October 28, 2019 / 10:00 AM / 20 days ago

France orders EDF to tackle nuclear project failings

PARIS (Reuters) - The French government on Monday gave EDF (EDF.PA) a month to outline how it plans to tackle skills shortages and other problems which ministers say have delayed nuclear projects and damaged the reputation of a key industry for the country.

French Finance Minister Bruno Le Maire, Minister for the Ecological and Inclusive Transition Elisabeth Borne and French state-controlled utility EDF Chief Executive Jean-Bernard Levy arrive to attend a news conference to release the Folz report about EDF's long-delayed Flamanville nuclear plant, at the Bercy Finance Ministry in Paris, France, October 28, 2019. REUTERS/Charles Platiau

EDF’s Flamanville 3 nuclear project in France is running more than a decade behind schedule and has racked up billions of euros in cost overruns, and the utility has encountered setbacks in building plants overseas too.

But the hitches point to bigger problems for France’s nuclear industry as a whole, according to a state-backed audit of Flamanville released on Monday, at a time when the government needs to decide in the coming years on its energy mix.

The report highlights planning deficiencies and a lack of direction at Flamanville in the early stages of the project, as well as poor coordination with suppliers, but also says France has lost industrial expertise in the sector.

“The nuclear sector has to get back on track. It’s a question of energy sovereignty,” Finance Minister Bruno Le Maire told a news conference to present the report, in a rebuke of EDF’s handling of its flagship projects.

Le Maire said delays at Flamanville - which will take 15 years to get up and running instead of six, and cost almost four times as much as initially planned - were “a failure for France’s entire electricity and nuclear sector.”

Skills shortages were so severe that most of the weldings in the Flamanville project had to be done by foreign sub-contractors, Le Maire added.

SUPPLIER STRAINS

EDF, which is 84%-owned by the French state and aims be a global leader in nuclear energy, revealed in early October that the Flamanville project, started in 2006, would cost 1.5 billion euros (1.3 billion pounds) more than previously expected.

The total bill now runs at 12.4 billion euros.

EDF has had to contend with problems with some weldings, which it was ordered to repair by nuclear safety watchdog ASN.

But the audit also underlined the absence of a clear project leader for Flamanville from the outset.

And while the company was tripped up by a changing regulatory backdrop to some degree, the report said EDF had a strained relationship with suppliers, and in particular Areva.

Now known as Framatome and 75% controlled by EDF since 2018, Areva was long considered a rival.

French Finance Minister Bruno Le Maire attends a news conference to release the Folz report about EDF's long-delayed Flamanville nuclear plant, at the Bercy Finance Ministry in Paris, France, October 28, 2019. REUTERS/Charles Platiau

EDF Chief Executive Jean-Bernard Levy will have a month to present his proposals, Le Maire said. The minister reiterated his support to the former Thales boss, who has been at the helm of the utility since 2014, and said the government would check on how the action plan was being implemented by the end of 2020.

“It’s true, France’s nuclear industry is going through a difficult time,” Levy told the same news conference, adding that EDF would “double down on its efforts”.

EDF has also had to hike its cost estimates for the Hinkley Point C nuclear plant it is building in Britain, and it recently encountered a separate problem with defective weldings at some steam generators of its reactors, although ASN subsequently ruled these could remain operational.

Reporting by Bate Felix and Sarah White; Writing by Matthieu Protard; Editing by Mark Potter

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