§ The Secretary of State for Trade and Industry (Ms Patricia Hewitt)
On 18 September 2003,Official Report, column 62WS, I informed the House that British Energy had made a further drawing on the credit facility following its repayment of all outstanding amounts in March. On 14 October 2003, Official Report, column 11WS, I informed the House that the company had formally agreed with creditors the terms of its proposed restructuring.
British Energy has subsequently asked for the maximum amount available under the facility to be increased from £200 million to £275 million. I am advised by the company that the principal reasons for this request are the costs of unplanned outages at Sizewell B and Heysham 1 and the impact of current volatility in wholesale electricity prices (increasing both the required levels of trading collateral and the cost of the unplanned outages) which have had an adverse impact on the company's liquidity.
We and our advisers have considered British Energy's request carefully. This is the first opportunity I have had to inform the House that, in the light of that consideration, I have confirmed to the company that I will increase the maximum amount available under the facility to the amount requested, subject to the condition that the increase will be limited to the period prior to the expected receipt of the proceeds from the sale of the company's interest in Amergen, or 22 February 2004, if earlier, whereafter it will be reduced to £200 million.
The increase in the facility is within the rescue aid ceiling approved by the European Commission last year, although as a matter of courtesy my officials are informing the Commission. The stringent controls governing drawings on the facility by British Energy remain in place, and the company's obligations under the credit facility agreement continue to be secured by charges over the British Energy Group's assets. We continue to expect any drawings on the facility to be repaid in full, including interest, as soon as the company is in a position to do so.49WS
As I have previously informed the House, if the Government are not satisfied that British Energy will be viable in all reasonable foreseeable conditions, or if there is a material adverse change in British Energy's position, the Government have reserved the right to withdraw its support for the restructuring. The Government remain ready for administration if any of the restructuring conditions are not met.