UK-based energy company Centrica has confirmed that it is in discussions with a "third party" with a view to taking a minority ownership position in UK nuclear generator British Energy (BE).
According to Centrica, such a move would be contingent on various conditions including the unnamed third party - thought to be EdF - successfully acquiring BE. It says that if it does not manage to reach an agreement with the third party, or if the third party's offer for BE does not go ahead, Centrica "might consider a number of alternatives" respecting BE. These could include long term power offtake arrangements, participation in potential new nuclear partnerships, or even a merger of Centrica and BE. Centrica is keen to point out that it is not at present in discussion with BE over any of the alternatives.
|Centrica's Rough gas storage facility. The company is not directly
involved in nuclear power - yet
The disclosure was made under the direction of the UK Panel on Takeovers and Mergers. Under the code of practice covering takeovers, any person who becomes "interested" in 1% or more of either Centrica or British Energy is required to publicly disclose the fact.
Only days ago EdF's bid to buy BE failed when BE's shareholders rejected it, much to the disappointment of the UK government which holds 32.5% in the company. According to business and enterprise minister John Hutton, the government was ready to accept the French company's offer.
Centrica has previously made its interest in gaining a foothold in the nuclear industry clear, and it recently took a controlling stake in the Belgian firm SPE, which has rights to offtake 535 MWe of nuclear power generated by Electrabel. Press speculation on possible talks between Centrica and EdF, BE, or both, has been rife, but it appears the British government is still in favour of a sale to EdF. According to a spokesman from the department of business and enterprise quoted in The Times, "The Secretary of State said on Friday the EdF deal would have been a good fit. That remains our view and the parties are still in discussion. Our clear preference is for a business with experience of new nuclear build." Centrica, whose existing interests are firmly non-nuclear, clearly does not fit that description.
BE operates eight of the UK's nuclear power reactors including the country's only pressurized water reactor but its sites, which are prime candidates for new plants, rather than its generating portfolio, are a major attraction to potential buyers. However, BE sites are far from being the only option open to potential constructors trying to gain a toehold in what could be a lucrative new-build market. Earlier this year, the UK's Nuclear Decommissioning Authority (NDA) began the process of making land next to its sites available on the open market. The NDA's sites include those occupied by the country's Magnox reactors, most of which are now being decommissioned and which would also be suitable for new construction. EdF has also already purchased privately-owned land near two existing UK nuclear power plants.