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EDITIONS
Sunday, 25 August, 2002, 09:15 GMT 10:15 UK
UK to 'bail out' British Energy
Nuclear power plant, Dungeness
British Energy runs eight power plants in the UK
Speculation is growing that the UK government may offer troubled nuclear energy company British Energy financial help.

Newspaper reports on Sunday suggested that the Department of Trade and Industry (DTI) is set to unveil a plan to bail out the company as early as this week.

The Department of Trade and Industry may renationalise the company, buy its eight British nuclear power stations or pay it to take over six aging reactors from BNFL, a report in the Independent on Sunday said.

The DTI admitted that it was monitoring the electricity market closely but said "any decisions about the company's future are for the company."

A spokeswoman said: "It would be irresponsible for us not to be taking an interest in how the electricity market has been progressing, but British Energy is a private company."

A bail out of a privatised company could be embarrassing for the government, prompting questions as to why it should help a commercial company.

Liberal Democrat trade and industry spokesman Dr Vincent Cable described the reports as a "very worrying development".

"It would be wrong for the government to organise an expensive bail-out for the nuclear power industry. It's very clear that nuclear power isn't competitive in the short and medium term," he said.

Cash crisis

British Energy is thought to need to find as much as 450m this year to pay debts and cover losses and it is unclear where it will get the money from.

The slump in power prices - blamed in part on warmer than usual weather - is expected to push the firm into the red.

Last week, shares in the nuclear giant fell to an all time low of 59 pence, a third of their value at privatisation in 1996.

The sell-off was triggered by the company's decision to close a reactor at its power station in Torness, Scotland, which accounts for about 12% of its annual energy output.

The firm operates a total of eight power plants in the UK, and runs other nuclear power operations in the US.

It employs 5,200 staff in the UK and 3,000 in Canada.

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15 Jul 02 | Business
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