State-owned nuclear fuels giant BNFL has reported a �2.3bn loss for last year, the worst result in the company's history.

BNFL claims that its operating performance has improved.

Chairman Hugh Collum said it had been a "landmark" year for the company, which had achieved an underlying profit before tax and exceptional items of �22m.

The record losses are thought to reflect the cost of cleaning up Britain's radioactive sites as well as the cost of closing some reactors.

Last month, the government unveiled proposals to create a separate agency to take on these clean- up costs - effectively passing the costs onto the taxpayer.

The creation of this agency was seen as a first step towards the sale of the company.

More cash for boss

On Monday, BNFL chairman Hugh Collum was awarded a 10% pay rise. He is set to continue in his job for another two years on a �165,000 salary.

The pay rise prompted calls for the National Audit Office to investigate the company's management.

"BNFL is haemorrhaging money at the taxpayers' expense, yet the government has rewarded its chairman with a 10% pay rise," anti-nuclear campaigner Roger Higman said.

Trade and Industry Secretary Patricia Hewitt said: "Hugh has rebuilt the board and steered the company through difficult times."

Clean-up costs

The estimated costs of decommissioning old nuclear plants and storing radioactive waste continue to grow.

As of March this year, the total estimated cost was �47.9bn, up sharply from a previous estimate of �35bn.

The latest estimate covers decommissioning and demolition of aging plants, processing, storage and disposal of nuclear waste and environmental restoration.

Earlier this year, Energy Minister Brian Wilson unveiled proposals for the Liabilities Management Agency (LMA).

Crucially for BNFL and the government, ring-fencing the company's liabilities in this way should make it more attractive to potential buyers.

BNFL missed out on the last wave of nuclear privatisation.

Some of its Magnox plants are old and expensive to run, and as such it was deemed better that they were kept in state hands when the rest of the industry was sold in 1996.