27 September 2002 – Just a day before its initial £410m ($635.5m) loan to nuclear power generator British Energy (BE) expired, Patricia Hewitt, UK Trade and Industry secretary confirmed that the loan would be rolled over for a further two months and has provided an extra £250m for working capital.
The government said its overriding priorities were to ensure the safety of nuclear power and security of electricity supplies while protecting the interests of the taxpayer but the decision has been attacked by environmentalists, opposition parties and competitors.
In a statement the Department of Trade and Industry said the loan had been given in compliance with the EC rules on rescue aid and had been notified to the European Commission. Greenpeace questioned the legality of the loan, as European regulators had not approved it.
Hewitt said “We have decided to extend the loan for a further two months in order to give sufficient time to clarify the company’s full financial position and to come to a clear view on the options for restructuring the company. No decisions have been taken and no commitments given on the company’s long term future at this time.”
Discussions will continue to find a permanent solution to the crisis at British Energy which could range from bringing the company back into state ownership like BNFL, an outside bid for the assets or a preferred solution which grants BE concessions to allow it to continue in business. Proposed concessions include the introduction of a carbon tax to give an advantage to nuclear and clean technologies and local rate relief.
Shares in BE had risen in anticipation of the government’s decision with analysts viewing a loan extension as the cheapest alternative in the short term. BE’s shares were slightly off at 18p on confirmation of the extension.
Robin Jeffrey, Executive Chairman of British Energy said, “This enables us to continue to operate, and to ensure that our objective of maintaining safe operations will be met whilst restructuring options are developed. “
The loan has been secured on the assets of BE’s trading companies including those in North America. Under the terms of the loan the state is its senior creditor with first call on assets under a new bailout plan. “The government is the senior creditor which means that it has first call on assets,” a British Energy spokeswoman said.
Vince cable, Liberal Democrat trade and Industry spokesman, said, “This is completely wrong and irresponsible. It is putting taxpayers’ money at risk and the government is laying itself open to legal action.”
Tim Yeo, Conservative Trade and Industry spokesman, accused ministers of “dithering over nuclear policy” ahead of its Energy White Paper later this year.