Companies haggle over power plants

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A GROUP of companies, including ICI, Blue Circle and BOC, is talking to the electricity generators, National Power and PowerGen, over the acquisition of power plants. The generators are under pressure from the regulator, Offer, to sell the equivalent of six large power stations in order to increase competition in the electricity generating market, writes Mary Fagan.

The talks are thought to hinge on price, with National Power and PowerGen asking far more than buyers are prepared to pay. The generators are thought to want about pounds 200m to pounds 300m for a plant with a generating capacity of 1,000 megawatts, but one potential buyer said that a realistic price would be a third of that.

ICI and Blue Circle are among the largest consumers of electricity in the country and have complained about rising electricity prices since the industry was privatised. They and other large users had hoped that buying into power stations would be a solution to their problems. The companies are also believed to be talking to private mining companies - now bidding to take over British Coal - to supply the generating plants.

The sale of the power stations is due to be completed by the end of next year, but Offer is asking for a progress report by the end of this month. National Power and PowerGen have said they will agree to divest stations only if the deal is in the best interests of shareholders. As yet, there is no sale in sight.

Failure to show willing to meet Offer's requirements would cast a shadow over the Government's planned pounds 4bn disposal of its remaining 40 per cent stakes in the generators, which is expected to take place in February.