Centrica to pull out of new UK nuclear projects

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February 4, 2013 10:14 PM EST

Utility group Centrica has decided not to take up its option to build new power stations in Britain with partner EDF and is planning to launch a 500 million pound ($787 million) share buyback scheme.

Centrica has the option of taking a 20 percent stake in four new reactors - two at Hinkley Point in Somerset and two at Sizewell in Suffolk - in a partnership with France's state-owned utility EDF.

It cited uncertainty around project costs and the construction schedule for its decision on Monday.

The British company's move follows in the footsteps of Germany utilities E.ON and RWE , which quit the nuclear sector after the Fukushima disaster in 2011.

"The lengthening time frame for a return on the capital invested in a project of this scale, have led us to conclude that participation is not right for Centrica," Centrica Chief Executive Sam Laidlaw said.

The company added that it would write off 20 percent of the pre-development expenditure, about 1 billion pounds ($1.6 billion), and it would return surplus capital to shareholders from a share buyback in the next 12 months.

EDF said last month that it would start discussions with Chinese state-owned nuclear company CGNPC about forming a partnership on its project to build the next generation of nuclear power plants in Britain, a top EDF official said.

Centrica said that it will retain its 20 per cent stake in eight of Britain's existing nuclear power stations.

Shares in Centrica were up 1.2 percent at 10:24 GMT.

(Reporting by Lorraine Turner; Editing by Paul Sandle and David Goodman)

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