UK says no decision yet on Brit Energy
Date: 26-Nov-02
Country: UK
Author: Daniel Morrissey
The near-collapse of the provider of a fifth of Britain's electricity has created a major headache for the government, Trade and Industry Secretary Patricia Hewitt told UK business leaders in Manchester. British Energy ran into trouble this year when power prices fell below its cost of production.
"We have a very difficult situation at British Energy with that loan expiring on Friday," Hewitt told the Confederation of British Industry's annual conference.
Hewitt said she would make a statement on the issue before this Friday's deadline for repayment of the 650 million pound ($1.02 billion) loan. She later told Reuters the government remained undecided on the issue.
"No decisions have been made yet, but when they are made, I will announce it to parliament," she said. "These are highly market-sensitive issues."
British Energy went to the government for a bailout in September. The current loan, already extended once, expires on Friday November 29. The government has refused to rule out putting the company into administration but talks are continuing about a financial restructuring and possible adjustments to the power market that could make life easier for the company.
Hewitt's comments are the clearest indication yet that the web of energy, environment and industrial policy issues the crisis has thrown up will drag the problem into next year.
STATEMENT BEFORE FRIDAY
Environmental campaigners and some competitors suffering in an oversupplied market say the aid is unfair, but the government has said it must support the nuclear industry for reasons of safety and security of supply.
Industry and government sources have told Reuters that a debt-for-equity restructuring package and a possible renegotiation of contracts with state nuclear fuels group BNFL are among actions being discussed.
British Energy is also in talks to sell its majority holding in Canadian nuclear project Bruce Power.
(additional reporting by Andrew Callus).