unlikely to meet targets
Financial Times, 30 Mar 2000
By Matthew Jones and Andrew Taylor
Nuclear Fuels said on Thursday that it would try to persuade the government
to lower the performance targets it must meet before ministers approve
a partial sell-off of the company.
Collum, chairman, told the cross-party Trade and Industry Select Committee
that progress against the six key targets had been poor, and that the
company would struggle to meet any of them this year.
admission came after Helen Liddell, energy minister, told the Commons
on Wednesday that the partial privatisation could not now take place
"before the latter part of 2002."
plan would have involved the sale of up to 49 per cent of the company
to the private sector before the next election and was expected to raise
up to £1.5bn.
targets, known as the "balanced scorecard", were agreed with the government
last July. They focus on the company's environmental performance, health
and safety, skill enhancement, development of the US business, liability
management, financial performance and reduction of controllable costs.
Collum, who joined the company in October, admitted that the group was
behind in profitability terms and had only reduced controllable costs
by 17 per cent against a target of 25 per cent by 2001.
revelation follows publication in February of three reports by the UK's
nuclear safety regulator which found "systematic management failures"
in the company.
Collum said: "There is no point in having in place criteria which we
have no chance of meeting. We will be seeking to have another look at
them at the end of the year."
the government is known to be surprised that the company came closest
to meeting its environmental and health and safety targets. Ministers
are expected to tighten rather than relax these criteria in the light
of the regulator's reports.
Department of Trade and Industry said: "The government is likely to
wish to review targets to reflect BNFL's new corporate plan but any
new targets will be rigorous and demanding."
Collum welcomed the delay to the partial privatisation because it would
allow BNFL to recover from a spate of incidents which had badly dented
its credibility. He claimed a partial sale of the company would still
be the best option to safeguard its future because it would allow better
access to financial markets and make managers more accountable.
Mrs Liddell defended the government's decision to hand over management
of the Atomic Weapons Establishment at Aldermaston to a consortium including
BNFL, Lockheed Martin of the US and Serco the services group.
Liddell said the consortium's management and safety plans had been carefully
reviewed and that BNFL's nuclear waste management business had no connections
with recent Mox manufacturing quality control problems.