NTR's rapidly expanding bioenergy unit Bioverda has entered the British market with the acquisition of a majority stake in renewable fuel company Tees Valley Biofuels.

The consideration was not disclosed but the combined cost of Bioverda's equity stake in the business and capital investment in its proposed plant at Teesside will be at least €75 million. The plant will produce a direct substitute for mineral diesel.

With significant investment projects already under way in Ireland, Germany and the US, the Tees Valley deal brings the total value of Bioverda's current initiatives close to €500 million.

The wholly owned subsidiary of utility group NTR Plc, formerly National Toll Roads, said yesterday that it continues to look at potential projects in Europe and North America.

Bioverda plans to use the Tees Valley Biofuels investment to build a "significant" enterprise in Britain. The company has opened an office in London and appointed former Royal Dutch Shell executive Nick Brooks as head of its European operation.

The existing owners of Tees Valley Biofuels retain a small minority stake in the business after the Bioverda transaction.

The company's Teeside development has already received support from One North East, the regional development agency in northeast England. The plant will use indigenously supplied rapeseed from partnerships with local co-operatives.

"The biofuel produced will have a focus on sustainability and low carbon footprint biofuels in order to meet the needs of the UK Renewable Transport Fuel Obligation which comes into force in April 2008," said Bioverda.

"This will directly substitute mineral diesel and will provide UK farmers with a new outlet for bioenergy crops as well as assisting in meeting the UK's climate change targets."

Bioverda's development was welcome by the UK Trade and Investment agency and by the National Farmers' Union.

Seed supply will be managed for Tees Valley Biofuels through GrainCo, a farmer-controlled grain trading merchant in northern England.