National Power is to claim pounds 20m from GEC Alsthom over delays with its latest gas-fired power station at Little Barford, Bedfordshire, which was due to be operating in the spring. The plant is not now expected to be up and running until early next year.
The extent of the problem with Little Barford emerged as National Power announced a 20 per cent increase in pre-tax profits to pounds 254m in the first half of the year. Earnings per share rose by 12 per cent to 15.6p and the dividend increased by 24 per cent to 5.4p, helped by a share buy-back in March.
The company also confirmed its gearing will rise to 150 per cent as a result of its pounds 2.8bn planned takeover of Southern Electric, the regional electricity supply company in the south of England, falling back again within a few months. National Power revealed that it now owns, or has acceptances, in respect of more than 50 per cent of Southern's shares, although the takeover has yet to be approved by Ian Lang, President of the Board of Trade.
Keith Henry, who becamechief executive seven months ago, said: "The results are a solid performance in an increasingly competitive generation market where prices as well as our market share have fallen." National Power's market share fell to 30 per cent in the 27 weeks to 1 October, compared with 32 per cent a year before.
After the proposed sale of three major power stations as required by Offer, the industry regulator, the market share will fall to between 20 and 25 per cent. The sale of the power stations, for which there are four bidders, could bring in pounds 1bn for National Power, in addition to further payments related to the future operation of the plants.
Mr Henry said that he expects to hear the Government's verdict on Southern Electricaround 20 November. "The ball is in the court of the Office of Fair Trading. The strength of our case is paramount. We can see no reason on the grounds of competition why this bid should be referred to the Monopolies and Mergers Commission."
National Power, which bid for Southern after three earlier takeovers of regional firms were cleared, took heart from last week's approval of the acqusition of Norweb by North West Water. It is thought that Professor Stephen Littlechild, director general of Offer, wants this bid to be referred because it marks the beginning of significant vertical integration between power generation, distribution and supply - a structure that was dismantled before the industry was privatised five years ago. He is likely to hold similar views on PowerGen's pounds 1.9bn bid for Midlands Electricity, also awaiting the green light from Mr Lang.
But there is a widespread view that any objection by Professor Littlechild would be overruled by the Government.Reuse content