Three decommissioning projects on ice as nuclear industry braces itself for Treasury review

Decommissioning work worth almost £500m at the Dounreay nuclear site in Scotland is officially on hold as speculation mounts over the outcome of a Treasury spending review.

The Nuclear Decommissioning Authority (NDA) this week issued tenders for work on the Caithness site that capped annual spending at the current level of £150m. Consultants and contractors had previously been led to expect spending would ramp up this year to allow three schemes required under the decommissioning programme, worth £482m, to go ahead.

An NDA spokesperson confirmed that the three projects would be held for “a little while” but could not say when they would be made operational. He described the spending cap as a “deliberate tactic” to push contractors to be more efficient.

“We’re bringing in competition to make sure work is done more efficiently, focusing on costs, project management and safety.”

The £150m figure was issued despite the NDA forecasting a £170m spend in its draft business plan for 2010/11. The three projects are required on top of smaller works to maintain the site, which currently cost £150m a year.

Known as D3900, D3200 and D3100, the three projects are for, respectively, an encapsulation and storage facility to address hazards on site, construction of a shaft and silo retrieval facility, and construction of a low-level waste repository.

An industry source said D3900 would have to go ahead soon to address site hazards. However, sources said it was likely that the funding cap could mean that the other developments, which total £304m, are mothballed.

The source said: “D3900 is a critical project, but I’d expect to see the others delayed, and one development pushed right back.”

Meanwhile, nuclear experts warned that the cap imposed on the Dounreay site was a worrying indicator that funding pressures are now likely to hit other decommissioning programmes, including Sellafield and the waste site at Drigg, both in Cumbria.

The news comes amid increasing speculation over the possible outcome of a Treasury review of spending by the NDA, which sources say could lead to budget cuts of up to £300m this year, increasing in later years.