Byers confirms 49% BNFL float

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BNFL, THE state-owned nuclear fuel reprocessor, is to become Labour's first privatisation after the Government announced yesterday that it intends to sell up to 49 per cent of the company before the next election.

The sell-off, which will take the form of a share flotation, is expected to raise about pounds 1.5bn and will depend on BNFL meeting agreed targets to improve its environmental, safety and financial performance.

Confirmation of the partial privatisation was welcomed by the company and its unions but was attacked by environmentalists. Friends of the Earth claimed the sell-off could be a "giant turkey" because of BNFL's unfunded nuclear liabilities.

The targets BNFL will have to meet include an increase in the proportion of group profits made by its US business from 6 per cent now to 15 per cent and a further 11 per cent reduction in costs by March 2001.

There will also be specific targets for reducing radioactive exposure and environmental emissions drawn up by the Health and Safety Executive and environmental agencies.

Announcing the "radical" move to part-privatise BNFL, Stephen Byers, the Secretary of State for Trade and Industry, said it offered "a new way to apply private-sector skills and finance to make a successful public- sector company even more competitive".

Ministers denied that the Government had flunked the issue by deciding not to sell 51 per cent. The sale will involve the whole of BNFL, including its Thorp reprocessing plant at Sellafield and its eight Magnox electricity generating stations.

A report from KPMG Consulting, a summary of which was released yesterday, concluded that the Government could have raised more by splitting up BNFL and selling Thorp separately. But this had to be offset against poorer value for those parts of BNFL remaining in the public sector. KPMG also said that selling a majority stake would not secure a better price and would delay a sell-off until after the election. Ministers plan to appoint investment bank advisers in August. The most likely timing for a flotation is spring 2001.

Outlook, page 17