Manweb, the electricity distributor, and Brunner Mond, the soda ash producer, have agreed in principle a joint venture to build and operate a 300 megawatt coal-fired combined heat and power (CHP) station. The Finnish power company IVO also has an interest in the project. Mr Budge's company, RJB Mining, would be a prime candidate to supply the coal for the new plant if its pounds 900m bid for the English regions of British Coal succeeds. The Northwich project, expected to use a million tonnes of coal a year, helps to explain RJB's bullish projections for coal demand, which some independent experts have described as over- optimistic.
Recent new power stations in Britain have all been powered by gas or orimulsion, a bitumen-based fuel. But generators are starting to look again at coal because of advances in anti-pollution technology and the prospect of cheaper coal.
The new power station would be sited next to an existing smaller 50 megawatt power station, which would be phased out. It will supply Brunner Mond's neighbouring soda ash plant, which is a heavy user of power, as well as producing power for the National Grid.
A spokesman for Brunner Mond confirmed that a coal-fired station was planned: 'We're engaged in negotiations with two other parties on a CHP project. It's at an early stage.' Bill Dale, an energy analyst with Warburg, commented: 'This obviously won't do RJB or the coal industry any harm. But 300 megawatts is only half a per cent of available capacity in the UK. You'd have to have a number of stations of this size to create coal demand of the size RJB seems to be anticipating.'
A spokesman for RJB said the company never commented on contracts.
RJB is now in detailed negotiations on the British Coal purchase amid questions about the viability of its bid, which was 50 per cent higher than any rival offer. However, institutional shareholders, including Allied Dunbar and Charterhouse Venture Capital, professed themselves content with Mr Budge's plans, although they would still want to question him on his detailed proposals.
Brunner Mond, formerly part of ICI, has been seen as a candidate for a pounds 250m stockmarket flotation, although it is thought this will not take place for at least 12 months.