Engie and Belgian government sign agreement for nuclear reactor expansion

On 29 June 2023, Engie and the Belgian government signed an interlocutory agreement outlining the terms for the extension of the Doel 4 and Tihange 3 nuclear installations. The purpose of the agreement is to establish a fair allocation of risk between the parties and to resolve any uncertainty regarding future changes to the terms of nuclear waste management.

The agreement builds on the non-binding agreement in principle signed on 9 January 2023 and outlines the following terms: both parties commit to use their best efforts to resume operation of the Doel 4 and Tihange 3 nuclear units, with a target restart date of November 2026 at the earliest. Alternatively, if the announced regulatory relaxation is effectively implemented, restart could take place in November 2025. The objective is to enhance the security of energy supply in Belgium.

A dedicated legal structure, jointly owned by the Belgian state and ENGIE, will be established to manage the extended nuclear installations. This arrangement aligns the interests of both parties and ensures the sustainability of their commitments. The extension will be based on a business model with a balanced allocation of risks. This will be achieved through a contract for difference mechanism that includes incentives for industrial operators to achieve favourable technical and economic performance at the plant. An agreement has been reached on the future fixed costs associated with nuclear waste disposal. The agreement is based on a new programme defined by ONDRAF and includes all of Engie’s nuclear reactors in Belgium at a total cost of €15 billion. This will be paid in two instalments: the first, covering categories B and C, will be paid at the end of the first half of 2024, while the second payment relating to category A will be paid at the start of the LTO.

Under this agreement, the transfer of all nuclear waste responsibility to the Belgian government resulted in the Engie Group no longer being responsible for future costs associated with waste disposal. These costs, which are reviewed every three years by the Nuclear Supply Commission, will now be borne by the government. In exchange for this transfer, the Engie Group will recognise the increase in its commitment as a charge affecting non-recurring income in the financial year 2023, after adjusting the nuclear clause. The estimated amount of this charge is approximately €4.5 billion before tax. In addition, the Group expects a corresponding increase in net economic debt of a similar magnitude.

The implementation of the definitive agreement is expected to have no impact on Engie’s medium-term guidance presented in February 2023, following its signing at the end of July 2023. This applies to all aspects, including net recurring revenue, credit, investment and dividend policy. As such, the agreement will not change the Company’s expected outlook.

In addition, the agreement includes provisions to remove restrictions on certain assets owned by Engie’s subsidiary Electrabel. “After months of intense and constructive dialogue with the Belgian government, we are delighted that both parties have signed this balanced agreement,” said Catherine MacGregor, Engie’s Chief Executive Officer. It provides ENGIE with the necessary visibility of the total amount associated with nuclear waste management and significantly reduces the risks associated with the expansion of both units. This is a new fundamental step towards the expansion of Doel 4 and Tihange 3, for which ENGIE is fully responsible.

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