US puts $90m pressure on BNFL project

BNFL is set to face a demand by the US Department of Energy to cut at least $90m (£53m) from the price of a key contract which has already lost the British state-owned nuclear company tens of millions of pounds.

BNFL is building a $912m (£536m) plant to process nuclear waste in Idaho, but a September audit by Department of Energy officials found the government "could pay at least $90m more than necessary" unless there was an "equitable price adjustment".

The department has not yet formally asked for the cuts, but its Idaho office said Jessie Roberson, the official in charge, "generally concurred with the findings and recommendation". A review was under way, and "based on this review, appropriate contractual action will be implemented".

BNFL won the waste processing contract at Idaho in 1996 and proposed burning the plutonium-contaminated leftovers from nuclear weapons manufacture in an incinerator.

A green group called "Keep Yellowstone Nuclear Free" launched a lawsuit against the incinerator, claiming wind would blow radioactive and toxic dust from the plant into a nearby national park. In 2000, the US government conceded defeat and cancelled the incinerator. BNFL turned to a cheaper process called "super compaction", where barrels of waste are squashed into small "pucks".

BNFL also abandoned plans for a more expensive "vitrification" process, where waste is sealed in glass. The US government decided it was no longer necessary as it will be buried in salt caverns deep underground.

The energy department's inspector-general found "removing the incineration equipment could reduce the project's cost by $90m to $100m". However, government auditors "could not determine the costs" saved when BNFL abandoned plans for other expensive decontamination and storage schemes.

The Idaho project has a history of financial snags. In June, BNFL revealed £175m of "provisions against US contracts" in its accounts.

BNFL told The Independent on Sunday that the figure was made up of "cost overruns in the construction phase" at Idaho and extra costs on a separate contract in Tennessee.

The company said it had not yet been formally asked for the cutbacks.