to review BNFL's Hanford contract after price rises
Financial Times, April 27 2000
By Matthew Jones
Nuclear Fuels on Thursday ran into fresh problems when Bill Richardson,
the US energy secretary, said he would review the company's largest
contract in the US, following unacceptable price increases.
submitted a $15.2bn proposal to clean up nuclear waste at the Hanford
nuclear reservation in Washington on Monday after saying 18 months ago
it was confident it could complete the contract for $6.9bn.
rise was the second over the two-year design period for the project
- in February company officials said the cost would be $8bn.
Richardson said the proposal to turn 54 million gallons of radioactive
liquids, sludges and salts into glass had become "unfundable" and he
would now consider seeking another contractor.
is the latest development in a disturbing trend of unacceptable and
unexplained budget escalation," he said. "As a result, DOE (the Department
of Energy) is now evaluating possible alternative approaches."
has been beset by problems since it admitted in September to falsifying
quality checks on batches of mixed oxide fuel manufactured at its Sellafield
plant in West Cumbria.
then major international Mox fuel and reprocessing customers, including
Germany and Japan, have put contracts on hold and Irish and Nordic ministers
have stepped up pressure on the British government to close Sellafield
US market is particularly important to BNFL because one of its key commercial
targets, set by the government to test the viability of a partial privatisation
of the company, is to increase its US profits by 15 per cent.
company has already admitted missing most of its other key targets,
based on environmental and safety targets, and ministers have been forced
to delay the sell-off until after the next election.
the contract BNFL would be responsible for attracting private investment
to pay for the project up-front and would then be reimbursed by the
US government as the waste was vitrified.
BNFL official said he accepted the cost had become too high and that
the company would work with the DoE to find an acceptable "middle ground".
financing arrangements are clearly critical to the overall cost of the
project. The high cost of capital we would have to bear accounts for
around half of the total cost," he said.
official said other reasons for the price increase were changes in the
specification, which had more than doubled the footprint area of the
clean-up plant, and unexpected complications with the process.
waste at Hanford is stored in 177 tanks and is the bi-product of nuclear
bomb manufacturing since the second world war.