Unused nuclear plant may be written off

THE PROSPECT that the pounds 1.85bn nuclear reprocessing plant at Sellafield may never open is gaining currency, as the financial justification for it crumbles.

Until now, the possibility of a U-turn on such an expensive high- technology project has seemed to be out of the question. Abandoning its Thermal Oxide Reprocessing Plant (Thorp) was yesterday described by a spokesman for British Nuclear Fuels (BNFL) as akin to building the Channel tunnel then deciding not to use it.

The Cumbrian plant is complete, and was due to start operating within the next few weeks, but the odds against are stacking up. Thorp is on hold for an eight-week consultation period over authorisations on radioactive emissions.

German utilities with contracts with BNFL are known to be uneasy over their commitment, and are said to be increasing pressure on Chancellor Helmut Kohl for him to negotiate a diplomatically and financially acceptable formula by which they can pull out.

The German commitment to Thorp represents about 12 per cent of the volume of BNFL's initial 'baseload' contracts for reprocessing fuel. Germany is also the only country to have settled a reprocessing deal beyond 2002.

Projected profits from overseas customers' use of Thorp are the lifeblood on which BNFL's future depends. But Treasury anxieties over the plant's economic viability, mounting opposition to the transportation of spent nuclear fuel and reprocessed plutonium approaching weapons grade, as well as the disappearing market for reprocessed fuel are conspiring against the plant.

Last week, Thorp's director, David Bonser, said abandoning the plant would cost Britain pounds 900m in future earnings from overseas. He also said that either state-owned BNFL, or the Government, might have to pay back millions of pounds under contracts with customers.

His view has since been called into question by expert observers of the nuclear industry. William Walker, of the Science Policy Research Unit in East Sussex, said yesterday that BNFL's initial contracts were heavily in the company's favour. 'My understanding is that the British could get out of these things with absolutely no penalties', he said.

BNFL has also confirmed that most contracts contain a force majeure clause which frees the company from liability for compensation to customers in certain circumstances should reprocessing not take place. Criteria include war, riot, revolution, fire and flood, 'or restraint of government or any other authority having jurisdiction in respect of the performance of any obligation under this agreement'.

Such a clause would be open to legal interpretation, or more likely inter-governmental negotiation, were Thorp abandoned. But it appears to offer BNFL a possible way out of some of its compensation obligations if the Government stops the plant from opening. A company spokesman said compensation terms differ under each contract.

Last month's announcement that Britain was pulling out of the European fast breeder reactor programme cast further doubt on the plant's future. Much of the rationale for building Thorp was to reprocess fuel from conventional nuclear power stations to provide plutonium for use in those advanced fast reactors.

Mr Walker said yesterday that a month or two ago he would have said Thorp would go ahead, but he now feels the odds are against that. 'It would be a very hard decision for the Government to make, but there are so many people who would prefer it not to happen.'

Rising costs, page 3