France’s government announced plans on Wednesday to nationalize Electricite de France S.A. (EDF), a French state-owned multinational electric utility company, to help EDF better manage a worsening energy crisis currently plaguing both France and greater Europe, Bloomberg reported.
French Prime Minister Elisabeth Borne made the revelation during a policy speech in France’s parliament in Paris on July 6.
“Borne didn’t provide specific details of the government’s plans, beyond saying the state will raise its stake in EDF to 100% from 84% currently,” Bloomberg relayed.
“No decision has been made at this stage on the modalities of the operation,” a spokesman for France’s finance ministry told reporters of the nationalization of EDF, which is Europe’s largest producer of nuclear power.
Bloomberg explained some of the circumstances that prompted France’s federal government to pursue a full takeover of EDF this week, writing:
France will acquire the 16% stake [in EDF] not already owned and nationalize the company. This suggests state intervention may increasingly feature elsewhere in the EU [European Union], given the worsening energy crisis, to ensure market continuity, mitigate cost inflation and drive the region’s energy-security plans.
EDF has been grappling in recent years with various issues at its aging fleet of reactors and cost overruns when building new ones. Its problems are being exacerbated by a government-imposed cap on electricity prices and Russia’s invasion of Ukraine, which is making it more expensive for the company to cover its own electricity-output shortfall.
Russia and neighboring Ukraine have been engaged in a war since February 24 following eight years of Russia illegally occupying Ukraine’s Crimean peninsula. Moscow’s decision to launch its latest invasion of the country caused Western governments, led by Washington, to impose sweeping financial sanctions on Russian companies and entities in an effort to punish the Kremlin for the act. The ongoing sanctions campaign coupled with Europe’s general shunning of Russian business has contributed to the continent’s current energy crisis, which began in late 2021.
The governments of France and Germany largely blame Russia for their lack of sufficient energy supplies, claiming that Moscow’s recent decision to decrease the flow of natural gas to Europe via its Nord Stream pipeline was an act of retaliation for their support of the anti-Russia sanctions campaign.
Reuters detailed the situation on June 17, writing:
The most immediate cause of the energy crisis is a lack of natural gas, which accounted for 22 percent of power generation in the EU in 2019. The EU receives natural gas directly from Russia through the Nord Stream pipeline, but Russia recently decreased shipments, causing prices to soar and stoking fears of shortages.
Russia claims the decreased supply is a seasonal change to divert more natural gas into storage caverns to prepare for higher domestic demand during the winter. However, the cut in supply also coincides with the completion of the Nord Stream 2 pipeline and Russia’s efforts to bully the EU Commission into supporting the pipeline’s final approval.
Also in her speech on July 6, French Prime Minister Borne said the following: “The climate emergency requires strong, radical decisions. We need to have full control of the production and our energy future. We must ensure our sovereignty faced with the consequences of the war and the colossal challenges ahead.”