The UK firm is also thought to be talking to regional electricity firms, including Eastern Electricity and Southern Electric, and with an overseas group.
National Power and PowerGen were told last year by the electricity regulator, Offer, to dispose of 4,000 megawatts and 2,000 megawatts of generating capacity respectively - the equivalent of three very large power plants. Offer, which hopes the disposal will boost competition in generation, has threatened to refer the companies to the Monopolies and Mergers Commission if they fail to meet the deadline of the end of this year.
The companies have dragged their feet over the issue, arguing that they must get best possible value for shareholders and railing against being forced to sell market share. But recently the regulator eased the rules by suggesting that they might be able to lease the plants and be paid some sort of royalties on the power produced by the new operators.
At one point PowerGen was looking at asset swaps with overseas firms rather than a sale, but this is not now thought to be priority. National Power has confirmed that it is in negotiations with "several groups" but has declined to comment further on any disposals, which could raise pounds 1bn for the company.
Eastern Electricity is thought to even more keen to buy power stations following the proposals by Hanson, the industrial conglomerate, for an agreed pounds 2.5bn bid for the regional firm. Hanson is supportive of Eastern's diversification into generation and would also like to exploit its UK experience in power projects overseas.
Southern Electric was bidding for plants in conjunction with Southern Electric International of the US. But the state of the relationship is unclear since SEI launched its pounds 1bn bid for South Western Electricity. Southern of the UK subsequently held abortive talks with neighbouring SWEB on the possibility of becoming a "white knight".