PowerGen group close to buying German generator

AN ANGLO-AMERICAN consortium led by PowerGen, the UK electricity generator, is close to buying eastern Germany's biggest lignite mining and electricity generator from the Treuhandanstalt, the German privatisation body, writes Neil Thapar.

PowerGen has emerged as the leading contender for Mibrag with a bid thought to be worth tens of millions of pounds. Sources say a deal is likely to be announced before Christmas.

The purchase will give the consortium access to about 40 years' lignite reserves and an annual production of 20 million tons in an area near Leipzig.

It will also give access to long- term contracts to supply lignite to local power stations. The deal is being ring-fenced so PowerGen will acquire only mines without environmental problems. Germany faces an estimated DM30bn ( pounds 12bn) bill for damage at mining sites under the former Communist regime.

PowerGen's consortium partners include NRG Energy, a subsidiary of Northern States Power of the US.