by Marine Strauss

BRUSSELS/PARIS (Reuters) – Engie and the Belgian government announced on Thursday that they had signed an agreement to extend the operation of the Tihange 3 and Doel 4 nuclear reactors by ten years, after Russia’s invasion of Ukraine prompted Belgium to review its plans to rely more on natural gas.

While Belgium planned to phase out nuclear power by 2025, the agreement negotiated for almost a year “strengthens our electricity supply, reduces our country’s energy dependence and guarantees the production in Belgium of carbon-free electricity and cheap,” Prime Minister Alexander de Croo said in a statement.

The agreement provides for the creation of a legal structure dedicated to the two extended nuclear reactors, owned equally by the Belgian State and Engie, as well as a “balanced distribution of risks” notably through a mechanism called “Contrat pour difference ” and an incentive for the operator to “good technical and economic performance of the facilities”.

It also sets a lump sum for future costs related to the management of nuclear waste concerning all Engie’s nuclear facilities in Belgium, for a total amount of 15 billion euros.

Based on current nuclear provisions, Engie’s total nuclear liabilities to Belgium now amount to at least 23 billion euros, the Belgian government said.

The group for its part underlined in a press release that, thanks to the transfer of all obligations related to nuclear waste to Belgium, it would no longer be exposed to the evolution of future costs related to the treatment of waste, reviewed every three years by the Nuclear Provisions Commission (CPN).

In return, Engie will recognize a charge in non-recurring income for the 2023 financial year corresponding to the increase in its commitments, net of the adjustment of nuclear provisions, for an amount of around 4.5 billion euros before taxes. The group anticipates an increase in its net economic debt of the same order of magnitude.

It added that, subject to the signature of the definitive agreements expected at the end of July, these terms did not modify its medium-term outlook presented in February 2023, whether in terms of net recurring income, credit, investments or dividend policy.

Around 10:25 a.m., the Engie share rose by 2.79% while the CAC 40 gained 0.31%.

“This is an important clarifying event for the stock which should support a strong revaluation over the next few days/months and open up a number of strategic options for Engie and potential buyers,” JP Morgan said in a statement. a rating.

(Report Marine Strauss in Brussels, Benjamin Mallet in Paris, with the contribution of Diana Mandiá; edited by Kate Entringer)

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