The federal government has hit another pothole in its drive to unload money-losing Atomic Energy of Canada Ltd. after Ontario-based Bruce Power pulled out of the bidding.
As a result, there is now only one prospective buyer for AECL: Montreal-based SNC-Lavalin Group. And the engineering company won't commit to complete the design of a new generation of reactors, which AECL hopes to sell to Ontario.
Industry sources said Friday that Bruce has informed Ottawa it will not pursue its bid for the country's flagship nuclear company, more than a year after the official bidding kicked off.
Bruce Power operates a nuclear generating station on Lake Huron and several units are being refurbished by AECL. The company is owned by TransCanada Corp., Cameco Corp., and a trust established by the Ontario Municipal Employees Retirement System, the Power Workers' Union and the Society of Energy Professionals.
Bruce Power's shareholders were reluctant to take on the financial risks that would come with ownership of AECL, which has experienced crippling cost overruns in its refurbishment projects, one industry source told The Globe and Mail.
Bruce Power chief executive Duncan Hawthorn told staff on Friday that the company had dropped out of the bidding process, The Canadian Press reported. The company was always considered a long-shot bidder for AECL - more interested in protecting the service side of the business on which it depends, than pursuing reactor sales.
A company spokesman refused to comment late Friday, saying the company does not publicly discuss such business development issues.
Ottawa has been pursuing a sale of AECL for several years in an effort to put the company on a more market-oriented footing and removed taxpayers subsidies that have run into billions of dollars in the past decade.
But the sales effort has been plagued by AECL's ongoing problems, and none of the foreign companies that now dominate world reactor sales submitted a bid for the smaller Canadian company.
SNC - which has a long business relationship with AECL - has publicly confirmed its interest in buying the Crown company, but said it would not put its own financial health at risk in doing so. AECL has yet to complete the design and safety certification of the Advanced Candu Reactor (ACR) 1000, and sources say SNC has made it clear it will only go forward with the project with government backing.
AECL is also looking to sell an updated version of its smaller workhorse, the Candu 6.
The Ontario government continues to express interest in purchasing reactors from AECL, but wants the federal backing for the company to ensure the province does not get hit with massive cost overruns in a future new-build project.