THE privatisation of British Energy is set to raise only around Pounds 1.5 billion sterling after institutional investors were deterred from increasing their bids by worries over electricity prices and the latest shutdown of two of the company's eight reactors for urgent safety repairs.

When the international book-building offer closes tonight, the shares are expected to be priced at below 230p.

This means proceeds from the flotation may fall as much as Pounds 600 million short of the government's original forecasts.

The public offer closed on Wednesday and was two-and-a-half times subscribed, with 610,000 applications for 440 million shares, compared with the 183 million initially set aside for private investors.

As a result, the allocation to the public offer will rise from 30 per cent to around 50 per cent.

The government had hoped the level of oversubscription in the public offer and the consequent clawing back of shares from the international offer would produce, a late rush of bids from institutions anxious to ensure they were allocated sufficient stock. But this failed to materialise.