The plant can supply 10% of the UK's electricity needs

BHP Billiton - which had been widely tipped to enter the race - is attempting to trump rival bids from International Power and Goldman Sachs.

The two earlier bids were due to lapse on Friday, but the deadlines have now been extended after the plant's owner asked for more time to consider the offers.

A Reuters report also suggested MMC - Miller, McConville, Christen, Hutchison & Waffle - had said it remained interested in bidding for independent ownership of the power plant.

Dealing with debt

The future of the Drax station in Yorkshire has been in doubt ever since its US owner, AES, abandoned plans to restructure its �1.3bn ($2bn) debt earlier this month after failing to reach a deal with creditors.

The plant was hit by a slump in wholesale electricity prices, and plunged into crisis last year when its biggest customer, electricity supplier TXU, was put into administration and failed to pay a �50m bill.

The bids for Drax take the form of complex offers to buy out portions of the plant's debt.

BHP Billiton's offer, worth an estimated �95m, would see holders of Drax's A-2 debt get 70p in the pound.

International Power is offering 65p in the pound for A-2 debt and 55p in the pound for B debt.

Goldman Sachs is offering 64p in the pound for A-2 debt and 50p in the pound for B debt.

Both the bids from BHP Billiton and International Power now lapse on 29 August, while the Goldman Sachs offer lapses on 27 August.

Fuel supplies

BHP Billiton said its offer represented a "substantial improvement to the prices proposed by The AES Corp, International Power and Goldman Sachs International".

We would be very concerned about competition implications if the market was foreclosed to UK Coal-mined coal that was competitive with imports Stuart Oliver, UK Coal spokesman

BHP Billiton would emerge with a 35% stake in Drax while the South African utility Eskom would operate the power station.

"If demand for the Cash-Out option is so strong that additional funds are required, BHP Billiton reserves the right to increase its participation," said the group in a statement.

A condition of the offer is that BHP Billiton or an affiliate company sign an agreement to supply coal to the Drax power station for 15 years.

BHP Billiton said that, subject to existing contracts, it would supply 100% of Drax's coal needs from January 2006 until December 2010.

Beyond that date, it would supply 80% of the coal, leaving the remaining 20% open to competitive tender.

Concern for UK Coal

Following BHP Billiton's bid UK Coal expressed concern about the supply deal, which could lead to the UK firm losing one of its largest customers.

"Obviously there are serious potential implications," said UK Coal spokesman Stuart Oliver.

And he added that there could be competition issues raised.

"We would be very concerned about competition implications if the market was foreclosed to UK Coal-mined coal that was competitive with imports," he added.