THE government is to clear the way for a £10 billion sale of British Energy by agreeing to pick up the bill for cleaning up the nuclear company’s power stations.

British Energy is at the centre of a bidding war between Germany’s RWE and EDF of France. Centrica, Britain’s largest utility group, hopes to join forces with one of the foreign bidders.

The two continental utilities are understood to have submitted informal cash offers at about 650p a share – lower than previously thought – valuing the group at just under £10 billion once the government’s one-third share is taken into account. RWE is thought to have submitted the marginally higher offer.

All the prospective bidders have warned they will not take on liabilities related to decomissioning or decontaminating British Energy’s eight remaining nuclear power stations.Although the government is committed to absorbing these costs as part of British Energy’s restructuring six years ago, those agreements do not allow for a takeover.

Government advisers are now redrafting the documentation to allow a deal to happen – in a move that could delay the sale. Prospective bidders are holding parallel discussions between the company’s advisers at NM Rothschild and the government’s advisers at UBS.

British Energy’s shareholders are beginning to fret that the government may not back the highest bid.

EDF is trying to persuade the government it is the best candidate to build and run Britain’s new nuclear stations. It is understood the company also believes it could bring new plants on stream quicker than rivals. EDF is the world’s largest operator of nuclear power plants, running 58 reactors in France and is constructing its 59th, in Normandy.

Further delays could result from obtaining competition clearance. RWE and EDF already have power stations in the UK, and a British Energy takeover could push them past a 25% market share – enough, in theory, to trigger a competition inquiry.

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