Iberdrola, the Bilbao-based owner of ScottishPower, is putting the final touches on a bid for British Energy, power industry sources said last night.

The Spanish utility, France's EDF, German-based RWE and Centrica, the owner of British Gas and Scottish Gas, are expected to be among companies that will submit offers for British Energy by a deadline on Friday.

It is understood that Centrica is trying to pair up with one of the bidders, possibly EDF or the other big German energy group, E.ON, which tried and failed to buy ScottishPower.

British Energy, state-controlled Electricité de France, RWE and Centrica declined to comment on possible bids. A spokesman for Iberdrola said: "We are studying this but still have not taken a decision. We will decide over the coming week."

The Spanish financial newspaper Expansion said Iberdrola was preparing a bid for British Energy, citing sources sources close to the company.

Fevered speculation has swept through the City in recent weeks on possible bidders for British Energy, the UK's only private nuclear power generator.

A power industry source familiar with the situation told Reuters last month that RWE, Europe's third-biggest utility and the owner of British Energy supplier npower, had made an indicative all-cash proposal of just under 700p a share for British Energy, valuing it at up to £11bn. Another source close to the matter said EDF would bid substantially below 700p a share, hoping its expertise in nuclear power would persuade the UK government to prefer its proposal.

The government owns a 35% stake in the nuclear operator and will decide its next owner. Its advisers have emphasised that they will not block bidders on the grounds of nationality, with price the main criteria. However, the government is thought to want at least two companies involved in the new nuclear building programme.

Some City analysts believe EDF will emerge as the preferred bidder because of its extensive expertise in building and operating nuclear power stations in France.