§ The Secretary of State for Trade and Industry (Ms Patricia Hewitt)On 1 October, British Energy announced that it had formally agreed with creditors the terms of its proposed restructuring announced on 28 November last year.
In the light of the company's announcement, I have confirmed the Government's support for the plan by entering into the Government Restructuring Agreement (GRA) with British Energy. This is an overarching agreement recording the conditions of the Government's commitment to British Energy to proceed with the restructuring and making that commitment legally binding. It entails the Government agreeing that, when the restructuring takes place (Restructuring Effective Date), it will enter into the following principal agreements with British Energy:
CONTRIBUTION AGREEMENT, which details the mechanisms by which the British Energy group will make contributions to the Nuclear Liabiities Fund (NLF) for the purpose of discharging its liabilities.11WSNUCLEAR LIABILITIES FUNDING AGREEMENT, which provides for the mechanisms by which Government will meet its commitment to underwrite the NLF to the extent that British Energy's contributions are not sufficient to meet the costs, as and when they fall due, of decommissioning British Energy's power stations and discharging other uncontracted nuclear liabilities.HISTORIC LIABILITIES FUNDING AGREEMENT, which details the mechanisms by which Government undertakes to discharge British Energy's payment obligations under certain of its existing contracts with BNFL with respect to the management, reprocessing and storage of historic spent fuel, i.e. fuel loaded into British Energy's reactors prior to the Restructuring Effective Date.OPTION AGREEMENT, which details the mechanisms by which Government may exercise an option to acquire the British Energy stations at the time when British Energy plans to shut them, either to prolong their operation where it is economically advantageous to do so or decommission them within the public sector.These agreements are within the terms of the support for British Energy which I announced to the House on 28 November last year. They are summarised in more detail in British Energy's announcement of 1 October, which I have placed in the Libraries of both Houses. This announcement also gives more details of the conditions of the formal agreements to the proposed restructuring, which include the acceptance of the restructuring terms by a sufficient number of British Energy's significant creditors.
The restructuring will only be implemented once all these conditions are met. Other conditions include the receipt of State Aid approval from the European Commission. The Commission announced on 23 July 2003 that it was opening a formal investigation procedure into the Government's proposed restructuring aid to British Energy. The period for third party comments to the Commission has now closed and the Government are continuing to work with the Commission to complete the investigation as swiftly as possible.
Also, if the Government are not satisfied that British Energy will be viable in all reasonably foreseeable conditions, or if there is a material adverse change in British Energy's position, the Government have reserved the right to withdraw their support for the restructuring.
This would include withdrawal of the Government's secured credit facility, which the Government are otherwise continuing to make available to British Energy at its current level of up to £200 million. Drawings under the credit facility can be made up to the date of the European Commission's decision on the Government's proposed restructuring aid, or 30 September 2004, whichever is earlier. Repayments under the credit facility have to be made by the earlier of the Restructuring Effective Date or 30 September 2004.
British Energy's announcement is a significant step forward in the implementation of its restructuring plan. However, there are significant milestones ahead, and the Government's contingency plans to fund the administration of the company should any of the restructuring conditions not be met or the restructuring fail for any other reason, will, therefore, remain in place. This means that whether or not the solvent restructuring plan is implemented the nuclear power stations will 12WS continue to generate electricity and employ staff and customers' lights will stay on. Government's overriding objectives of ensuring the safety of the nuclear power stations and the security of electricity supplies to the grid and consumers will be met.
I understand that in November British Energy will be making copies of the key agreements signed on 1 October available for public inspection. When this takes place, I will also place copies of those agreements in the Libraries of both Houses.