Monday, October 03, 2005

US investors circle ailing Sellafield

Guardian Unlimited | Special reports | US investors circle ailing Sellafield

Terry Macalister and Tania Branigan
Friday September 30, 2005
The Guardian

Harold Wilson's old Labour government saw the new state-owned nuclear power industry as a major British success story that would meet all of our future energy needs. But while New Labour might still push the button on a new generation of atomic power stations to take up the slack from a dwindling domestic oil and gas industry, it seems relaxed about whether ultimate control of reactors lies overseas.
Last night, such a possibility came a step closer with the emergence of plans to sell generating, reprocessing and clear-up operations worth billions of pounds at a string of nuclear sites operated by British Nuclear Group, part of BNFL.

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It is the latest example of British willingness to sell off sensitive industries once considered vital to national strategic interests. Despite astonishment from other countries, which balk at foreign ownership of of their defence and energy complexes, the government seems relaxed about key national assets such as missile ranges and the operation of nuclear plants moving into private - and foreign - hands despite security issues in both sectors at a time of heightened concern about terrorism.
The proposals over the nuclear sale come as the government has indicated as greater willingness to build a second generation of nuclear power stations. All but one of the existing ones are due to be decommissioned by 2023. This week Tony Blair told the Labour party conference in Brighton that a successful energy policy required "an assessment of all options, including civil nuclear power". He also stressed the "serious" threat posed by global warming and warned that the developed world could not afford to rely on unstable regions for its energy needs.

Brian Wilson, Labour's energy minister until 2003, said the sale of BN Group would be a logical follow-through from the creation of the Nuclear Decommissioning Authority, which was set up to deal with the clean-up of Britain's civil nuclear waste. "It reinforces the separation of liability issues and current ones. It wouldn't affect new build," he said.

But Norman Lamb MP, the Lib Dem trade and industry spokesman, said he would ask the trade and industry secretary, Alan Johnson, to clarify the government's position, as the sale would have important implications. The Liberal Democrats oppose the creation of new nuclear power stations on economic, environmental and security grounds.

The reason for the mooted sale appears to be that although government may approve a new generation of plants, the existing industry is at a low ebb. British Energy, the already privatised atomic power company, has only been kept in business by public loans and formidable financial restructuring. As for British Nuclear Fuels, it made a loss last year of £470m. Managers privately admit their task, set by government, of becoming a competitive contractor - bidding for work to operate atomic sites and decommission ageing plants - is too onerous without the help of the private sector.

The company, which now manages and operates Sellafield and other sites, signalled its willingness to give up on its sprawling empire in July when it unveiled plans to sell-off Westinghouse, the US-based design and construction business it bought in 1999. That company is based in America but it also employs 1,400 British staff at a BNFL site near Preston where it maintains a reactor fuel production facility. A host of American firms such as General Electric have been linked with possible purchase and prices of £1bn and beyond have been bandied around.

Mike Graham, north-west secretary for the Prospect union, which represents thousands of workers at BNFL, says these sell-offs raise environmental, safety and staffing issues. Not least is the position of the huge pension fund which is currently in state hands.

As for the disposal of Westinghouse, he says: "An inquiry should be launched immediately into why six years ago government believed owning Westinghouse was central to its vision for BNFL but today it is peripheral and put up for sale. Nothing has changed except that nuclear new-build is now top of the agenda for fighting carbon emissions.

"Westinghouse would provide the UK with a golden opportunity to grab market share and earn a return for the British taxpayer. Instead that long-term vision has been sacrificed to make a quick buck for the Treasury."

Exactly the same arguments can be made about the sale of the BN Group which operates and nuclear sites such as Bradwell and Dungeness, although it does not actually own them.

Chequered history

Originally known as Windscale, Sellafield was built in the late 1940s and began generating electricity at its Calder Hall reactor in 1956. But from the start the plant was plagued by controversy and accidents.

During the cold war radio-active waste was discharged from Sellafield via a pipeline directly into the sea.

In 1957 a fire broke out in one of the Calder Hall chimneys spreading radioactive waste across Cumbria . The accident was so bad that milk from farms in a 500-square kilometre radius had to be destroyed. In the 1960s a second reactor was added and in 1981 British Nuclear Fuels renamed the plant Sellafield. The Calder Hall reactor was retired in 2003. But although Sellafield was no longer producing electricity it continued to generate headlines.

In February 2005 the UK Atomic Energy Authority admitted 29.6 kg of plutonium had gone missing, enough to make seven nuclear bombs.

In May, Thorp discovered that 83,000 litres of radioactive waste had leaked from a cracked pipe into a huge stainless steel chamber. The leak had so contaminated the chamber it was impossible to enter and with the cost of the clean up estimated at £2.1bn Thorp was closed.


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