from Sunday Herald, 14 July 2002
British Nuclear Fuels, which runs the Sellafield nuclear complex in Cumbria and the Chapelcross nuclear power station in Dumfries and Galloway, has made a £2.1 billion loss because of the huge cost of managing its radioactive waste business.
According to a report leaked to the Sunday Herald, the state-owned company is technically bankrupt, with more liabilities than assets. But the Blair government is planning to bail it out by removing £20bn worth of nuclear liabilities -- and giving them to the taxpayer. This, says its chief executive, Norman Askew, will 'liberate the company'.
British Nuclear Fuels (BNFL) is to publish its annual report for 2001-2002 on Tuesday, when it will disclose a loss of £2bn last year compared to a loss of just £46 million in 2000-2001. The main reasons for such an enormous increase were 'significant lifetime cost increases' of £1.9bn identified by a review of how to deal with large stockpiles of dangerous radioactive waste.
These stockpiles consist of all the medium-level wastes created by more than 50 years of civil and military nuclear activities at Sellafield, Chapelcross and elsewhere. It is estimated that there are currently 44,100 cubic metres of nuclear waste in storage, plus another 67,300 cubic metres to come from decommissioning defunct nuclear facilities.
BNFL also incurred an 'adverse accounting charge' of £375 million because of its recently announced decision to bring forward the closure of its two oldest nuclear stations: Chapelcross and Calder Hall, next to Sellafield.
In addition, the rest of BNFL's worldwide nuclear reprocessing and decommissioning business made an operating loss of £68m.
'While we achieved our own budgetary targets, it is obvious that our performance is still significantly short of where it needs to be,' said Askew. Last year's huge loss has pushed BNFL's overall long-term debt -- the amount by which its future costs exceed its current assets -- to £1.85bn.
The company's group finance director, John Edwards, said: 'Whilst it is our belief that we have adequate financial resources to meet our obligations in the short to medium term, it is evident that the group in its current form would not generate sufficient cash to meet these now increased longer-term liabilities.'
BNFL is eagerly anticipating the establishment of a new agency that the government has promised will take over its expensive liabilities. These include all the radioactive waste, all the shut-down facilities and all the ageing nuclear reactors -- which amount in total to £20bn worth of liabilities.
The new agency, named the Liabilities Management Authority (LMA), will be entirely bankrolled by the government. Details were announced in a White Paper on July 4, causing BNFL to postpone plans to publish its annual report that day.
"The UK government's decision to establish the LMA was the most important BNFL-related decision for many years," said Askew. "It will remove a substantial proportion of our net liabilities from the balance sheet. We therefore stand on the threshold of fundamental change within our company."
BNFL's plan now is to concentrate on building new reactors, designed by its subsidiary Westinghouse, in Britain and around the world. "Specifically we expect our expertise in new reactor design to pave the way for our participation in the resurgent global nuclear energy market," Askew predicted.
BNFL is promoting two new reactors, known as AP600 and AP1000, as replacements for existing stations such as those at Hunterston in Ayrshire and Torness in East Lothian.
In the leaked annual report, BNFL chairman Hugh Collum urges the government to fast-track the establishment of the LMA so that BNFL can become a profitable business and be privatised. "Only when legislation has been passed and the new liabilities structure established can the company truly start to take shape."
Environmentalists last night savaged the nuclear industry for incurring such mammoth debts. Greenpeace's Peter Roche said: "This report gives the lie to the government's claim that the LMA has nothing to do with a new reactor programme. Clearly it will free BNFL to go and create yet more nuclear waste that we have no idea what to do with".
