The cost of decommissioning nuclear plants and cleaning up radioactive materials at British Nuclear Fuels, the state-owned atomic services group, has jumped £7bn ($10.2bn) following a review of the group's long-term nuclear liabilities.

The review, to be published with the company's annual accounts on September 14, will reveal the cost of decommissioning nuclear plants, managing radioactive waste and reprocessing Magnox fuel at BNFL sites has risen to £34bn.

Of the £7bn extra costs, about £3bn will be passed on to the Ministry of Defence and the UK Atomic Energy Authority, which still own some of the facilities on BNFL sites. This will leave BNFL with total liabilities of about £23bn and the group will announce it is taking a £170m special charge next week.

The higher decommissioning costs are likely to increase pressure on the government to rethink its planned privatisation of up to 49 per cent of the company. The proposal has already been postponed until 2002 following a series of incidents in the last 12 months that are expected further to depress the group's profits.

The large increase in liabilities will be attributed mainly to decommissioning problems discovered at chemical plants at BNFL's Sellafield site in West Cumbria.

Members of BNFL's Liabilities Management Unit, the team assembled to conduct the review, have found some waste silos at Sellafield to be leaking and records for others to be missing or inaccurate.

Silo B41, one of the worst examples on the site, was originally designed to treat contaminated fuel cladding but has been used as a dump for pieces of nuclear fuel and radioactive equipment. Engineers are now having to build a containment structure around the silo, doubling the cost of decommissioning from £100m to £200m.

An early draft of the report on liabilities suggested the cost of waste management and decommissioning on BNFL sites could rise by as much as £9bn.

However, experiments on the spread of radioactivity in concrete are understood to have shown that up to 70 per cent of the rubble from dismantled structures could be disposed of in normal landfill sites. Previously the company had feared it would have to treat all concrete from Sellafield's plants as intermediate level radioactive waste.

BNFL's share of the discounted liabilities, the amount of money that needs to be set aside to meet the cost of clean-up projects in the future, will rise by £500m. Half of this will be taken as "normal" account charges for this year, a further £170m will be treated as a special charge, and the remaining £80m will be written off over the lives of the plants to be decommissioned.

However, BNFL's discounted liabilities could rise by a further £700m if the Nuclear Installations Inspectorate decides to reduce the period before decommissioning begins to between 40 and 50 years. It is considering a reduction from the 100 years used by BNFL which assumes it would take that long for radiation to decay to safe levels.

BNFL is understood to be lobbying against the move and is in talks with ministers over the ownership of its liabilities.

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