Distribution fears delay sale of British Fuels

BRITISH COAL has been forced to delay the sale of British Fuels, one of the largest non-mining activities of British Coal and the biggest fuel distributor in Britain.

The sale, planned for the end of this year, has been derailed by the Government's decision to ask other companies to bid for contracts to distribute free 'concessionary' coal to British Coal employees and pensioners - an operation that accounts for a large chunk of British Fuels' business.

Industry sources said the decision made it impossible to value British Fuels. The disposal of the company, which one source said could have been worth pounds 100m if left alone, is not likely to begin until next spring. Potential buyers are thought to include Anglo United, which owns the Coalite smokeless fuel business, and Coal Investments, the company headed by Malcolm Edwards, former commercial director of British Coal.

British Coal said British Fuels would be among the bidders for the concessionary coal distribution contract. The cost to the Government of supplying coal to former British Coal employees and their families could be pounds 1.5bn over the next few decades.

The sale of the non-mining activities, which is the responsibility of British Coal, could fetch pounds 500m - as much as the mines themselves may be worth. British Coal's non-mining operations had a turnover of pounds 774m last year, of which fuel distribution accounted for pounds 609m, up from pounds 477m the previous year. British Fuels distributes oil and gas as well as coal.

Yesterday, British Coal announced the sale for an undisclosed sum of its Compower computer operation to Philips of the Netherlands. Philips has also won a contract worth an estimated pounds 20m to provide British Coal with computer services that were previously handled by an in-house subsidiary, British Coal Information Technology.

The sale of Compower includes the headquarters at Cannock in Staffordshire, which houses 230 BCIT staff. All BCIT employees and 130 Compower staff are expected to move to a new joint computing venture between Philips and BSO/Origin, an information technology company that is 41 per cent owned by Philips.

British Coal has warned that government approval for another nuclear power station at Sizewell in Suffolk could displace 9 million tonnes of coal. It has called on ministers to stick to free market principles, noting that the nuclear industry accepts that state funds would be needed for a second pressurised water reactor.