UK's £73bn nuclear clean-up is fast-tracked

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The Independent Online

The Government's £73bn nuclear decommissioning programme is to be accelerated with a radical repackaging of its private sector contracts.

The Nuclear Decommissioning Authority (NDA) had planned up to five nuclear plant clean-up contracts, which would be let sequentially and take about two years each to select a preferred bidder. This has now been cut by two, with the later three projects combined into a single £13bn-plus outsourcing contract. The large value of this contract will also ensure greater private sector interest.

Originally, the clean-up of its Magnox reactors, relics from the 1960s, were to be split into north and south site contracts. The south included Sizewell A, Suffolk, and Hinkley Point A, Somerset, while the north had Wylfa in Anglesey, North Wales, and Chapelcross, south-west Scotland.

However, when the NDA asked companies about their potential interest in the schemes 18 months ago, it was told that the contracts would not be worth enough to justify the bid costs. "Initially, Magnox was separated out, but the feedback was that the south alone simply wasn't big enough," said an NDA spokesman.

The NDA has joined up the Magnox programmes and has also included research sites in Harwell, Oxfordshire, and Winfrith, Dorset. Potential bidders will be invited to pitch in 2012.

This means there are now only three contracts for the so-called Parent Body Organisation (PBO) roles; the others cover Sellafield in Cumbria and Dounreay in the Scottish Highlands.

Hamish Lal, partner specialising in nuclear at law firm Jones Day, said: "This may be more attractive to the private sector as there will be a juicier contract. With only three PBOs there will be fewer competition processes, so there will be more drive and focus on decommissioning."

In 2008, a consortium of the London-listed engineer Amec, France's Areva and US construction group URS won a £22bn deal to clean up Sellafield.

The NDA is now awaiting bids for Dounreay. The Pentland Alliance, the interim team working on this clean-up until a preferred bidder is named in 2012, was going to pitch but has broken up. Initially the consortium's three parties – Amec, Babcock International-owned UKAEA, and US group CHM Hill – were to have equal stakes in Pentland. It is understood that Babcock asked Amec to take a smaller equity stake, a move the engineer resisted.

Amec is expected to make an announcement on its new bid team next week. VT Group, which is being taken over by Babcock, is pressing ahead with plans for its own, separate bid. But, should the takeover be completed, VT will inevitably join Babcock's team.

The NDA published its business plan, last Thursday, confirming a £2.8bn expenditure plan on its 19 sites in 2010-11.