In a move designed to eliminate a constant drain on the public purse, the Canadian government has sold the commercial reactor division of Atomic Energy of Canada Ltd. to Montreal-based SNC-Lavalin for $15 million, plus royalties from the sale of new reactors and extension projects on existing ones. The government retains ownership of the CANDU reactor technology developed by the division, and the the medical isotope business.

Under the agreement, which closes in October, SNC-Lavalin subsidiary CANDU Energy will take over the division's three business lines, which include servicing and rehabilitating existing reactors and building new ones. It commits the company to completing ongoing refurbishments. Negotiations for the sale started last year.

Natural Resources Minister Joe Oliver announced the deal June 29, citing the division's cost overruns that have reached about $1.2 billion during the past five years. At the same time, the CANDU commercial reactor business will benefit greatly from SNC-Lavalin's "entrepreneurial capacity and global scale" he says. The transaction is consistent with government policy of restructuring in a time of fiscal restraint, according to Oliver.

With its expertise in the nuclear industry, CANDU Energy will use the acquisition to pursue new projects in Canada and globally, in nations such as Jordan, Romania and Turkey. The; unit will receive up to $75 million from the government to complete Atomic Energy's Enhanced CANDU (EC6) reactor development program, says SNC-Lavalin Executive Vice President Patrick Lamarre.

Tom Adams, a Toronto-based energy consultant, has misgivings about that strategy. "The Enhanced Candu 6 design has proven to be unlicensable in any Western country other than Canada prior to Fukushima," he says. "Post-Fukushima, the EC6 is much less acceptable."

Nevertheless, "Atomic Energy has never made money since it was created in the 1950s and there is bound to be a conflict of interest when government is both the promoter and regulator of a technology," Adams contends.

Both the government and SNC-Lavalin say that approximately 1,200 jobs will be protected at the closing of the transaction. That still puts about 800 jobs at risk, says Michael Ivanco, vice president of the Society of Professional Engineers and Associates.

The downsizing will have no net employment impact, counters Adams. Competent employees leaving Atomic Energy "will have abundant opportunities" in the North American energy sector due to an aging workforce.