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Ministers are preparing to take control of Gazprom’s retail arm within days | business news

The government is preparing to nationalize Gazprom’s British utility arm within days amid a standoff between the state-controlled Russian energy company and a Wall Street banking giant.

Sky News has learned that ministers are preparing plans for implementation Gazprom Marketing & Trading Retail (GM&T) into public hands when it gives financial partners no assurances about the nature of an apparent change of ownership signaled by its parent company last week.

The move to take control of the UK subsidiary, which could cost taxpayers billions of pounds, could come as soon as this week, according to an industry source.

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Where does Britain get its energy from?

It would be one of the most significant impacts to date on businesses in the UK resulting from the Russian invasion Ukraine and the subsequently introduced sanctions regime by the government in an attempt to punish Vladimir Putin.

The Gazprom division supplies around 30,000 customers, including many NHS hospitals, municipalities, large retailers and industrial gas consumers.

Overall it supplies more than 20% of the gas consumed by UK businesses, a growing number of which have left it in recent weeks.

Gazprom Energy’s incorporation into Ofgem’s Special Administration Regime (SAR) would make Gazprom Energy – as the division is known – the second utility to be absorbed by UK taxpayers after the Bankruptcy late last year of Bulb Energy, the domestic utility.

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November: Bulb goes into administration

The cost to the public purse of maintaining Gazprom Energy’s existing supply contracts was estimated at around £4 billion by Bloomberg News last month.

If true, it would be significantly more expensive than Bulb’s collapse.

Bloomberg also reported that Teneo Restructuring was designated as special administrator.

If customers’ existing contracts with Gazprom Energy were not honored, they would be forced to purchase gas at much higher spot prices, which have skyrocketed in recent months and especially since the start of the war in Ukraine.

The potential bankruptcy of the Gazprom entity comes at a politically sensitive time for Boris Johnson’s government, which is preparing to enact a series of measures aimed at ensuring Britain’s energy independence.

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How Russia affects our energy bills

Last week Kwasi Kwarteng, the business secretary, signed the appointment of former BP UK boss Peter Mather to his department’s board as Whitehall increases its focus on energy supply resilience.

A government spokesman said: “Britain is in no way dependent on Russian gas, which accounts for less than 4% of our supply. Our very diverse gas supply sources and diverse electricity mix ensure that homes, businesses and heavy industry benefit from the energy they need.

“We are aware that Gazprom Energy has a large presence in the non-domestic energy retail market.

“Companies and organizations should exercise their own commercial judgment with respect to their current energy supply contracts.”

An energy industry executive said it was still not certain whether Gazprom Energy would need to be transferred to public ownership, but said the division’s fate would rest on ongoing talks between the company and Citi, which acts as its clearing bank .

On Friday, the Gazprom Group announced that it had “ended its stake” in the British arm, but without providing details about new owners.

GM&T released a statement on its website that it “is unable to comment on the new ownership structure” but that it “remains operationally independent.”

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Putin: Gas payments should be switched to Russian rubles

“We source our gas on the European wholesale markets just like other market participants and have not sourced gas from long-term contracts with Russia since the first quarter of 2021.

“GM&T, given its significant role in both energy trading and B2B energy retail, recognizes the significant impact we are having in relation to the UK and European financial and energy markets and therefore the economy.

“We are therefore fully committed to mitigating any negative impacts and are currently working very closely with the UK Energy Regulator (‘Ofgem’) and other UK government agencies to manage these risks.”

She said she would comment further “in due course.”

Gazprom has canceled its sponsorship deal with European football’s governing body UEFA since the invasions of Ukraine, while a number of cabinet ministers, including Health Minister Sajid Javid, have urged departmental stakeholders to stop using energy supplied by the company.

Citi did not respond to two emails requesting a reply on Sunday, while Ofgem declined to comment.

Ministers are preparing to take control of Gazprom’s retail arm within days | business news

Source link Ministers are preparing to take control of Gazprom’s retail arm within days | business news

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