The Government fired a warning shot to potential bidders for British Energy yesterday by saying it will not tolerate the emergence of a single monopoly player in Britain’s drive to build a new generation of nuclear reactors.

Malcolm Wicks, the Energy Minister, said in Washington on a trip to meet Samuel Bodman, the US Energy Secretary: “We wouldn’t be happy, we wouldn’t really allow just one company to have a monopoly of nuclear in Britain.”

Mr Wicks said that the Government continued to keep under review its 35 per cent stake in British Energy but added it was mindful of the need to ensure a variety of companies were involved in the programme. It is expected to last decades and cost tens of billions of pounds.

“We need to protect the taxpayer,” he told The Energy Daily. “We need to make sure that new nuclear isn’t a monopoly business.”

The comments will be interpreted as a signal that the Government will not accept a single bidder such as France’s EDF or Germany’s RWE to buy British Energy on its own.

It has also fuelled expectations that the firm may be sold to a group of companies, possibly including Britain’s Centrica. Such a scenario would almost certainly lead to a break-up of the company into several constituent parts.

British Energy’s ageing plants still generate 20 per cent of all UK electricity but most are due to be retired from service over the next 15 years. The power company is viewed as a key player in the new-build programme because it controls access to most of the preferred sites for new stations.

Mr Wicks said it is up to British Energy, rather than the Government , to take the lead in takeover negotiations. However, the Government is monitoring the talks carefully because of its interest in the company. He emphasised that apart from sites owned by British Energy, there are a number of other localities available to build new reactors in the UK that are owned by the Nuclear Decommissioning Authority.

The news comes as tensions have emerged in the auction over price. Sources said that British Energy’s share price had risen in recent weeks, in anticipation of a sale, above the level most bidders would be willing to pay. “The market has got ahead of itself,” one adviser said.

It is understood that the bidders have been conducting due diligence in recent months, but they have failed to keep to a timetable set by Rothschild, the investment bank running the process. It has twice asked the suitors to submit proposals for the business. “People will do the deal when they think the stars are aligned. But at the moment, the stars are not aligned,” the adviser said.

Sources close to the deal yesterday said that the bidding team appeared to be focusing around a consortium of Germany’s RWE with EDF, of France and Britain’s Centrica.

Centrica does not have the firepower to do the deal on its own.

Germany’s E.On is understood to be holding back and with a lack of available partners it will be difficult for the rival German utility to mount a bid. Iberdrola is also believed to be wavering, particularly in light of a potential hostile bid from EDF.

Vatenfall of Sweden is also interested although it is unlikely to be capable of mounting a bid on its own. EDF and RWE declined to comment yesterday.

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