NatPower set for $800m US expansion

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The Independent Online
NATIONAL POWER is today expected to announce an $800m investment in two new gas-fired power stations in the United States.

The two stations, one in Texas and the other in New England, will have a combined output of 1,500 megawatts and will increase National Power's overseas generating portfolio to almost 23,000 megawatts.

This latest investment will bring the amount spent overseas by National Power to nearly pounds 3bn. It has identified the US as one of its most important growth markets because the Americans are having to replace around 50,000 megawatts of ageing power station capacity a year.

National Power already has a 1,100 megawatt station under construction in Midlothian, Texas, and interests in a further five US stations with a combined output of 1,400 megawatts.

The company's plan is to invest around $1.6bn in the US by 2001, making it the country's biggest single power station developer. In two years time it aims to have around 3,500 megawatts of wholly-owned capacity in the US.

Other UK electricity companies are expanding in the US through acquisition. ScottishPower is close to completing the pounds 4bn takeover of PacifiCorp on the West Coast while National Grid is buying New England Electric System for pounds 2bn.

PowerGen had talks about a pounds 10bn "merger of equals" with Houston Industries but these broke down after disagreements on price and management.

National Power, however, has opted to grow its US presence by building new stations on greenfield sites. Last year it suffered a setback in its international operations after problems with two power stations in Pakistan resulted in a halving of overseas profits to pounds 70m.

There has been speculation that National Power might decide to demerge or float its international arm.

But this will not happen, if at all, until it has resolved the position in Pakistan. The government in Karachi has suspended payments for the electricity produced by the two stations, claiming that the contracts were awarded corruptly by the previous administration of Benazir Bhutto.