Row over Magnox intensifies
Saturday 25 May 1996
Ian Lang, President of the Board of Trade, wrote to his Labour opposite number Margaret Beckett saying Magnox Electric had cash and investments in its balance sheet of pounds 3bn.
This compares with a figure of pounds 2bn used by the Government a year ago when it announced the nuclear sell-off and split the industry into two - British Energy, which owns the modern AGR and PWR stations and is being sold off this July, and Magnox Electric, which will remain in public ownership.
At that time, the Government put the Magnox liabilities at pounds 8.5bn even though the cost was shown as pounds 9.8bn in the company's own accounts, and said that the flotation of British Energy would need to raise pounds 2.6bn to cover the shortfall.
A report due out from ABN Amro Hoare Govett, British Energy's brokers, next Tuesday, is expected to cast doubt on whether the sale will raise that much.
Mr Lang said in his letter to Mrs Beckett that she had shown a "complete misunderstanding" of the position with the Magnox reactors. But he declined to repeat the pledge that the money raised from the British Energy sale together with existing and future funds from Magnox generation would be enough to cover liabilities being left for the taxpayer to pick up.
Mrs Beckett said: "The Government's answer reveals very little. It is increasingly clear that the Government can neither reassure the taxpayer that they won't be picking up the bill for nuclear privatisation nor reassure shareholders that they won't be taking on more than the Government is presently making clear."
The break-down of the Magnox liability figures given a year ago showed that in addition to the pounds 2bn of cash, the Government expected to raise pounds 1bn from the future operation of the stations, pounds 1.4bn from the nuclear levy, and a further pounds 1.4bn through savings in liability costs and more effective decommissioning strategy.
This totalled pounds 5.9bn - leaving another pounds 2.6bn to be found from the sale of British Energy. The best estimates now are that the sale will raise pounds 2.3bn to pounds 2.4bn, including the pounds 700m of debt being left in British Energy.
A spokeswoman for the Department of Trade and Industry said that the figures used a year ago were "illustrative" and that pounds 8.5bn for liabilities was on the high side.
The DTI also said the cash in the balance sheet had increased because of extra money from generating and from the nuclear levy.
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