TROUBLED nuclear power group British Energy dashed hopes that two reactors at its Heysham 1 plant would return to service this year.

The company said the need to replace further pipework meant the two units, which were taken out of use at the end of October, were now likely to remain out of action until the first quarter of next year.

British Energy had hoped the problems - stemming from the inspection of seawater cooling pipes at the Lancashire site - would be resolved by last month.

The financially troubled group recently put the cost of the outage, combined with a shutdown at Sizewell B, in Suffolk, at more than £50m as it is forced to go into the electricity market to replace the lost power.

The problems were among the factors that recently led the company to ask Trade and Industry Secretary Patricia Hewitt for a £75m increase in the level of a £200m loan from the Government.

The company was kept afloat last year by a £650m Government loan, which was subsequently replaced with the £200m facility in March.

And the generator, which supplies one-fifth of the UK's power needs, narrowly escaped being placed into administration in October before it secured the agreement of banks and bondholders to write off £1.3bn in debt.

As part of the proposed deal, the Government will meet some of the company's future nuclear decommissioning liabilities.

In June the group announced losses of £4.3bn.

Shares were 12 per cent lower, down 0.15p, at 4.05p by the close.