BNFL makes £2bn loss after nuclear clean-up costs soar

British nuclear Fuels, the state-owned company which runs the Sellafield reprocessing plant in Cumbria, will tomorrow announce a £2bn loss for last year.

The deficit, the biggest in BNFL's history, follows a further sharp rise in the company's liabilities for decommissioning its nuclear sites. BNFL has also decided to take a one-off charge to cover the early closure of two of its remaining Magnox nuclear power stations.

The increase in BNFL's decommissioning liabilities is in the order of £1.9bn, taking the total figure, on a discounted basis, to £18bn. The undiscounted figure – what it will cost in money of the day – is now £40.5bn.

BNFL is expected to announce a further £200m write-down to cover the cost of the decision to close its two oldest Magnox stations – Calder Hall in Cumbria and Chapel Cross in Scotland – three years earlier than planned.

The company's liabilities are due to be transferred to the new Liabilities Management Agency being set up by the Government. However, the legislation needed to bring the agency into being is not expected to make it into this autumn's Queen's Speech, meaning there will be a delay of at least a year.

Despite the huge bottom line loss, Norman Askew, BNFL's chief executive, is expected to announce an improvement in its underlying profitability. Leaving aside the charge against profits to reflect the increase in liabilities, BNFL is expected to report a pre-tax profit of £20m to £30m.

All BNFL's divisions, with the exception of its Magnox reactor business, made money last year. The fuel manufacturing and reactor services arm improved on the £93m it made in 2000-01 while the nuclear decommissioning and clean-up division turned a £13m loss into a profit.

Losses on the Magnox business fell from £161m in 2001-01 to just over £100m. The spent fuel and engineering business at Sellafield is thought to have improved on the £30m profit made in the previous year.

A BNFL spokesman declined to comment on the annual figures although he did point out that the increase in its liabilities had been disclosed last November when Patricia Hewitt, the Secretary of State for Trade and Industry, announced plans for the new Liabilities Management Agency.