While the federal government is apparently set to sell off its money-losing nuclear reactor business to a Quebec company, Canadian taxpayers will be stuck with the fiscal fallout for years to come.
The government-owned Atomic Energy of Canada Ltd. (AECL) is expected to announce this week that it has finally reached a tentative deal to sell its commercial reactor division to engineering giant SNC-Lavalin.
While details of the deal are being kept under tight wraps, the fact the Montreal-based company was the only suitor in the world left at the negotiating table sums up the situation.
Atomic Energy may be world famous for its CANDU reactors, but it hasn’t sold one in 15 years, and now generates mainly massive amounts of red ink, the Crown corporation having cost Canadian taxpayers over $800 million last year alone.
AECL’s refurbishment of the Point Lepreau reactor in New Brunswick is so behind schedule and over budget that the provincial government is now demanding more than $2 billion in compensation.
Under the circumstances, the government believes a good deal to sell AECL doesn’t have to produce a windfall — just stopping the annual bleed would save taxpayers potentially billions of dollars in future.
In the words of Atomic Energy’s president, Hugh MacDiarmid, earlier this year: "It is, in some cases, a bit of a leap of faith that somebody needs to take that we are going to be a company in the future that will enjoy growth, profitability and operational effectiveness."
If SNC-Lavalin is taking a leap of faith in buying AECL, it likely won’t be a huge one.
Last year’s losses in AECL’s reactor division alone would have been enough to wipe out the Montreal engineering conglomerate’s global profits several times over.
All of which means that whatever the deal with SNC-Lavalin, Canadian taxpayers are going to remain unwilling partners in the nuclear biz.
For instance, it is all but certain the federal government will have to assume responsibility for settling the multibillion-dollar Point Lepreau refurbishment fiasco.
Then there are all the research and development costs.
AECL says the future of its global business is in the next-generation ACR-1000 reactor, which doesn’t yet exist.
According to AECL’s latest annual report, taxpayers have poured more than $225 million into development of the ACR-1000 just in the past two years.
Will SNC-Lavalin assume sole responsibility (and liability) for completing, testing and bringing the new reactor to market?
Ottawa will guarantee new reactors
And when the first order rolls in for one of those new multibillion-dollar reactors, does anyone believe the sale would or even could be completed without financial guarantees from the Canadian government?
Perhaps the biggest ongoing cost to taxpayers is what’s being left out of the AECL deal —namely, the Chalk River research division that produces isotopes for medical scans and treatments.
The deal splits off Chalk River from AECL’s reactor division that SNC-Lavalin is buying.
Over the past two years, the government has given AECL over $170 million in special funding for the Chalk River research reactor and other facilities that produce nuclear isotopes for medical scans.
Most of that time, the entire operation was shut down for repairs to the isotope reactor, now 54 years old and due to be mothballed barely five years from now.
Even when the Chalk River reactor is running smoothly, supplying half the world’s medical isotopes, AECL still manages to lose about $25 million a year on the operation.
Most of the isotopes produced there are shipped to U.S. medical facilities to treat Americans.
Meanwhile, AECL has spent years and hundreds of millions of dollars at Chalk River building two new isotope reactors that don’t work and likely never will.
Just decommissioning those reactors will now cost taxpayers millions more.
Making matters worse, AECL’s commercial partner in that snafu, MDS Nordion, is now suing the federal agency for $1.6 billion in damages.
Finally, there is the small matter of six decades of nuclear waste at Chalk River, a mess the federal government has now started to clean up.
That shouldn’t cost taxpayers more than an estimated $3 billion.