Saturday, May 22, 2004

Another Houdini-like escape?

Sources: AFP and Datamonitor

The French government-owned electricity giant, Electricité de France (EDF) is currently appealing against a decision by the EU Commission that it must repay money obtained from the French state, by way of tax breaks, regarded as illegal state aid. The sum, including interest, comes to 1.2 billion euros.

Undeterred by this rap on the knuckles, however, the French government is now organising a partial privatisation of the company – in response to EU demands for "liberalisation" of the non-residential electricity market – which in fact is anything but.

The government, in a draft law before parliament, is seeking to change EDF's legal status from a nationalised industry to a joint-stock company, aiming to offer shares to the public next year. But the law setting up the deal prohibits more than fifty percent of the stock being released, although the government is likely to retain 60-65 percent.

As a welcome by-product, the sale of stock in the company – which is valued at 100 billion euros – will add 10-15 billion euros to its coffers, in addition to which it is being permitted to dump its crippling pension liabilities on the state. Even more bizarrely, under the draft law, existing EDF employees will retain their current civil servant status, with all the associated perks and, presumably, work practices restrictions.

The EU commission will probably take a dim view of these arrangements, and may consider yet another action against what is almost certainly another example of illegal state aid.

With the current fines as yet unpaid, however, and the French reputation for Houdini-like escapes from EU sanctions – not least Air France, the Bull computer company and, shortly, Alstrom - no one is prepared to bet that, in the end, EDF will not continue with its sham privatisation. And these are the people with whom Mr Blair wants to share our government?

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