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Government to sell part of British Energy stake

30/05/2007

The government is to sell part of its interest in British Energy (BE) after the company announced its results earlier today.

Trade secretary Alistair Darling announced the move, originally announced as a possibility in July 2006, to the stock exchange this morning.

He said the proceeds from the sale will be diverted to the nuclear liabilities fund (NLF), the kitty earmarked for coping with the decommissioning costs of BE's eight nuclear power stations.

Earlier today BE revealed it had suffered a fall in productivity for the year ending March 31st 2007, with its total power output of 58.4TWh (terrawatts per hour) proving disappointing compared to the 68.4TWh achieved in the preceding 12 months.

Despite this, BE's average earnings before interest, tax, depreciation and amortisation (ebitda) rose from £0.85 billion in 2005/06 to £1.2 billion in 2006/07, however, thanks to higher electricity prices.

BE chief executive Bill Coley, referring to technical difficulties experienced at two of the firm's power stations, thanked his staff for efforts in helping to resolve "significant operational challenges".

"They have demonstrated great commitment and resolve through difficult times and can take great pride in returning these units to service," he said.

"There are numerous signs that our investment in people, plant and processes are delivering improvements and I believe that 2007/08 will be a far better year for the company in delivering output."

Last year Mr Coley outlined plans to develop the company's nuclear activities but the firm admitted its output in this field was "disappointing", falling from 60.4TWh to 51.2TWh.

Shares in BE fell sharply on news of the government's decision to sell part of its stake. By lunchtime they had lost 3.78 per cent of their opening value.

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