Taxpayers to back Sellafield £7bn clean-up

Tim Webb, industrial editor
The Observer,

Sunday July 6, 2008
Taxpayers are being forced to indemnify the winner of the £7.5bn contract to decommission the highly toxic Sellafield nuclear site in Cumbria against an accident because the bidders are based overseas. The preferred consortium will be announced on Friday.
Four consortia are vying for the contract, which could be worth £20bn over its lifetime, including US engineering giants Fluor, Bechtel, Washington Group and CH2M Hill, as well as French nuclear power group Areva and the Japanese firm Toshiba. UK companies Serco and Amec are also members of overseas-led consortia.
Because every country has different laws setting out liability in the event of a nuclear accident, the government has agreed to waive UK rules that require companies to pay the first £140m of clean-up costs.
It is understood that Washington Group recently threatened to walk away after being awarded a much smaller contract to manage an atomic waste dump in nearby Drigg without securing an exemption.
In a document obtained by The Observer, the Nuclear Decommissioning Authority, which is running the Sellafield tender, proposes to indemnify operators against 'claims arising as a result of property damage, damage to human health', 'cost of measures of reinstatement of significantly impaired environment' and 'the cost of preventative measures'. Under the arrangements, the NDA will also compensate operators for the resulting loss of income after an accident, even if it was their fault.
Most European governments have signed up to the Paris and Brussels conventions on nuclear energy. But neither the United States nor Japan is a signatory. Even among European signatories, governments have set different caps on liability for nuclear accidents. While the UK has settled on £140m, others have put the maximum cap for operators as low as £5m. Clean-up costs above these caps are met from public funds.
The NDA says that courts in the home country of a foreign company contracted to clean up Sellafield could challenge UK laws. This is despite the fact that the conventions rule that jurisdiction over the liability for a nuclear accident lies in the country where the incident occurs. Nevertheless, because of the legal uncertainty the NDA warns that there is no commercial cover available for companies. The Treasury has approved the waiver, which will last for 30 years after the Sellafield contract expires.
The NDA, which manages more than half a dozen sites across the UK including Sellafield, has itself obtained insurance on the commercial market. The NDA argues that the benefits of awarding the contract 'outweigh the small risk that this indemnity may be called upon'.