Ministers prepare privatisation of BNFL

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Andrew Feinberg

White House Correspondent

THE GOVERNMENT has appointed a leading firm of accountants to advise it on the privatisation of the state-owned nuclear fuel reprocessing company BNFL, which runs the Sellafield complex in Cumbria.

Any decision to sell the company would be hugely controversial because of BNFL's involvement in the nuclear weapons programme and the enormous financial liabilities tied up with the civil nuclear industry. The move by Peter Mandelson, Secretary of State for Trade and Industry, to appoint advisers shows, however, that Labour is prepared to contemplate a privatisation that even the Conservatives under Margaret Thatcher avoided.

Whitehall sources said last night that the Department of Trade and Industry had come under strong pressure from the Treasury to order an immediate sell-off of BNFL to raise money.

A spokesman for the DTI last night confirmed advisors had been appointed to look at "options for BNFL's future structure". He added: "The government's manifesto made clear that it would look at options to increase the commercial freedom of public corporations. Of course that includes BNFL.

"No decisions have been taken and no option papers have yet gone to ministers."

The firm advising the Government is KPMG, the international accountants and management consultants that worked on many of the privatisations under the previous administration. BNFL is taking advice from the City investment bank Rothschilds, which advised on the sales of British Telecom and British Coal.

The advisory work is understood to be at an early stage and no decision has been taken on whether to sell BNFL. However, earlier this year ministers allowed BNFL to go ahead with the $1.2bn (pounds 700m) take-over of the United States nuclear contractor Westinghouse.

In some quarters, the move was seen as opening the door to partial privatisation of BNFL.

Apart from Sellafield, which reprocesses nuclear waste from British power stations at the pounds 1.6bn Thorp facility, BNFL also controls the ageing Magnox nuclear reactors, which produce eight per cent of the country's electricity. When BNFL took charge of the nine Magnox stations last December, it stuck a deal to leave pounds 3.9bn of decommissioning liabilities in the Government's hands. This would clear one of the main obstacles to privatisation.

The Sellafield plant has been at the centre of controversy this year following a spate of radioactive leaks which have led to calls for its closure.

Business outlook, page 19