Electricity imports 'cannot be cut to save pits'

RESTRICTING imports of electricity from France was ruled out by Michael Heseltine, President of the Board of Trade, yesterday as a means of trying to save British coal pits.

Electricite de France transmits the equivalent of 6.5 million tonnes of coal a year through an under-sea interconnector. The Commons Select Committee on Trade and Industry has proposed cutting the flow to increase the market for British Coal.

But Mr Heseltine said restricting imports across the interconnector would be contrary to the Treaty of Rome. The Government would be at 'considerable financial risk' if it did so because of indemnities given at the time of electricity privatisation.

Mr Heseltine's demolition of the interconnector option and other proposals by the committee took the heat out of a Labour debate on the decline of manufacturing industry.

Robin Cook, Labour's trade and industry spokesman, said 750,000 manufacturing jobs had been lost since John Major became Prime Minister. 'They have gone from the companies that formed the backbone of our industrial economy, the companies on which we depend to provide the exports we need to pay our way in the world.'

He said that Mr Heseltine had taken his initiative to try to close 31 pits without once considering the impact on the mining engineering industry, where another 20,000 jobs would go.

Mr Heseltine is expected to publish his review of the coal industry towards the end of this month. He questioned the committee's central conclusion that it should be possible to find a market for an additional 16 million tonnes of deep-mined coal in each of the next five years. Promising to publish a summary of the legal advice he had received on cutting electricity imports, he told MPs that Tim Eggar, the Minister for Energy, would be in Paris today following up discussions with the French government.

Mr Heseltine rejected a proposal to legislate to require generators to take coal at a price and in a quantity they would judge to be against their commercial interests. Nor could he agree with the committee's suggestion that the additional tonnage could be purchased through a subsidy at a total cost of pounds 500m. He said the subsidy, intended to reflect the difference between British and world prices, was 'an interesting approach', but he disputed the committee's assessment that it could be achieved at a cost of no more than pounds 5 a tonne. Mr Eggar is expected to discuss the use of the interconnector and the French grid to export British electricity to Italy and Spain. The link was originally planned as a two-way system, helping each country with swings in demand.

Although the contracts are between EDF and regional electricity companies, the Government has signed a memorandum of understanding with the French authorities making it difficult and hugely expensive for either government to interfere with the link.

Without cutting the link, or stemming nuclear power or the 'dash for gas' in electricity generation, the Government's White Paper is likely to provide salvation for only a handful of the 31 pits. There is growing speculation that ministers will be able to take advantage of loss of public and political support for the miners because of their ballot in favour of 24-hour strikes. Miners who lobbied Parliament yesterday said they did not believe a strike would affect the strong public support for them. They urged the Labour leader, John Smith, to raise the pressure on the Government.

National Power and PowerGen are still refusing Government demands that they sign contracts for more than 40 million tonnes of extra coal over the next five years in order to save pits. PowerGen is also asking for pounds 140m in compensation even to take its share of the 40 million tonnes.

Still more urgent, however, is the signing of the basic contracts for 40 million tonnes this year and 30 million in each of four subsequent years. Without those contracts British Coal may have almost no sales from 31 March when the current deal expires.

One electricity industry source said that if the basic contracts are not signed, 'British Coal will struggle to sell any coal at all. Both generators have coal coming out of their ears. It would be a heaven-sent opportunity to reduce stocks'.