Paris wants EDF and Areva to join forces

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PARIS, July 28 (UPI) -- The French government has called for closer cooperation between utility EDF and reactor maker Areva to help the country regain its leadership in the nuclear power sector.

Such closer cooperation would increase France's chances to win reactor contracts abroad, French Finance Minister Christine Lagarde said Wednesday.

"There must be a strategic partnership between Areva and EDF each time that it's necessary for exports," Lagarde told French radio station RTL. "Our two big nuclear champions must imperatively get along."

Her comments come a day after Paris unveiled a report on the state of the French nuclear industry. The report indirectly suggests that EDF and Areva forge closer ties to improve their chances on the global reactor market. Recently, Areva, Total and GDF Suez lost a $20 billion deal to supply four reactors to United Arab Emirates. The contract went to South Korea's Kopeck instead -- its reactor is cheaper.

Shortly after the report's publication, President Nicolas Sarkozy's office released a statement that Paris would look into the possibility of EDF buying a stake in Areva, a move long-resisted by Areva Chief Executive Officer Anne Lauvergeon.

Areva, 90 percent state-owned, will sell up to 15 percent of its shares by the end of the year to raise cash for an international expansion program.

EDF, which is 85 percent owned by the French government, runs 58 nuclear reactors in France that satisfy around 80 percent of the domestic power demand. It already holds a 2.8 percent stake in Areva but it has been an open secret that Sarkozy wants to increase the utility's reactor profile -- especially in the export sector.

If EDF wants buy shares, then there is "no reason to keep them out," Lagarde said.

The report also criticized Areva's focus on the highly complex European Pressurized Reactor, suggesting the company should also offer smaller and thus cheaper models to sell them to emerging economies.

The two EPR models under construction in Finland and France have been plagued by costly construction delays.

Paris' influence in EDF has been growing over the past months. The utility's Chief Executive Officer Henri Proglio, in place since last year, was heaved into his chair by Sarkozy. Proglio is to restore France's position as a world-leading reactor exporter.

EDF has already vowed to build four nuclear power plants in Britain, with each expected to cost $7 billion-$8 billion. It also aims to build new reactors in the United States, China and Italy.