THE merger of a troubled energy firm employing 900 North-East workers has done little to allay fears over its future.

The deal between US-based firm Enron and competitor Dynegy was announced yesterday after mounting speculation.

Earlier this month Enron - which employs around 900 people at two Teesside power stations, a water treatment plant, a call centre, and headquarters building - announced plans to shed 5,000 of its European workforce in a bid to counteract a slide in share prices.

It had said that its Teesside jobs were safe.

Under the merger, which could take up to two years to complete, Houston-based Dynegy will inject an immediate $1.5bn cash boost.

Chevron Texaco, which owns around 26 per cent of the firm, will contribute a total of $2.5bn to the newly merged company, to be called Dynegy.

A spokesman for the firm said it was anticipated that the union will both stabilise Enron and help Dynegy expand and that in the short-term North-East jobs won't be affected.

"It's very much business as usual for Enron on Teesside," he said. "It's far too early to say what the implications of this announcement may or may not be for the company locally.

Councillor David Walsh, leader of Redcar and Cleveland Borough Council, expressed reservations. "These are corporate deals at the very apex of American capitalism."

"Places like Teesside are very remote to those concerned and while it looks positive, we need to make sure that local managers continue to make decisions."