firms threaten crisis for Sellafield
Independent on Sunday, 13 May 2001
By Severin Carrell and Geoffrey Lean
Sellafield's main international customers
have threatened to withdraw their business, throwing the Cumbrian nuclear
complex into an unprecedented crisis, according to confidential documents
obtained by The Independent on Sunday.
The documents show that nuclear power
companies in Germany, Japan, Switzerland, Holland and Italy have warned
British Nuclear Fuels (BNFL) the nationalised industry that owns
the complex that they are considering abandoning contracts worth
£6bn to have their used nuclear fuel reprocessed there. They also reveal
that the customers are on the verge of "a complete loss of confidence"
in the firm.
The threats jeopardise the Government's
plans to part-privatise the firm after the general election. BNFL could
be forced to close down its controversial Thorp reprocessing plant,
at the cost of 2,000 jobs. BNFL's main home customer, British Energy,
has already decided to open talks on ending reprocessing its fuel at
the plant, describing the practice as "economic nonsense".
Disclosure of the threats comes at
the worst possible time for BNFL, which is hoping to get permission
to expand its operations at Sellafield shortly after the election, by
opening a new £300m plant to turn plutonium into new nuclear fuel.
The Prime Minister and Stephen Byers,
Secretary of State for Trade and Industry, are keen to give the plant
the go-ahead, despite growing doubts over its profitability. Reprocessing
separates used fuel from reactors into plutonium, uranium and waste.
It was originally conceived when it was thought that nuclear power would
expand so rapidly that uranium would become scarce and reactors would
need the recycled uranium and plutonium that it produces. In the late
1970s, Sellafield customers effectively signed open-ended contracts
with BNFL, allowing it to charge them whatever it cost to treat their
fuel, plus a margin for profit.
Nuclear power is now much less economic,
thanks to increased energy market competition. But the overseas customers
have become increasingly angry as BNFL has increased its prices, leading
to angry demands to renegotiate the contracts. The leaked documents
show that the negotiations have erupted into a furious row. The customers
accuse BNFL of breaching the contracts by failing reprocess on time
or at agreed prices.
They reveal that at one heated meeting
in September last year, the customers warned BNFL's chief executive,
Norman Askew, that the "situation is now becoming critical". In a stinging
statement they said that they were "losing confidence in BNFL's technical
ability" and added: "If BNFL's underperformance continues [there] could
be a complete loss of confidence in all aspects of BNFL's services."
The companies said they were considering
taking court action, totally renegotiating the contracts or stopping
sending their fuel to Sellafield.
The documents also report a crisis
meeting at Heathrow on 23 March, brokered by the accountants PriceWaterhouse-Cooper,
when the customers accused BNFL of being "unresponsive and unwilling
to help". They warned that they would take legal action if BNFL refused
to carry out a full technical audit of its operations.
Last night, one senior overseas negotiator
confirmed the crisis raised "rather significant" doubts over the future
of their Thorp contracts.
Another crisis meeting will take
place in London on Tuesday. Last night, a BNFL spokesman refused to
comment on the crisis but confirmed that both sides were in long-running
negotiations. He said that "robust contracts" were in place, underpinned
by government commitments, and that 85 per cent of the fuel to be reprocessed
was already at Sellafield. He insisted that BNFL was "optimistic" the
dispute would be resolved.
However, environment campaigners
at Greenpeace insisted that the leaks prove BNFL is facing a major crisis.
"Their future economic prospects are bleak, and they know it, their
customers know it and the British government needs to understand it,"
a spokesman said.
Greenpeace today said the documents (available at http://www.BritishNuclearFuels.com,
set up by Greenpeace) totally contradict BNFL's public statements that
it has rebuilt customer confidence, and that it will obtain sufficient
contracts to allow the UK government to approve the opening of the Sellafield
mixed oxide (MOX) plutonium fuel plant, SMP.