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Last Updated: Wednesday, 30 May 2007, 16:16 GMT 17:16 UK
Government to sell nuclear shares
British Energy's Hinkley Point power station
British Energy has had problems with its Hinkley power plant recently
The government is to sell more of its stake in nuclear energy firm British Energy, to fund the cost of shutting down nuclear power stations.

The sale of 400 million shares will cut the government's stake from 64% to 39%.

The aim is to make the Nuclear Liabilities Fund, intended to cover nuclear clean-up costs, less reliant on British Energy shares.

The news came as the firm announced a 44% rise in underlying annual profits to 1.22bn, buoyed by rising prices.

The government first announced its plans to reduce its stake in the UK's biggest energy producer in the 2006 Budget.

The latest sale - to financial institutions - is to take place immediately.

Shutdowns

Despite the rise in profits, British Energy said that problems at two of its power plants had continued to disrupt its electricity production levels.

BRITISH ENERGY N-PLANTS
Hunterston B, Ayrshire
Torness, East Lothian
Hartlepool
Heysham 1 and 2, Lancashire
Hinkley Point B, Somerset
Dungeness B, Kent
Sizewell B, Suffolk

The firm warned last year that it had discovered cracked pipes in nuclear plants at Hinkley Point in Somerset and Hunterston in Ayrshire.

Both sites shut as a result of the problems, and were only given the go-ahead to restart the plants at the start of this month.

As a result of the closures, energy output fell to 58.4 terawatt hours (TWh) from 68.4 TWh a year earlier.

But during the period, power prices jumped to record levels as a result of the rising cost of natural gas, allowing British Energy to fix sales at higher levels.

As a result, fixed contract prices rose to 44.20 per megawatt hour (MWh) compared with 32 in the previous year.

British Energy - which generates around one-sixth of the country's energy needs - owns eight nuclear power stations and one coal-fired station in Eggborough, East Yorkshire and employs about 6,000 staff.

However, the update and news of the government's stake sale failed to impress investors.

Shares in the group closed down 5.6% at 537 pence in London.


SEE ALSO
Nuclear plant gets nod to restart
11 May 07 |  Somerset
Safety approved at nuclear plants
03 May 07 |  Somerset
Nuclear firm seeks new partners
07 Mar 07 |  England
Repair delays hit British Energy
20 Dec 06 |  Business
Power prices lift British Energy
17 Nov 06 |  Business

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