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Centrica weighs final bids for UK gas plants - sources
February 12, 2015 / 4:08 PM / 3 years ago

Centrica weighs final bids for UK gas plants - sources

LONDON (Reuters) - British utility Centrica (CNA.L) is in the process of assessing final bids for the gas-fired power plants it has put up for sale but offers are likely to be below the company’s target price of 500 million pounds ($767.8 million), sources familiar with the matter said.

“My understanding is that three parties are still looking,” said one source close to the bidding process. Two other sources confirmed the number.

Centrica put three of its large combined-cycle gas turbine (CCGT) power plants in Britain up for sale last May after deciding to focus on more flexible small-scale gas plants instead.

At the time, Centrica said the three plants, Langage, South Humber and Killingholme, were worth 500 million pounds.

Since then, the utility has dropped the older Killingholme station in north-east England from the sales process, the sources said.

The initial sales process attracted over 30 expressions of interest, one of the sources added, but only three bidders have now submitted final offers.

“People are offering a world below what Centrica were looking for,” one of the sources said.

Centrica declined to comment and names of the final bidders remain confidential.

Recently, Macquarie Group (MQG.AX), energy trading house Vitol and Czech energy company EPH have bought British power plants, hoping to snap up valuable assets for a low price.

Macquarie purchased the Severn gas-fired power plant in South Wales, comparable in age but slightly higher in efficiency than Langage, from Denmark’s DONG Energy for 305 million pounds in late 2013.

Since the start of the sales process, Britain has held its first auction for stand-by power capacity. Some power producers, including Centrica, have secured contracts through the auction to keep power plants on standby so they can be called upon at times when renewable energy output lags demand.

Centrica secured one-year capacity contracts for South Humber and Langage in the auction, while Killingholme missed out.

But the auction price cleared much lower than industry experts had expected, at 19.40 pounds per kilowatt, making it less attractive for investors to snap up assets in the market.

Editing by Jane Merriman

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