Jeremy Warner's Outlook: British Energy may have to share sites

May the highest bidder win. That's generally the only choice facing directors on the receiving end of multiple takeover bids, yet with British Energy, the owner of virtually all Britain's remaining nuclear power stations, it's a bit more complicated than that. At least three overseas power utilities – Electricité de France, RWE of Germany, and Iberdrola of Spain – have so far thrown their hats into the ring. Meanwhile, Centrica, the UK gas and electricity retail group, hovers on the sidelines, offering to partner one or all of them so as better to give the impression that they are cloaked in the Union flag.

In any normal company, it would be an easy enough decision. In the interests of shareholder value, the successful bidder would also be the highest. Yet British Energy is hardly a normal company. Both for safety and strategic reasons, the Government retains a powerful voice in the outcome. It also maintains a controlling stake, thanks to the state-sponsored bail-out of five years ago.

In line with its "open doors" policy on foreign investment, the Government has said it is happy to see Britain's nuclear power industry foreign-owned, but with caveats. It doesn't want to be beholden to a single, dominant producer.

High energy prices have underpinned the commercial viability of new nuclear build. Even if this were not the case, emission reduction targets necessitate some degree of nuclear in the energy mix. Yet British Energy's existing portfolio will be decommissioned within 15 years.

New plants don't have to be built on the site of, or adjacent to, the old ones, but it would certainly ease the planning constraints around such projects. Those already living close to nuclear power stations tend to be reasonably supportive of their presence in the area. As the present owner of virtually all these sites, British Energy is therefore sitting pretty. Anyone who wants to build new nuclear power stations has to be talking to British Energy.

Allow one of the interested foreign utilities to take over British Energy, and you potentially shut out everyone else who might want to participate in Britain's nuclear future. Plainly, it would be undesirable for the country to be dependent on just one of these nuclear players. What happens, for instance, if their investment priorities switch elsewhere to China, India or beyond. Some degree of competition is essential.

To achieve this, British Energy must be forced either to sell certain sites, rather in the manner of Ferrovial and the British airports it owns through BAA, or at least to agree co-siting with rivals. That obviously devalues the price that can be obtained for British Energy as a standalone nuclear monopoly.

The need to be seen as British adds a further complication, hence the potential importance of partnering with Centrica or some such other British company. At planning inquiries, the last thing you want to be doing is turning up with a French or Spanish accent, still less a German one. Squaring the circle of Government and shareholder priorities is going to be far from easy.