James Hann, chairman of Scottish Nuclear, has held a meeting with Nuclear Electric amid growing speculation that the two companies will be merged as a precursor to privatisation.
Scottish Nuclear has spoken out strongly against a merger which is also vehemently opposed by many politicians north of the border.
Industry sources said that the meeting this week between Mr Hann and his counterpart at Nuclear Electric, John Collier, was amicable.
The Government is believed to be considering the creation of a holding company - possibly based in Edinburgh - with one subsidiary for Scotland and another for England and Wales.
There are fears that 380 Scottish Nuclear engineering and support jobs at East Kilbride will be lost but, according to one source, rationalisation is likely to be minimal.
An announcement on the privatisation and merger is unlikely to be made before the local government elections on 4 May - and possibly not until publication of the long-overdue White Paper on nuclear power, anticipated for 9 May.
Tim Eggar, the minister for energy, declined to comment yesterday. It is also understood that, contrary to expectations, the subject was not discussed by the cabinet.
Some insiders believe that the merger and sale of the companies - which could raise £3bn - has been quietly agreed, with only details to be finalised.
The Chancellor, Kenneth Clarke, is the most vigorous supporter of the concept while Michael Heseltine, President of the Board of Trade, has more recently come round to supporting the idea.
The merger would combine Nuclear Electric's five advanced gas-cooled reactors and pressurised water reactor at Sizewell, Suffolk with Scottish Nuclear's two AGRs.
Six older Magnox reactors with liabilities of about £9bn would remain in public ownership. The Government has considered giving them to British Nuclear Fuels - which has two small Magnox reactors of its own. Alternatively all the Magnox plant may be put into a separate state-owned company leaving BNFL to concentrate on its core skills of waste management and decommissioning.Reuse content