The partial privatisation of British Nuclear Fuels (BNFL), announced yesterday, is likely to be one of Britain's most difficult flotations and the legalities a nightmare, analysts said.

"I think it will be very difficult to float and there are real concerns about the outlook for the company after 2004 when some contracts finish," said Mr Nigel Hawkins at Williams de Broe.

British Trade Secretary Mr Stephen Byers told parliament BNFL would be changed into a public/private partnership, effectively putting up to 49 per cent for sale with the government retaining control. His carefully worded statement to parliament reflected the sensitive nature of the move under a Labour government. The sell-off could give the British government a windfall of anything up to £1 billion (€1.53 billion) ahead of a general election expected to be called before 2002. Mr Hawkins said it was doubtful any UK listed company would want to invest directly in what has been a "highly controversial" company.

There is concern in the city about the nuclear liabilities BNFL inherited when it took over the ageing Magnox power stations in 1997. Exactly how its reprocessing contracts with Germany and Japan would be resolved in the event of a cancellation would also be uppermost in investors' minds, especially given Germany's uncertain stance on nuclear power.

Due diligence would be "complex", said one analyst, "a nightmare", said another.

The nuclear industry's generally poor public image will not endear it either to jumpy investors. BNFL, with turnover of about £1.4 billion sterling, has its fingers in almost every slice of the nuclear pie and is a frequent and favourite target of environmentalists.

The government said the aim of introducing private funds into BNFL was to assist the company's global expansion plans. BNFL has already landed lucrative clean-up contracts in the United States.