Speculation is mounting that BNFL will sell its US nuclear engineering arm Westinghouse for around £1 billion ($1.82 billion).

UK government-owned BNFL, which acquired Westinghouse five years ago, is thought to be under pressure from the Treasury to part with the group on the grounds that the government should not own nuclear assets and wants to avoid any future liabilities. The sale of Westinghouse would technically be the start of the break-up of BNFL, which has been predicted by some since the beginning of the firm’s reorientation to clean-up.

Conversely, BNFL is said to want to delay any such sale for at least a year in the hope of raising more cash from the sale on the back of a widely anticipated nuclear renaissance – and perhaps an order for Westinghouse’s AP1000 advanced PWR. Westinghouse is already bidding for a Chinese government contract to build four nuclear reactors, a bid which includes some $5 billion in loans and other financing from the US Exim Bank.

GE is expected to be a front-running candidate to acquire the business, but given GE’s status as the world’s largest company, antitrust action might block the deal. A similar situation faces Areva who may wish to acquire Westinghouse – PWR technology could be seen to be too concentrated.

Given a history of cooperation, Mitsubishi Heavy Industries (MHI) may find Westinghouse’s Chinese prospects attractive, but sources say MHI might have more to gain if Westinghouse were to remain financially independent of it, given the state of relations between China and Japan.

Another possibly interested party is private equity outfit Cerberus, headed by former US vice president Dan Quayle.

No matter who the new owner may be, Pittsburg-based Westinghouse can expect strong support from the USA.

BNFL is expecting to receive board approval for the sale at the end of this month.