* NuGen agreed to pay 70 mln pounds for site
* Energy ministry says may review other scenarios for site
* Iberdrola in talks with Westinghouse on NuGen stake sale
LONDON, Sept 24 (Reuters) - The British government is considering holding a new auction for a piece of land earmarked for construction of a nuclear plant after current owner NuGen has failed to make any progress, industry sources said.
The NuGen joint venture between France's GDF Suez and Spain's Iberdrola struck a deal to buy the site at Sellafield in Cumbria in 2009, signing an option agreement with the Nuclear Decommissioning Authority (NDA) and committing to reach a certain level of progress by a deadline.
The joint venture plans to build up to 3.6 gigawatts of new nuclear capacity at the site, which it has named Moorside.
For the site alone, NuGen paid an initial 19.5 million pounds ($31.3 million) and agreed to pay another 50.5 million pounds over six years, or more than 8 million pounds a year, the 2009 agreement showed.
Neither the government nor NuGen would reveal details of the deadline or the progress required due to commercial confidentiality.
The site remains untouched, while NuGen has yet to find a reactor builder and has lost one of its partners, SSE.
Frustrated by the delay at Sellafield, the government is considering its options for the site as it pushes through an ambitious nuclear new-build programme, which is needed to replace ageing reactors.
"They are thinking about auctioning the site," said an industry source, who requested anonymity because of the confidentiality of the topic. The information was confirmed by another two industry sources familiar with the situation.
The energy ministry and the NDA declined to comment, and officials at NuGen could not be reached for comment.
"If the option is not exercised by the agreed deadline, there may be a number of alternative scenarios, and we would have to consider these carefully when the position becomes clearer," a spokesman for Britain's energy ministry said, without elaborating on the scenarios available.
NuGen partner Iberdrola is in talks with Toshiba's Westinghouse unit to take over its 50 percent stake in the joint venture, a deal that could rejuvenate the project.
The Sellafield property, if reopened for auction, is likely to attract strong interest as a cheap option for investors to secure a British nuclear new-build site.
Last year, the sale of the Horizon nuclear new-build venture with two sites in Britain by utilities RWE and E.ON to Hitachi fetched 696 million pounds, a sum that experts say was well above expectations.
In 2011 the government shortlisted eight sites around the country as suitable to build new nuclear power plants, including the site at Sellafield.
Other sites include two owned by Horizon and the remainder are owned by France's EDF.
The French utility wants to build Britain's first new nuclear plant in decades at Hinkley Point in Somerset and is in discussions with the government about a fixed minimum electricity price for power generated from the new plant.
The three nuclear new build groups said they could jointly build around 16 gigawatts of new capacity by 2025, a target that now looks ambitious after Japan's Fukushima crisis delayed regulatory progress and added to mounting nuclear plant bills.