British Energy boss to be ousted

Robin Jeffrey, the chairman and chief executive of troubled British Energy, is to be forced out of the group as part of the price for government support for a financial rescue.

The nuclear power giant, which is only continuing in business thanks to a £650m energy loan from the Department of Trade and Industry, has already appointed headhunters to find a new chief executive.

Three top executives at British Energy have applied for the job: David Gilchrist, the director of generation; Keith Lough, the finance director; and Duncan Hawthorne, who runs the Canadian subsidiary, Bruce Power.

British Energy hopes to make an appointment by the end of March.

However, Mr Jeffrey's hopes of staying on as chairman have been dashed by opposition from two different areas.

Within British Energy's headquarters in East Kilbride, near Glasgow, divisions about the future direction and management of the group have led senior figures to question whether Mr Jeffrey should stay on.

"He is an increasingly isolated figure within the company," said a source close to the group. "His supporters can be counted on the fingers of one hand."

"The place is riddled with factions – between the Scots and the rest, between the Jeffrey camp and those who want him out," said a senior nuclear industry figure. "The pro-Jeffrey camp is quite small though."

Mr Jeffrey is also understood to have fallen out with the Government. Brian Wilson, the energy minister, has let it be known within Westminster that he felt let down by Mr Jeffrey when the company warned it could go into administration last month. Mr Wilson has told other MPs that he was reassured about British Energy's financial position two days before the announcement.

Mr Jeffrey is already under pressure because of the guidance given to analysts in August saying that British Energy was not in financial trouble.

The Financial Services Authority is investigating whether Mr Jeffrey misled the market in those statements.

The group is working with Schroder Salomon Smith Barney to try to come up with a rescue plan. It is attempting to sell its US operation, AmerGen, and has proposed being given a contract to run BNFL's ageing Magnox reactors.

However, hopes that it would gain relief from the Climate Change Levy have been dashed.

Schroder Salomon Smith Barney is confident it will be able to make some proposal to the Government before the end-of-November deadline for repayment of the £650m loan. However, the investment bank is believed to be concerned about the "deliverability" of any rescue plan given the problems in the energy market.

Last week the troubled TXU sold its retail electricity operations to E.ON, the German group which owns Powergen, while AES, the US corporation, wrote off its £600m investment in Drax, the giant coal-fired power station in Yorkshire which is facing financial troubles.