closures with the argument that British Coal's output is 'not competitive'. In truth, its worth depends on such volatile factors as world prices for coal and oil, and as these are traded in dollars, the strength of the pound. Devaluation of sterling since Black Wednesday has immeasurably strengthened British Coal's position.
The real reason British Coal cannot sell its productis the effective blackmail it suffers at the hands of its two chief customers. PowerGen and National Power, the two electricity generation companies artificially born of the division of the Central Electricity Generating Board on privatisation in 1990.
The two companies currently buy fully 77 per cent of British Coal's output under a three year contract which ex25 Oct, 1992 pires in on 31 March 1993. They are now threatening to cut their current order of 65 million tonnes a year to between 30-40 million, turning to other fuels or imported coal instead This way PowerGen and National Power can, in Rothschild's words, 'purchase coal at below the market price that would have arisen in a competitive market. This would increase generator profits (which would not be passed to electricity consumers) at the expense of coal industry profits and production.' This is in the government's short-term interests. It still holds 40 per cent of the shares in the generators, which it wishes to sell for as much as possible on the basis of guaranteed easy profits.
But PowerGen and National Power in turn face competition from around 30 new gas-fired power stations planned or under construction by the 12 regional electricity supply companies, No. 30 out to lessen their reliance on the generators.
While these plants are quick and cheap to build, their electricity is 20 pe ent more than electricity from coal. N problem for the supply companies. As local monopolies, they can simply pass on extra costs to customers.
The crazy situation is the inevitable result of Tory attempts to build a market in a sector that remain: nationalised almost everywhere else ir the world, allowing governments to plan sensible energy policies.
British Coal is already the most efficient producer in Europe, with operating costs down 33 per cent in six years. Last year it produced 90m tonnes recording a profit (€78m) for the first time in 13 years in 1991 - and a 1992 profit of £170m. British Coal has exploitation rights for the 45.000 million tonnes of recoverable reserves, enough to last 300 years.
AS SOCIALIST OUTminimum Tory ¿Crisis Special public opinion, the actions of the