BEFORE his re-election in May and since, there have been broad hints that Tony Blair sees a significant role for nuclear power in meeting Britain's future energy needs, while cutting our emissions of greenhouse gases.

This time last year, the prime minister told senior MPs: "I have fought long and hard, both within my party and outside, to make sure that the nuclear option is not closed off". Blair, who revealed he had been lobbied by the Americans to look again at the nuclear option as the best way of cutting carbon emissions, sounded a cautionary note about the chances of meeting the government's longterm target of a 60-per cent reduction in carbon dioxide emissions by 2050 without a substantial nuclear contribution.

Nuclear power could not be removed from the agenda, he insisted, "if you are serious about the issue of climate change".

Then, just before May's poll, there was another flurry of reports that a strategy team, under the PM's blue skies thinker Lord Birt, was drawing up an action plan for building a generation of nuclear stations to take over from the current capacity when it is phased out by 2025.

Since the election, Sir David King, the government's chief scientific adviser, has argued publicly that one more generation of nuclear stations is needed to plug the supply gap that will open up when today's plants, which currently supply a quarter of the UK's power, are switched off.

Blair, we are told, is sympathetic to that viewpoint. If he is, Friday's news that state-owned British Nuclear Fuels is intent on selling Westinghouse, its profitable US subsidiary, constitutes something of a conundrum.

Westinghouse designs and builds nuclear power plants.

Indeed, it is now in the running to build four reactors for China. If it can land that order, there could be upwards of 30 more in the pipeline over the next two decades, if the fastest-growing economy on the planet builds all the nuclear capacity it is currently planning.

There are 15 possible bidders, including some from the US, France and Japan, already in the queue to acquire Westinghouse.

One of them, the French group Areva, is a rival bidder for the Chinese contract. So why, given the prime minister's stance on nuclear power, is the heavily lossmaking BNFL so intent on selling off a profitable American arm with a famous name that still knows how to build nuclear power stations?

The official explanation is that BNFL sees its future as a contractor rather than an owner-operator or manufacturer of nuclear facilities. It is currently transferring ownership of the Magnox generation of UK stations (including Hunterston A and Chapelcross in Scotland), the Sellafield reprocessing plant in Cumbria and its other nuclear liabilities in Britain to the new Nuclear Decommissioning Authority.

BNFL, which employs 23,000 people at 51 sites (including one in Beijing) in 16 countries, no longer wants to span the entire nuclear cycle from reactor design to decommissioning and clean-up. In the words of its chairman, it wants to "control risks to the UK taxpayer" and become the "contractor of choice" for decommissioning and clean-up to the new NDA.

Westinghouse, whose current AP1000 light water reactor design has now had final approval from the American authorities, does not fit that strategy. Better still, with interest in nuclear generation reviving and buyers already at the door, Westinghouse looks like a handy cash windfall for a shareholder (the British government) which has grown used to writing cheques to get BNFL out of various financial holes, not receiving them.

Westinghouse is thought to be worth around pounds-1bn. A tidy sum when the UK's public finances are looking a trifle strained. But if Tony Blair really is serious about building another generation of nuclear plants, does it make good strategic sense to sell off your only in-house reactor builder just before you press ahead with that policy?

There is one other twist to this tortuous tale. Westinghouse's efforts to land the China contract, against French and Russian competition, have just suffered a backlash in Washington. The protectionist anti-Chinese sentiment sweeping Congress in the wake of a provocative bid by a state-controlled Chinese oil and gas group for Unocal, one of America's smaller oil majors, is threatening to destabilise the BNFL subsidiary's chances of being picked by the Chinese to build those four reactors.

It is not just a matter of diplomatic tit-for-tat. The Westinghouse offer to the Chinese was dependent on a dollars-5bn financing loan sanctioned by the federallycontrolled Export-Import Bank.

The House of Representatives has now voted to disallow that loan.

Without it, Westinghouse may struggle to compete for the contract. Worse, that could shrink the price BNFL can expect to get for what group chief executive Mike Parker has called "a prime asset that has all the skills to prosper in the private sector".

Gordon Brown may get a smaller cheque than he was hoping for.

And Tony Blair may find his government has sold off a successful reactor builder on discounted terms at the very moment he hopes to revive Britain's own nuclear power industry.

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