June 2002

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New nuclear agency to take on £46bn liabilities

The Independent, 25 June 2002
By Michael Harrison

Original address: http://news.independent.co.uk/business/news/story.jsp?story=308715

[Posted 27/06/2002]

The Government is expected to detail plans next week to transfer £46bn of Britain's civil nuclear liabilities to a new state-run agency.

Patricia Hewitt, the Secretary of State for Trade and Industry, is due to publish a White Paper on 4 July setting out how the proposed Liabilities Management Agency will operate.

However, the DTI is also expected to confirm that it will not introduce a Bill paving the way for the agency in the next session of Parliament. This will delay the transfer of the £46bn in liabilities from the balance sheets of British Nuclear Fuels and the Atomic Energy Authority for at least a year and possibly longer.

The delay will be a particular blow to BNFL, which accounts for three-quarters of the UK's civil nuclear liabilities through its ownership of the Sellafield reprocessing plant and the country's ageing fleet of Magnox reactors.

BNFL's liabilities for closing down and cleaning up its nuclear sites now stand at £35bn and exceed its assets – making the company technically insolvent. Removing these liabilities would have helped BNFL to press ahead with the part-privatisation of its fuel fabrication and international clean-up divisions, the key element of which is Westinghouse.

The Atomic Energy Authority's liabilities stand at £8.9bn and involve four sites, the biggest of which is the former fast-breeder reactor at Dounreay, Scotland where more than half its 1,700 staff are employed.

The other three sites are at the authority's Harwell headquarters, Oxfordshire, Winfrith in Dorset and the original Windscale demonstrator nuclear reactor in Cumbria.

The authority expects to continue to operate as the contractor for the four sites once the new liabilities agency is set up. It would also like to widen its remit to other BNFL sites, although the Government is keen to bring private-sector contractors on board to improve efficiency levels.

In advance of the new liabilities agency coming into operation the Government has set up a shadow organisation run by an executive on secondment from the car maker Ford. Bechtel, the US construction giant, will be acting as adviser to the shadow body.

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