Bargain: Sizewell B 'going very cheap'

BRITAIN'S newest nuclear power station is likely to fetch only a fifth of the £2.5bn it cost to build when it is privatised along with much of the nuclear industry.

The Sizewell B power station on the Suffolk coast is so new that it is not yet fully operational but specialist economists believe that it will sold off at a bargain basement price, way below its construction value.

The entire privatisation, announced by the Government last week and exclusively forecast in detail by the Independent on Sunday two months ago, is expected to bring in no more than the cost of constructing this one power station.

In all eight power stations - seven Advanced Gas Cooled Reactors plus Sizewell B, a Pressurised Water Reactor - are to be sold off. Eight older, Magnox reactors, the first type built in Britain, are being kept in the public sector because ministers accept that no-one will purchase them at any price.

Opponents of nuclear power always contended that building the Sizewell station was a poor investment.

They are bound to point out that such a low valuation and return will make a mockery of the conclusion of a mammoth two-year public inquiry in the 1980s that said building the reactor would be "cost saving".

Nuclear Electric, which owns the station, says that in all £2.5bn has been paid out to construct Sizewell, which only began feeding electricity into the grid this February and is still operating at less than half power while safety checks are carried out.

Independent estimates, which take inflation into account, reckon that the cost is nearer £3bn at today's prices.

Optimistic City estimates privately suggest that the power station might now fetch £700m.

But other experts publicly place its value much lower. Mike Sadnicki, an economic analyst specialising in the energy industry, has published a study valuing it at only £429m, and now reckons that even this is an overestimate.

Gordon McKerron, senior fellow at the science policy research unit at Sussex University and one of Britain's leading experts on the economics of nuclear power, agrees.

He says: "I doubt if Sizewell B is worth £500m. I would feel I was being asked to pay quite a lot to take it off the Government's hands for that kind of money."

Neither Nuclear Electric nor the Department of Trade and Industry would put a value on the station last week but the independent estimates will heighten controversy over the use of a levy which has been added to the electricity bills of every household and business in England and Wales since 1990.

Michael Heseltine, President of the Board of Trade, told Parliament that the point of the levy was "to deal with the decommissioning of old and unsafe plants".

Nuclear Electric confirmed this, saying: "The levy is not intended to be a subsidy for Nuclear Electric's ongoing commercial operations."

But in fact more than £1.6bn of the levy was used to help build Sizewell B.

Nuclear Electric justified this on the grounds that the station would be a good investment and would provide a better return on the money than if it had been invested in a special account.

But now most of this money will disappear with the huge loss made on selling the plant.

A top civil servant described this last week as "an absolute scandal" and Clive Bates of Greenpeace said: "It is hard to imagine a worse place to have invested the funds for dealing with nuclear waste and decommissioning."

Analysts believe that the Government will be fortunate even to get £2.5bn from selling the industry.

They say that investors will be wary of the estimated £6bn cost of decommissioning the intensely radioactive stations and cleaning up their wastes, of the uncertain performance of the reactors in the past, and of the risk that a major nuclear accident anywhere in the world could cause added restrictions to be placed on the British nuclear industry.