Thursday, December 06, 2001

Security of employment for BNFL's 6,500-strong Sellafield workforce is said to be safeguarded even though the nuclear site is passing into the ownership of a new government body which will take on the massive cost of clean up work.

A Liabilities Management Authority is to bear the 35 billion bill but BNFL whichwill continue to do a lot of the waste treatment and decommissioning work denies that it is being rescued from bankruptcy.

An 8.5 billion bill has also been taken away from the United Kingdom Atomic Energy Authority for future decommissioning work, including the Windscale reactor pile chimneys.

BNFL and the AEA will relinquish ownership of their respective parts of the site along with all the plants and buildings, although the two companies will still be responsible for operating them.

Even with liabilities already outstripping assets, BNFL insists there was no danger of bankruptcy.

"We have enough money to pay our way and to pay the workforce even if we carried on as we are. BNFL has a lot of cash and was not definitely not going bust or insolvent," said Sellafield spokesman Nigel Monckton.

The Department of Trade and Industry revealed that currently state-owned BNFL has a current net asset deficit of 1.7 billion. Although this means that financial liabilities for clean-up work are more than the assets, the company's finance director John Edwards said: "BNFL has a strong cash position - cash reserves that are more than adequate to continue trading and pay our workforce and creditors for at least the next 10 years."

The Liabilities Management Authority is taking on the cost of civil nuclear liabilities, which is basically paying for cleaning up a legacy of radioactive waste, much of it at Sellafield and created in the early years of Britain's military and civil nuclear programme before the formation of BNFL in 1971.

However, the company was saddled with a 35 billion bill for dealing with the legacy over future years and it threatened the company's long-term financial liability. This is now removed but at the expense of site ownership.

Treating historic nuclear wastes arising in the early years of the nuclear programme was going to cost BNFL another 1.9 billion on top of the 35 billion burden.

"As a result of this increase BNFL's long-term liabilities are estimated to exceed assets," said the Department of Trade and Industry.

"The proposals outlined for restructuring the industry more broadly will address this. HM Chief Inspector of Nuclear Installations has assured government that BNFL's financial position will have no impact on the safety of its operations."

Patricia Hewitt, Secretary of State for Trade and Industry, told the House of Commons: "The government's priority is the safe, secure and cost effective discharge of its nuclear liabilities in a way that ensures protection of the environment.

"The proposals I have outlined today show the government's commitment to delivering a clear and focused long-term strategy to deal with the nuclear legacy with a firm focus on environment and safety.

"We are creating a management regime which can provide the strategic direction and influence required to sustain clean-up programme extending into the next century.

"We have to face up to our responsibilities and not leave them for future generations.

"We need to build on the best efforts of BNFL and UKAEA and the real progress made in recent years.

"We need to deepen the level and breadth of expertise in nuclear clean up in the UK, to use the best of what the public and private sectors have to offer and reward those who deliver."

Focused on maintaining the highest safety, security and environmental standards, the LMA will look to optimise the use of this expertise by developing the opportunities for liabilities management, including the management of licensed nuclear sites.

The LMA will take over in 12 months time and may pave the way for the partial privatisation of BNFL in 2004/5.

BNFL chief executive Norman Askew said: "This new strategy clarifies the way forward for historic liabilities, many of which predated the creation of BNFL. This helps management to focus on running the business.

"We now have to become more competitive and further commercialise our operations. We welcome this."