New blow to atomic authority

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Civil nuclear site manager UKAEA, whose chief executive resigned last week, is facing fresh uncertainty over the future of the clean-up consortium it formed in January with Amec and CH2M Hill, a US services company.

CH2M Hill has expressed interest in buying British Nuclear Group (BNG), UKAEA's much larger, state-owned rival. The Government decided in March that it would auction BNG off later this year. If CH2M Hill presses ahead with a bid, it could scupper the venture with UKAEA.

The Government is unlikely to sanction the sale of BNG to CH2M Hill while it is in a consortium with UKAEA, sources close to CH2M Hill admit. The Government wants to create a competitive market for the estimated £70bn of contracts to dismantle the UK's nuclear facilities. If a company such as CH2M Hill - which is in partnership with another state-owned company, such as UKAEA - was to buy BNG, it would defeat the aim of privatising the decommissioning work.

A spokesman for CH2M Hill declined to speculate on the impact on the consortium of a possible bid for BNG. "We will cross that bridge when we have to." CH2M Hill remained committed to the consortium but could not rule out looking at BNG later in the year, he said. "Down the road, once the NDA [Nuclear Decommissioning Authority] releases the schedule, we may look at it."

CH2M Hill and Amec have seconded staff to some of UKAEA's sites in preparation for tendering of contracts to decommission them in 2008. The alliance can bid for other decommissioning contracts when the market opens later this year.

Dipesh Shah, the UKAEA chief executive who resigned last week, looked at leading a management buy-out of UKAEA earlier this year, but, ii is understood, was blocked by the Government.