EdF loses guarantees

8 January 2004

Following demands from the European Commission (EC), the French government is set to end the state guarantees to Electricit√© de France (EdF) before the end of the year. State-owned EdF will now have to repay some €888 million in tax advantages plus interest. The final figure could reach €1.2 billion. EdF has been criticised by other European governments for investing abroad in deregulated markets while benefiting from its French monopoly, tax breaks and state guarantees which mean exemption from bankruptcy and insolvency laws.

EdF is to be turned into a limited company in 2005/6 as part of a plan to open up the French energy market but intends to retain the business of 80% of its French customers as well as 15% of the European market as a whole.

Meanwhile, the EC has also threatened to take the Italian government to the European Court of Justice over restrictions to foreign investment in its energy sector. In 2001, the Italian government issued legislation tailored to prevent EdF from controlling Edison, its second-largest electricity firm.

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