BNFL seals its $1.2bn deal for US nuclear takeover

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The Independent Online
BNFL, the state-owned nuclear waste reprocessor, last night completed its controversial $1.2bn (pounds 720m) deal to take over a leading US nuclear business despite continuing fears that the British taxpayer could be saddled with huge liabilities.

The breakthrough came after the Treasury approved BNFL's participation in a consortium bidding for Westinghouse's nuclear activities, which include the processing of weapons-grade material for the US military programme.

The pressure group Friends of the Earth has attacked the deal for exposing British taxpayers to financial risks and the Liberal Democrats intend to press for an emergency Commons statement on Monday.

Matthew Taylor, the Liberal Democrat MP, said: "BNFL have taken over Westinghouse at a bargain basement price because they have agreed to take on the US company's liabilities. The Government must explain what kind of burden this massive US liability is going to place on the British taxpayer."

However, BNFL insisted that only 10 per cent of the $900m of liabilities it was inheriting related to nuclear operations and that those liabilities had been capped.

The deal will double the size of BNFL, which runs the Sellafield waste reprocessing facility in Cumbria, and make it one of the leading global players in nuclear waste reprocessing and plant decommissioning.

John Taylor, BNFL's chief executive, hotly disputed suggestions that Sellafield would become the UK's "nuclear dustbin" following the takeover. "That will not be the case at all. Nuclear waste will stay in the US. This isn't an opportunity to ship it from the US to the UK."

Under the deal BNFL and its US partner, the engineering group Morrison Knudsen, will pay $238m for Westinghouse's nuclear operations and take on $930m of liabilities and other financial obligations.

BNFL will put up $70m of the cash purchase price, giving it a 40 per cent share of the venture, but it will assume $900m of the liabilities. However, 90 per cent of the liabilities relate to non-nuclear business, mainly discounts on future products for customers who bought steam generators from Westinghouse in the 1970s and early 1980s.

The Treasury, which put the deal on hold last weekend, is understood to have been reassured that the deal will have no effect on public spending totals or BNFL's External Financing Limit. Mr Taylor said it had not insisted on any changes to the deal or extra safeguards to protect taxpayers.

The Westinghouse activities that the BNFL/Morrison Knudsen consortium is taking over are its energy systems business, defence-related business and nuclear clean-up and decommissioning activities.

BNFL will be in charge of the energy systems business, which provides nuclear fuel fabrication services to 70 commercial nuclear power plants worldwide, while Morrison-Knudsen will be responsible for the US military work. The clean-up and decommissioning businesses will be run jointly.

The pressure for a Commons statement was stepped up by Friends of the Earth. Environment minister Michael Meacher's former assistant, Ian Willmore, a Friends of the Earth spokesman, said public financial guarantees on future liabilities might be needed to fund the deal, because BNFL was owned by the UK government.

The environmental campaigners also warned it could lead to an expansion of the Thorp reprocessing plant at Sellafield, increasing the quantity of highly radioactive nuclear waste stored in the UK.

BNFL has a pounds 13bn order book, including work in the US worth $2.5bn. Its US subsidiary BNFL Inc has contracts to clean up a number of former military nuclear weapons sites in Washington state, South Carolina, Tennessee and Colorado.