Contractors could earn £4bn from nuclear clean-up deals

Nuclear clean-up contractors could make a profit of up to £4bn from deals that start going out to tender in the next year. British and foreign companies stand to earn margins as high as 20 per cent from the state-funded nuclear clean-up programme established last week.

Nuclear clean-up contractors could make a profit of up to £4bn from deals that start going out to tender in the next year. British and foreign companies stand to earn margins as high as 20 per cent from the state-funded nuclear clean-up programme established last week.

The new Nuclear Decommissioning Authority (NDA) will start offering clean-up contracts that will eventually total £20bn, with work due to start in 2008. But the state-funded authority has already come under fire from MPs, who accuse it of being too generous to companies and wasting taxpayers' money.

Norman Baker, Liberal Democrat environment spokes-man, said: "This does not represent value for money. The nuclear industry over the past few years has been a licence to print taxpayers' money to an extraordinary extent."

The Independent on Sunday reported last month that companies who win the contracts will not face financial penalties if they fail to carry out the required work. Now the profit margin has been revealed.

Sir Anthony Cleaver, the NDA chairman, said the body was considering awarding profit margins of 8 to 12 per cent, based on similar incentives offered in the US. But if they outperform, by either carrying out the work quicker or for less money than planned, companies could get as much as another 6 per cent margin in return, he said.

"It's too early to say what we will offer," he added. But companies interested in the work say they have already been told by the NDA to expect to earn margins of up to 20 per cent.

Companies say they need big incentives to cover their liabilities from the work if, for example, the clean-up costs more than expected. But it is not clear whether they would actually be liable for cost overruns or other risks.

The UK company that stands to scoop the biggest slice of the clean-up contracts is Amec. US companies include Fluor, Jacobs and Bechtel.

As part of the shake-up, Nirex, the body charged with carrying out a long-term solution to waste storage, is being taken out of the hands of the nuclear industry. It will become a company limited by guarantee, with two shareholders - the Department of Trade and Industry and the Department for Environment, Food and Rural Affairs - and an independent board of directors. It will be funded under an NDA contract.

The future development of Nirex now hangs on recommendations from the Committee on Radioactive Waste Management. If it proposes a long-term repository for nuclear waste, Nirex will build it.