City: Nuclear fallout

Another civil servant to have made his name out of privatisation is John Guinness (gas and electricity). He's now chairman of British Nuclear Fuels, which you might have thought an even more unlikely candidate for privatisation than British Rail given the exceptionally dangerous and environmentally sensitive nature of what it does. Officially BNFL is agnostic on the issue of privatisation, but privately its management is desperate to escape from the dead hand of the public sector.

So what are its prospects? Theoretically BNFL is as easily privatised as any other business - in some respects a good sight more easily. It makes good profits, has a long-term international order book that would make most British companies green with envy, and a universally respected expertise in one of the world's biggest growth markets - nuclear waste management and decommissioning.

The fly in the ointment, however, is the Government's apparent inability to make its mind up on Thorp - the thermal oxide reprocessing plant at Sellafield. I've no wish to enter the environmental debate on Thorp, nor am I qualified to do so. But, from a business point of view, the consequences of preventing this pounds 4bn project from operating are dire. Some pounds 1.9bn has already been advanced by overseas customers - mainly Japanese utilities. If BNFL were prevented from going ahead with its contractual obligations, the Japanese would undoubtedly sue, exposing the taxpayer to an estimated pounds 5bn in costs and damages. The Government would be faced with a choice of horrible alternatives - default on pounds 1.9bn of advance payments with some of our most important trading partners, or cough up the damages. Alongside this, Mr Guinness's dream of one day privatising BNFL would become a forgotten victim of the fallout.