Wednesday, May 30, 2007

Nuke Sell-Off

Coming to shed down the bottom of your road

Darling has announced the immediate sell-off of 25% of British Energy, the nuclear power company. It will reportedly raise £2.56bn.

A tidy sum. But as you may recall (see this blog), the reason we've got these shares at all is that the government baled out British Energy just before it imploded in 2002. And before anyone congratulates the DTI for such smart investment, remember they only did it because they got panicked. We taxpayers got a stinking deal.

As we noted last year:

"The DTI not only baled out the company- which nobody else would have done- but it then led a financial restructuring that left taxpayers holding a £5.3bn liability, but with a sizeable de-risked ownership stake still in the hands of the original shareholders and creditors.

The creditors received "new bonds and 97.5 per cent of the share capital in the restructured company", while the remaining 2.5 per cent was left with the original shareholders. Even better, neither group was any longer lumbered with the £5.3bn liabilities- ie the estimated cost of dealing with all that nuclear waste and eventual plant decommissioning. That was all parcelled up and pushed over to the taxpayer."

True, we taxpayers did get 65% of future revenues, convertible into shares, and true, the value of those shares has since rocketed with the surge in world energy prices. But we're STILL the ones carrying all the risk, and those original shareholders and creditors have now done even better.

And as we blogged here, that nuke decommissioning bill is likely to end up much higher than the latest £70bn official estimate.

I suggest you get yourself a lead-lined bunker just in case the money runs out before the radiation does.

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