British Energy, the stricken nuclear electricity generator, is to be bailed out at a cost to the taxpayer of more than £3bn, the Government announced yesterday. The rescue deal could also mean the privatised company being taken back into public ownership.
British Energy, which produces a fifth of the country's electricity, was sold by the Conservatives for £2.1bn in 1996. It is now worth £46m.
Patricia Hewitt, the Secretary of State for Trade and Industry, told the Commons the Government had agreed to shoulder £2bn of British Energy's liabilities for reprocessing spent fuel. But the taxpayer will also be liable for a further £1.4bn in decommissioning liabilities if British Energy is unable to pay into a new nuclear liabilities fund announced yesterday. Environmental campaigners have attacked the bail-out. The rescue deal will reduce shareholders' stake in the company to less than 10 per cent and will also leave bondholders and banks out of pocket by £800m.
British Energy and the Government have only until mid-February to reach agreement with creditors for the deal otherwise the company will be declared insolvent, putting in doubt the future of its eight nuclear reactors.
Robin Jeffrey, the chairman of British Energy, was replaced by Adrian Montague, an investment banker who helped to set up the public-private partnership for London Underground and is deputy chairman of Network Rail.
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