Germany’s Concord Power told the Reuters news agency on Monday it had found an investor to back its 1.2bn mark ($559.7m) project to build a combined cycle gas turbine (CCGT) power plant in Lubmin, eastern Germany. Concord aims to start construction next year.

But building the 1 200 MW CCGT plant, the country’s biggest, also depends on the passing of a gas tax exemption law, which the European Commission is reviewing.

“We are still waiting for the gas tax exemption and we are in the process of negotiating with a big investor, but we expect that both issues will be finalised by the end of the year,” Concord Power’s Project Manager Joachim Manns told Reuters.

Manns declined to name the investor or the gas suppliers Concord Power is in talks with.

Germany’s gas tax amounts to 0.36 pfennigs per kWh, and the exemption would bring a €200m saving in fuel costs for the Concord project.

To qualify for the exemption, new CCGT plants, seen as an efficient and less polluting alternative to coal ones, must be ready to start operating by the end of 2004.

But while Hamburg-based Concord Power is pursuing its project, other major companies have abandoned CCGT plans because of high gas prices, low power prices and uncertainty due to the EC review.

U.S.-owned Dynegy , Finland’s Fortum and InterGen, a joint venture between Royal Dutch/Shell and engineering company Bechtel, have all pulled back on CCGT plans.

“We are just about the only CCGT project left in Germany, but we are progressing quite well since once the law and investment negotiations are in place we will have very good preconditions to be able to fly with the project,” Manns said.

“I am optimistic the EC will give the go-ahead for the law by the end of the year,” Manns said.

Manns said power prices, which plummeted after liberalisation of the market are now on an upward trend. German electricity prices declined by 26 per cent during the period 1995-2000.

“The tendency over the last nine months is quite clear – electricity prices are increasing and once they reach the real costs of generation, we will see investments in new plants,” Manns said.

Germany is keen to encourage companies to build CCGT plants to replace dirtier coal ones and also as a replacement to nuclear plants, which the government plans to phase out by 2020.

The site of the proposed Lubmin plant is in an economically weak area with high unemployment near Greifswald on the Baltic Sea. Federal funding is available for developments in the region, which has an infrastructure making it attractive to energy companies.