British Nuclear Fuels has warned the Government it will not take on the ageing Magnox nuclear power stations without guarantees of funds to cover billions of pounds of liabilities associated with the plant.
The transfer of six Magnox stations to state-owned BNFL is a key element in the Government's pounds 3bn plans to privatise Nuclear Electric and Scottish Nuclear by mid-1996.
John Guinness, chairman of BNFL, said: "The Government cannot force us as a plc to take these liabilities on. If the board does not agree [to do so] they can remove the board. I do not want to be chairman of an insolvent firm."
He added: "As directors we have to behave responsibly. We welcome the Magnox plants in principle, but we attach great importance to the issue of liabilities and the terms have yet to be made clear."
The Magnox plants have estimated liabilities of about pounds 9bn related to decommissioning and the management of radio-active waste. The problem of liabilities forced the Government to pull nuclear out of the privatisation of the electricity industry five years ago.
Mr Guinness was speaking as BNFL, which processes and manages waste for companies in the UK and overseas, announced a fall in pre-tax profits last year to pounds 74m from pounds 81m the previous year after exceptional charges.
Profits would have been pounds 180m higher but for price concessions for Nuclear Electric and Scottish Nuclear as a result of the renegotiation of contracts worth pounds 18bn to BNFL over a period of years. BNFL also paid pounds 38m to help fund UK Nirex, the organisation set up to find burial sites for nuclear waste.
Mr Guinness said that underlying profits grew by 7 per cent and that the company had increased its dividend to the Government by 70 per cent to pounds 45m. "The increase is a sign of faith in our future growth and profitability."
It was up to the Government to decide whether to sell BNFL at some stage and his prime concern was to run it as a fully commercial organisation.
He said BNFL had guarantees from the Treasury that its commercial status would not be affected by the decision to bring the company back within the public sector borrowing requirement.
BNFL tripled its export earnings to almost pounds 425m last year, mainly as a result of the opening of the Thorp reprocessing plant after a year of regulatory delays. Exports account for one third of turnover, rising to a projected 75 per cent by the end of the decade.
Should plans to transfer the Magnox plants proceed, BNFL will have 8 per cent of the UK's electricity generating capacity. The company already has a Magnox station at Sellafield in Cumbria and another at Chapel Cross in southern Scotland, but these supply BNFL's own needs as well as selling some into the nation's electricity trading system.
The addition of the six Magnoxes operated by Nuclear Electric and Scottish Nuclear would increase BNFL's turnover by about pounds 500m.