Europe checks French state aid for Areva restructuring
The European Commission has launched an investigation to determine whether the French government's contribution of €4.0 billion ($4.4 billion) towards the financing of the restructuring of Areva meets EU rules on state aid.
In late July 2015, EDF and Areva announced they had signed a memorandum of understanding setting out the principal terms and conditions for EDF to take a majority share in Areva's reactor business, Areva NP. Areva - which has been experiencing financial difficulties for over five years - plans to create a new group later this year that will bring together all its fuel cycle operations: mining, chemistry, enrichment, recycling, dismantling, logistics and related engineering. And in April 2016 France notified the European Commission of a restructuring plan to return the Areva Group's competitiveness and improve its financial position. The plan includes state aid in the form of a public capital injection of €4.0 billion. It also involves a renewed focus on the nuclear fuel cycle through various divestments and withdrawal from certain activities.
Areva - in which the French state owns, either directly or indirectly, an 86.5% stake - plans to launch a capital increase by the first quarter of 2017. The company earlier said, "The French state has indicated its intention of subscribing to it and ensuring its complete success, in compliance with European regulations."
According to European guidelines on state aid for rescuing and restructuring companies in difficulty, aid to rescue such firms can only be granted for up to six months. Beyond this period, aid must either be reimbursed or a restructuring plan must be approved by the European Commission to allow aid for the company's restructuring. The plan must ensure that the long-term viability of a company is restored without further state support, that the distortions of competition induced by the state aid are addressed by specific measures and that the company contributes to the cost of restructuring. Restructuring aid may only be granted once over a period of ten years.
The European Commission announced yesterday it has opened an in-depth investigation into the French government's financial contribution to Areva's restructuring. "At this stage, the Commission intends to check whether the assumptions underlying the restructuring plan for restoring the undertaking's long-term viability are sufficiently realistic to allow Areva to operate without constant injections of public funds," the EC said. "The Commission must also ensure that the group makes a sufficient, real contribution to the costs of its restructuring. Lastly, it must check that the measures proposed by France to limit distortions of competition are proportionate to the distortions created by the aid."
Margrethe Vestager, commissioner responsible for competition policy, said, "Given the size and importance of the restructuring of Areva, the commission has to carefully assess that the restructuring plan is sound and that the state aid does not unduly distort competition in the Single Market." She added, "Our aim is to ensure a sustainable future for Areva without the need for further government support."
Researched and written
by World Nuclear News
