nuclear energy. But France's nuclear reactors are aging. In October, France had to import electricity for the first time in years.
As France's demand for electricity rises, EDF has also been expanding abroad, marketing its nuclear expertise in countries including the U.S. and U.K.
The company bought U.K. nuclear operator British Energy in 2008. Last month, authorities in the U.S. approved its purchase of 49.99% of the nuclear assets of Constellation Energy Group Inc (CEG), a U.S. power group. EDF also has a stake in Italian power group Edison SpA (EDN.MI).
The rapid expansion, in addition to the maintenance requirements of France's existing nuclear fleet, has left analysts wondering whether EDF would need to tap the markets to finance these investments over the next decade.
"I'm not traumatized by this...We have enough cash flow," Proglio said in the interview. He said the company generates around EUR10 billion of operating cash flow per year that could be used for investments to prolong the life of existing nuclear plants and to boost their capacity.
Still, the new EDF chief did sound a cautious note. While saying he hasn't any immediate intention to raise fresh funding, he didn't exclude a capital increase altogether.
Looking to EDF's international markets, Proglio indicated that - despite the Constellation deal - the U.S. market wasn't necessarily on the top of his mind for the future of EDF. "It's not a priority. We need time to look at things there."
As for EDF's distribution business in the U.K., Proglio insisted he hasn't made a decision yet, noting that he believed that EDF's business model is "an integrated one" that covers the entire span of a business. "Different options are possible other than a pure and simple sale," he added.
Europe and China represent large potential markets, Proglio said, but for now, the French business is most important - which is why the chief executive said he planned a road-show of sorts to meet with EDF employees and partners.
To renovate France's nuclear fleet without raising more capital, Proglio might need a rise in tariffs, according to analysts.
This could be problematic for him, because he was appointed by a government which has pledged to keep prices low and has been under pressure during the economic downturn to help maintain household spending power.
Proglio said he recognized "the need to stay in touch with the reality," of the French economy - but wouldn't be drawn into whether French electricity tariffs are set to increase.
Prices are low in France, because of the country's past investment in nuclear energy. Proglio's predecessor had said in July he believed tariffs - which are set by the French government - should be allowed to rise 20%. This caused an outcry among politicians.
- By Geraldine Amiel and Sebastian Moffett, Dow Jones Newswires; +33 1 40171740; geraldine.amiel@dowjones.com, sebastian.moffett@wsj.com
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Publié le 26 novembre 2009 Copyright © 2009 Dowjones

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