Nuclear Electric in plea to be set free: Generator cuts losses and says it is ready for privatisation

NUCLEAR Electric yesterday renewed its call for privatisation after announcing a sharp drop in operating losses from pounds 616m to pounds 434m. With the benefit of a pounds 1.2bn subsidy from the nuclear levy, operating profits grew 20 per cent to pounds 796m.

The company said it was on course to make a profit before the subsidy in 1995/96. John Collier, chairman, said Nuclear Electric's commercial success had outstripped expectations over the past four years and the company no longer sat naturally in the public sector.

He said the company needed more freedom to compete and to raise private finance, adding that it was well on the way to displacing PowerGen as the second largest electricity generator in England and Wales. He also claimed that it would have the lowest costs.

The company wants to build a second pressurised water reactor at Sizewell in Suffolk at a cost of about pounds 3.5bn. But it is unclear how much of that, if any, would be provided by the taxpayer. Mr Collier said this plant, Sizewell C, should be built by a separate company in which Nuclear Electric would have a stake and which could raise money from banks.

He said private investors would be interested if the Government gave the project active support, either in terms of direct finance or by taking action to improve the rate of return that investors in nuclear projects would be able to earn.

Nuclear Electric has appointed Morgan Stanley to advise it on privatisation. This week the company announced that NM Rothschild would advise on raising private finance for new nuclear power stations.

'Nuclear Electric has succeeded despite dragging the ball and chain of public ownership,' Mr Collier said. 'As with any state- owned enterprise, our pursuit of commercial objectives inevitably has had to fall into second place behind the political imperatives of our shareholder.' He urged ministers to make privatisation a key element in the Government's current review of the nuclear industry.

In the year to 31 March, Nuclear Electric increased its income from electricity sales by 21 per cent to pounds 1.7bn. The company's market share grew to 23.2 per cent from 21.6 per cent the previous year.

Mike Kirwan, finance director, said that if Nuclear Electric's selling price per unit of electricity had been as high as that of other generators, the company's income would have been between pounds 300m and pounds 600m more.

Productivity rose by 27 per cent during the year, largely due to increased output combined with further job cuts. The workforce was reduced by 1,869 during the year and a further 2,000 job losses have been announced.

Nuclear Electric had pounds 11bn in liabilities at the year-end to cover fuel reprocessing, waste management and decommissioning of power stations. About pounds 8bn of those relate to the activities of the former Central Electricity Generating Board. The subsidy for Nuclear Electric, which is raised through a levy on electricity bills, covers historic liabilities and is due to end in 1998.

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