* Auditor warns EDF would be responsible for cost overruns
* Complex Hinkley Point deal raises “serious questions”
* Warning comes days after CFO resigns over Hinkley
* Questions EDF’s ability to renew its energy mix (Adds share price fall, criticism of focus on nuclear)
By Geert De Clercq
PARIS, March 10 (Reuters) - EDF’s project to build nuclear reactors in Britain is potentially risky for the state-owned utility, whose foreign investments in recent years have been disappointing, France’s top public auditor said on Thursday.
In a report on EDF’s international strategy, the Cour des Comptes said EDF and its 85 percent state shareholder should take a close look at the risks associated with EDF’s 18 billion pound (23 billion euro) project to build two nuclear reactors in Hinkley Point, Britain.
The report, which focuses on the 2009-2014 period - which includes EDF’s Oct. 2013 agreement with the British government but not its Oct. 2015 deal with Chinese utility CGN to take a one-third stake - said the financing around the Hinkley Point deal was potentially risky for EDF.
EDF shares fell on the report, reversing a nearly two percent gain to close 1.2 percent lower.
The auditor said EDF’s high debt and negative cash flow limit its capacity to invest abroad, especially in light of the huge sums needed to upgrade its ageing French nuclear fleet.
“Even though the (Hinkley Point) deal has not been finalised, the complexity of the deal and especially the way it could impact the responsibility of EDF suffice to raise serious questions,” the auditor said.
The warning comes days after EDF’s CFO resigned over worries about the firm’s ability to finance the project and after unions warned the project is a risk to EDF’s very survival.
In 2013, EDF had planned to take a minority stake in the Hinkley Point project, but only Chinese utility CGN agreed to take a one-third stake in Hinkley Point.
This forced EDF to shoulder two-thirds of the project to build two Areva-designed European Pressurized Reactors (EPR) in Britain. Four other EPRs under construction in Finland, France, and China are years behind schedule and billions over budget.
“(These delays) make one wonder whether Hinkley Point can respect its deadlines,” the auditor said, adding that if the project runs over budget, EDF would be responsible for the cost.
The auditor said the focus on nuclear in EDF’s foreign investments was a way to preserve its skill base at home, which it said was acceptable, as long as this was not more a defensive than an offensive stance.
EDF wants to renew its ageing nuclear fleet in a decade from now, but needs to build reactors abroad in order to keep the French nuclear industry alive for when it is needed at home.
“Considering the foreign nuclear investments foremost as a way to survive a dead period for nuclear in France raises questions about EDF’s ability to anticipate an evolution of its energy mix,” the auditor said.
The auditor also said the firm’s renewable energy unit EDF EN had a “marginal” and “peripheral” place within the firm and that EDF had been slow to invest in energy services.
It said EDF and its energy services unit Dalkia - which it acquired two years ago - had different corporate cultures and that synergies needed to be built.
The auditor said EDF’s rate of return - core earnings over revenue - on foreign projects was just 12 percent in 2014, compared to 30.6 percent in France, and had been falling since 2009.