National Power to spend pounds 1bn abroad

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The Independent Online
National Power yesterday unveiled plans to invest a further pounds 1bn on overseas expansion and cast doubts on the prospects of clean coal technology coming to the rescue of Britain's mining industry. Michael Harrison reports.

Keith Henry, National Power's chief executive, said its equity investments in overseas generating capacity were likely to double in the next two to three years. Since privatisation in 1991, it has spent pounds 1bn taking interests in 8,500 megawatts of plant. But Mr Henry said this figure could rise to 11,000 to 12,000 megawatts by 2000 and result in a further equity investment of pounds 1bn.

National Power has identified seven projects it is hopeful of proceeding with including a $1.5bn (pounds 890m) coal-fired station in Indonesia and two big gas and coal-fired stations in China.

News of the expansion came as National Power announced that overseas profits grew to pounds 67m in the first half of the year, helping offset flat UK profits caused by its declining market share and growing competition. Overseas earnings for the year are expected to reach at least pounds 130m.

The company also disclosed that it had contracted to buy most of its coal requirements for next year at prices which are about 20 per cent below those it has been paying RJB Mining. The coal contracts with RJB Mining are set at prices of around pounds 1.45 a gigajoule compared with international prices of pounds 1 to pounds 1.20 a gigajoule.

National Power also said that the prospects of RJB receiving government support for a 700 megawatt clean coal station it was planning to build at Kellingley in West Yorkshire appeared slim. Studies by RJB, National Power and Texaco indicate that electricity from the station would cost 3.9p a unit compared with a pool price of 2.6p, meaning the levels of subsidy would need to be significant.