Nuclear clean-up could cost pounds 12bn: Gains from selling Atomic Energy Authority's commercial arm will be dwarfed by decommissioning expense

THE COST of decommissioning nuclear sites owned by the UK Atomic Energy Authority could treble to pounds 12bn - dwarfing any gains from the planned privatisation of the AEA's commercial arm.

Estimates in 1990 that costs would be about pounds 3bn to pounds 4bn have now risen to between pounds 6bn and pounds 12bn, according to a parliamentary written answer by Tim Eggar, energy minister.

The Government intends to split the AEA and privatise its commercial and technology arm, leaving defunct reactors in the public sector. One nuclear expert said: 'Each site is unique, requiring delicate handling. The early estimates failed to take this into account, assuming they could all be dismantled in the same way.'

Nuclear industry experts believe the privatisation will raise about pounds 200m, with remaining decommissioning costs financed by the taxpayer.

Mr Eggar said the central estimate would be about pounds 8bn: about pounds 6bn for decommissioning costs of the AEA's own sites, plus pounds 2bn for cleaning up British Nuclear Fuels sites for which the AEA is financially responsible. But he added that the total cost could be as high as pounds 12bn.

The AEA owns six defunct reactors and one in operation, from Harwell in Oxfordshire to Dounreay in the north of Scotland. They will be radioactive for thousands of years and the decommissioning will stretch well into the next century. The sites employ about 1,000 people in total.

Mr Eggar said: 'The increase reflects the more systematic review, together with the inclusion in the new estimate of the costs of infrastructure, of care and maintenance where final decommissioning is deferred, and of programme management and supporting research.'

The AEA has a total turnover of pounds 400m, of which pounds 60m comes from overseas business. The operation has lost money in the past few years as a result of a restructuring that has meant 2,500 job cuts. The AEA now employs about 8,000 people.

Nuclear Electric, whose hopes of being privatised before the next election were dashed recently by the Government, said the AEA's decommissioning costs had no relevance to its own plans.

The high costs of decommissioning and waste treatment were the main reason that nuclear stations were kept out of the privatisation of electricity, because the City was not prepared to invest when the cost uncertainties were so high.

The cost to the taxpayer of AEA decommissioning appears surprisingly high compared with estimates for the rest of the nuclear industry, whose oldest reactors, the Magnox stations, are similar to some of those owned by the AEA.

Nuclear Electric inherited pounds 10.5bn of decommissioning costs, discounted to current prices, from a large number of old CEGB stations. After discounting the AEA estimates in a similar way, they come to pounds 5bn, half as much for a much smaller nuclear capacity.

Discounting to today's values is necessary to make sense of the figures because present policy is to partly decommission nuclear stations and then encase them in concrete while radioactivity dies away. Nuclear Electric has been pressing the Government for permission to spread the process over 135 years, and Mr Eggar confirmed the AEA decommissioning would last well into the next century.

The scale of the AEA's costs may be explained partly by the Dounreay reactor, which could prove a tougher problem than conventional reactors because it is a sodium-cooled fast breeder of an experimental design, whose development has now been abandoned.

The Government's admission that costs for the AEA are up to three times as high as first thought is likely to confirm the fears of critics who claim nuclear liabilities have been underestimated.