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Nuclear Build: Centrica Pulls Out Of Project

(c) Sky News 2013

Centrica (LSE: CNA.L - news) has announced it will pull out of the nuclear reactor build programme, as a new report puts the clean-up cost of Sellafield at £67.5bn.

The announcement follows a similar decision by German-owned npower, leaving only French and Chinese bidders for the future programme.

Separately, the Public Accounts Committee (PAC) said the authority dealing with the country's nuclear legacy had not been able to show what value it was getting for the taxpayer.

It said the "enormous" legacy of nuclear waste at the Cumbria facility had been allowed to build up, with no indication of when the cost will stop rising, according to a new report.

The PAC also said it was not clear what wider economic benefits had been achieved from the "enormous" amount of public money spent at Sellafield - currently around £1.6bn a year.

PAC chair Margaret Hodge said a solution to the problem of long-term storage of nuclear waste was as far away as ever following last week's decision by leaders of Cumbria County Council not to press ahead with a study for a possible site.

Successive governments had failed to get to grips with the "critical problem", Ms Hodge said, adding: "An enormous legacy of nuclear waste has been allowed to build up on the Sellafield site.

"The Nuclear Decommissioning Authority (NDA) believes that its decommissioning plan is credible but it has not been sufficiently tested and uncertainties remain - not least around what precisely is in the waste that lies in the legacy ponds and silos.

"It is unclear how long it will take to deal with hazardous radioactive waste at Sellafield or how much it will cost the taxpayer. Of the 14 current major projects, 12 were behind schedule in the last year and five of those were over budget."

The NDA states on its website : "Our purpose is to deliver the decommissioning and clean-up of the UK's civil nuclear legacy in a safe and cost-effective manner, and where possible to accelerate programmes of work that reduce hazard.

"We aim to do this by introducing innovation and contractor expertise through a series of competitions."

In 2011 a Cabinet Office list showed that the then NDA boss Tony Fountain was the country's highest-paid quango executive with a pay package of more than £520,000, including a second home allowance of £85,937 and pension payments of £70,810.

Ms Hodge said taxpayers were not getting a good deal from the NDA's arrangement with international consortium Nuclear Management Partners on a plan to improve Sellafield Limited's management of the site.

"Last year the consortium was rewarded with £54m in fees, despite only two out of 14 major projects being on track," she said.

The report said deadlines for cleaning up Sellafield had been missed, while total lifetime costs for decommissioning the site continued to rise each year, reaching £67.5bn.

"It is essential that the authority brings a real sense of urgency to its oversight of Sellafield so that the timetable for reducing risks does not slip further and costs do not continue to escalate year on year," it said.

It added: "Basic project management failings continue to cause delays and increase costs, while doubts remain over the robustness of the plan, in particular whether the Authority is progressing the development of the geological disposal facility as quickly as possible."

Ms Hodge added that Sellafield was an area of high unemployment, but said there should be a clearer ambition that the £1.6bn of public money being spent at the nuclear site each year was contributing to creating jobs in the region and elsewhere in the UK.

John Clarke, who started last April as CEO of the NDA on a base salary of £265,000, said: "Prior to the NDA's inception there was no credible lifetime plan for Sellafield and tough decisions about how we ultimately decommission the site had simply been put off for future generations to deal with.

"We are now facing up to those challenges and for the first time we have a proper plan in place for the decommissioning of Sellafield which lays out in detail programmes of work for every area of the site.

"Since the creation of the NDA in 2005, the financial investment at Sellafield has increased from £900m to over £1.5bn a year.

"Of course, not everything has gone smoothly on such a complex and highly-technical programme, and the report has rightly pointed to areas where we and the site need to do better."