Negotiations to bale out French engineering company Areva have hit a significant roadblock.
In July the lossmaking energy group announced that it needed a €7bn capital injection to stay afloat, as the company also unveiled an agreement with Europe's largest utility, EDF, on asset disposals. The three parties, Areva, EDF and the French government, announced that they had come to a provisional agreement that would involve EDF paying about €2bn for a 75% stake in Areva's lossmaking reactor business, Areva NP. This would go some way to providing Areva with the €7bn it said it needed over the next two years, with the rest coming from other asset sales and a state-backed capital raising.
Now negotiations over the rescue scheme have stalled because none of the parties involved is willing to bear responsibility for the Olkiluoto 3 nuclear project in Finland. The project is already €5bn over budget and nine years behind schedule.
But EDF has made clear that it would accept no exposure to the Finnish project when taking control of Areva NP, insisting that it be "completely immunised against any risks related to the Olkiluoto 3 project".
At the same time Areva, which after the sale of its reactor division will be focused on mining and treating uranium, is saying that keeping too much of the Olkiluoto risk will make it very difficult, perhaps impossible, to raise market financing.
This leaves the French taxpayer but the government is apparently reluctant to agree to the full risk because of the potential for further losses on the project. However, the French government owns 85% of EDF and 87% of Areva, so it looks like being the last man standing.
- Areva, which is also supplying the reactor for the planned new nuclear power plant at Hinkley Point in the UK, has reported a record €4.8bn net loss for 2014, a major contributor being severe cost overruns on the Olkiluoto project. Olkiluoto 3 is now due to come online in 2018 at a cost of €8.5bn. Areva has a €3.4bn claim against its Finnish customer Teollisuuden Voima, a nuclear power company, which has filed a counterclaim for €2.6bn.