USEC keeps to Russian deal

23 December 1999

USEC Inc is to continue to act as executive agent in the Megatons to Megawatts deal. The decision follows a US government decision to provide the company with a $115 million subsidy.

USEC, which runs enrichment services and was privatised in July 1998, had threatened to withdraw from its role in converting Russian bomb grade material into reactor fuel, claiming that the programme was unprofitable due to the fall in the market price for uranium. USEC has said it could lose $2-300 million as a result of the deal.

Congress called USEC’s bluff, with energy secretary Bill Richardson daring USEC to resign and preparing to find another executive agent, action that would have created a major competitor to USEC. Richardson saw that it was in USEC’s long-term interest to continue the deal, something which USEC president and ceo William Timbers recognised.

“While there are quantifiable costs to USEC and its shareholders associated with the executive agent activities, the company would incur greater economic costs in the long run from not being manager of this programme,” he said.

Republican congressman Thomas Bliley, chairman of the House Commerce Committee, is investigating USEC’s privatisation.

“The negligence and incompetence of the Clinton-Gore administration in dealing with this vital national security issue leaves me with little confidence,” he said. “The administration may be content with the status quo that leaves USEC in control of one of this nation’s most important national security programmes. I am not.” Bliley’s investigation centres on the decision to hold a Wall Street stock offering to privatise USEC. Criticism centres on the argument that this jeopardised the Russian deal and therefore national security.
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