Outlook: BNFL

SLOWLY BUT surely, the Government is edging towards formal announcement of the privatisation of British Nuclear Fuels. The appointment of KPMG to advise ministers on how to introduce private money into the company is the surest sign yet that any lingering ideological objection to a sale is being quietly buried. These days we have to call it public/private partnership, of course, but in truth what is being considered is a good old fashioned state sell-off.

Obviously, this is going to be highly controversial. Even the last administration hesitated when it came to selling BNFL. For New Labour to embark on such a project might therefore seem a trifle foolhardy. BNFL's business is a sensitive one and it is never far from the environmental debate. Furthermore, the integration of the Magnox power stations into the core business of producing and reprocessing nuclear fuel creates potentially vast decommissioning liabilities that the private sector won't want to have anything to do with.

It also gives BNFL control of and responsibility for Nyrex, which is charged with storing and ultimately disposing of nuclear waste. Forget the political flak Peter Mandelson is going to get for suggesting the idea; all this is going to present even the City's finest with quite a privatisation challenge.

But there's no reason it shouldn't or can't be done. Indeed, BNFL's acquisition this summer of Westinghouse's nuclear reprocessing plants and related businesses in the US makes the strongest possible case for doing it. The Westinghouse acquisition demonstrates both that it is possible to have private sector ownership of such assets and that this has become a global, commercial business, perhaps best managed by a global enterprise.

Mr Mandelson is right to be contemplating privatisation, even if it is going to give him more than a touch of trouble with the brown rice-eating brigade.