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EDF and Enel in Italian nuclear venture

February 24, 2009

Published: February 24 2009

France’s EDF and Enel of Italy on Tuesday set out an agreement aimed at building four nuclear plants in Italy – the first since a national referendum halted the country’s nuclear industry in 1987 in the wake of Chernobyl. Pierre Gadonneix, EDF chairman, and Fulvio Conti, chief executive of Enel, signed the agreement in Rome with President Nicolas Sarkozy of France and Silvio Berlusconi, the Italian prime minister. Mr Sarkozy and Mr Berlusconi also signed a separate accord on civilian nuclear co-operation.

The deals mark another strategic in-road for French industry in Italy. Air France-KLM in January bought a 25 per cent stake in Alitalia, and in October SNCF, the French state railway, took a 20 per cent stake in NTV, a private Italian high-speed train consortium.

Industrialists called the agreements a historic development for Italy, but cautioned that local opposition and identifying sites for the plants could still prove formidable obstacles. Enel and EDF set the goal of opening the first plant by 2020.

Italy is joining the nuclear renaissance at a time when several other countries have committed to construction programmes, raising doubts as to whether the engineering industry will have the capacity to meet demand. In the UK EDF wants to build at least four European pressurised water reactors.

EDF said last year that the estimated building costs of its EPR at Flamanville in northern France would be €4bn ($5bn), 20 per cent higher than its previous estimate. The cost of future EPRs would depend on how far rises in component costs were offset by lessons learned from the first project, said EDF.

The financial crisis has also raised questions about whether private investors will be prepared to fund projects that could be subject to a high level of political and commercial risk.

EDF and Enel – Europe’s largest utilities – agreed to form a 50-50 joint venture to carry out feasibility studies for construction of the EPRs.

Enel, 32 per cent-owned by the Italian government, would hold a majority stake in the plants and electricity withdrawal rights, and be in charge of their operation. Each plant would be an individual company with share ownership in the next phase open to third parties, with Enel and EDF holding majority control of at least 51 per cent between them.

Additional reporting by Ed Crooks in London

via FT.com / Companies / Energy – EDF and Enel in Italian nuclear venture.

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