Amec alliance eyes up £56bn nuclear clean-up contracts

The UK Atomic Energy Authority is to team up with the engineering group Amec and a US partner to bid for £56bn worth of clean-up work at Britain's civil nuclear sites.

The decommissioning of the 20 electricity generation, fuel reprocessing and nuclear research sites is valued at £2bn a year and about half of the contracts are due to be let by the end of 2008.

Dipesh Shah, the chief executive of the state-owned UKAEA, said the new partnership hoped to win the clean-up work at eight of the locations - four of which are UKAEA sites. The contracts will be awarded by the Government's new Nuclear Decommissioning Authority, which has said the £56bn cost estimate is a conservative one which could easily rise to more than £60bn.

In the longer term, the UKAEA's clean-up division could be privatised, although Mr Shah stressed this would ultimately be a decision for the Government as its sole shareholder.

The other partner in the UKAEA consortium is the American engineering company CH2M Hill, which is involved in the US nuclear decommissioning programme.

The UKAEA partnership will face strong competition from British Nuclear Group, which operates British Nuclear Fuels' four sites including Sellafield and the country's fleet of Magnox nuclear stations. The Government is selling off BNG in a move which is expected to raise about £200m.

Competition is also likely to come from Bechtel and Fluor of the US and the French nuclear reprocessing and clean-up company Cogema, who are also likely to form partnerships, possibly with groups in the UK, to bid for the work.

Mr Shah said that as the clean-up programme developed, it was likely to account for two-thirds of the UKAEA's turnover of £400m a year. He also said the partnership with Amec and CH2M Hill would be well placed to win decommissioning contracts from eastern Europe and the former Soviet Union. The market there is also estimated at £2bn a year.

Amec, which counts UKAEA, BNFL, British Energy and the Atomic Weapons Establishment at Aldermaston among its clients, is disposing of its traditional construction activities to concentrate on nuclear and oil.

CH2M Hill is an employee-owned, Denver-based company with 15,000 workers and turnover of $3bn (£1.7bn). It is involved in a range of activities from nuclear services and transportation to water and energy.