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Taxpayers Pick Up the Tab at Sellafield

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The consortium with a £20bn contract to clean up Britain's Sellafield nuclear plant has been handed a blank cheque by the Government to pay for future accidents there.

The Nuclear Decommissioning Authority wants the Department for Business, Enterprise and Regulatory Reform to grant indemnity to Nuclear Management Partners Ltd.—the consortium that won PBO status in the Sellafield contract—against uninsurable claims arising from a nuclear incident that fall outside the protections offered by the Nuclear Installations Act and the Paris/Brussels Conventions.

“It would not be viable for any of the bidders to proceed without an indemnity because any fee earning benefits of the contract would be overwhelmed by the potential liabilities,” Energy Minister Malcolm Wicks informed the House of Commons..

The consortium with a £20bn contract to clean up Britain's Sellafield nuclear plant has been handed a blank cheque by the Government to pay for future accidents there.

The Nuclear Decommissioning Authority wants the Department for Business, Enterprise and Regulatory Reform to grant indemnity to Nuclear Management Partners Ltd.—the consortium that won PBO status in the Sellafield contract—against uninsurable claims arising from a nuclear incident that fall outside the protections offered by the Nuclear Installations Act and the Paris/Brussels Conventions.

“It would not be viable for any of the bidders to proceed without an indemnity because any fee earning benefits of the contract would be overwhelmed by the potential liabilities,” Energy Minister Malcolm Wicks informed the House of Commons..

“The NDA has assessed that the benefits of engaging a new contractor far outweigh the remote risk that an indemnity might be called upon. The final form of the indemnity will reflect the specific terms proposed by the preferred bidder.”

A similar liability issue held up the NDA finalising the contract for the Low-Level Waste Repository near Drigg with UK Nuclear Waste Management, also led by URS. While the Department for Business, Enterprise and Regulatory Reform was initially reluctant to offer such additional indemnity, the issue was eventually resolved by Government taking the risk, likely paving the way for a similar agreement to be reached more quickly for the Sellafield PBO.

In a minute to Parliament about changes in nuclear liability as the Parent Body Organisation for LLWR switched from public to private sector, BERR said that the contract strategy had been to follow a policy of using commercially available insurance to cover any risks unless the insurance is unavailable or represents poor value for money and this position has been maintained wherever possible.

BERR said that a low probability risk has been identified and that as currently there is no commercial insurance available to cover this risk, it undertook to indemnify the PBO for claims arising as a result of property damage, damage to human health plus cost of measures of reinstatement of significantly impaired environment; loss of income from use of impaired environment and the cost of preventative measures. “Because of the nature of nuclear activities and the historically very low occurrence of incidents giving rise to claims, the maximum figure for the potential liability is impossible to quantify,” the Department said.

Paul Flynn, the MP for Newport West, who asked the parliamentary question of Mr Wicks, said: "It is just the latest sign that the Government has been totally seduced by the Pied Piper of the nuclear industry. The Government is putting its faith in nuclear power, literally at any price."