Neil Clarke, chairman of British Coal, said yesterday that gas-fired generation, oil and nuclear power were squeezing the market for coal and modern efficient coal- fired plants would have to close.
He said that selling 20 million tons was a worst-case prediction. But everything depended on negotiations under way with National Power and PowerGen. The outcome was the most significant influence on what parts of British Coal could be privatised.
His gloomy forecast came as British Coal reported its highest net profit of pounds 170m last year compared with pounds 78m a year earlier. Both periods include the benefit of a pension fund holiday estimated to be around pounds 100m.
Operating profit rose to pounds 361m last year from pounds 238m in 1990-91. Productivity advanced 13.1 per cent and operating costs were reduced by 5 per cent in real terms.
British Coal cut 16,000 jobs last year compared with its forecast 7,000. The mining workforce is now 41,000 compared with 171,000 in the mid-1980s.
Mr Clarke said the shrinking of the coal industry was being accelerated unfairly as electricity from many planned gas-fired power stations would be more expensive than from coal. Many of the regional electricity supply companies are committed to buying electricity from gas plant under 15- year contracts, which will pre- empt the market for coal.
At the same time, National Power and PowerGen want to switch to cheaper imported coal when the current Government- imposed contracts with British Coal run out next year.
The Government is increasingly embarrassed over British Coal's predicament and is trying to press the generators into a deal. However, they will not sign until the regional electricity companies agree to buy the electricity generated.
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