Sellafield setback plunges nuclear reprocessor BNFL deeper into loss

The state-owned nuclear fuel company, BNFL, plunged deeper into losses last year after problems with a controversial new fuel manufacturing facility at its Sellafield plant in Cumbria.

The state-owned nuclear fuel company, BNFL, plunged deeper into losses last year after problems with a controversial new fuel manufacturing facility at its Sellafield plant in Cumbria.

Losses before exceptional items rose by 16 per cent to £303m due in part to difficulties commissioning the new mixed oxide (Mox) fuel plant, which produces nuclear fuel from reprocessed plutonium and uranium. The plant was at the centre of a safety scandal three years ago which cost the then BNFL chief executive his job after it emerged that workers had falsified quality checks on Mox fuel rods destined for customers in Japan.

The safety problems have since been overcome. But equipment problems at the plant last year forced BNFL to sub-contract orders to other producers of Mox fuel in Belgium and France, resulting in higher costs.

In total, losses from BNFL's Sellafield operations before amortisation and exceptional items were £551m compared with £366m in 2002/03, more than offsetting profits elsewhere in the business.

Michael Parker, BNFL's new chief executive, forecast, however, that the company would make a £150m to £200m operating profit this year when the Sellafield site, its Magnox nuclear reactors and some £41bn of nuclear liabilities are offloaded into the Government's new Nuclear Decommissioning Authority. This would be its first operating profit since 1998.

The NDA will come into effect next April. Then BNFL will be left with only its US Westinghouse business, which fabricates fuel and decommissions former US government nuclear sites, a new division called the British Nuclear Group, which will concentrate on cleaning up UK nuclear sites and running the Magnox stations, and a spent fuel services business. The UK government had intended to part-privatise these operations through a public private partnership but the plan was abandoned last year.

Westinghouse's operating profit before exceptional items fell from £137m to £95m last year because of increased costs, in particular higher medical insurance charges. Operating profits from British Nuclear Group were £9m higher at £161m. BNFL's bottom-line loss last year was £299m. This compared with a loss of £1.09bn but that was inflated by exceptional charges of £833m to reflect the increase BNFL's UK liabilities and write-downs elsewhere in the business.

Mr Parker, who joined BNFL from the US chemicals company Dow, said he expected to resume dividend payments this year to its single shareholder, the Department of Trade and Industry. The company will continue to manage the Sellafield and Magnox facilities.