Centrica in tax rate blow

Utility company Centrica expects 2011 earnings to grow at a more subdued pace than it previously thought and said it would scale down investments in the UK following the government's decision to raise tax rates for oil and gas production.

In March, Britain unexpectedly raised a supplementary tax charge on North Sea oil and gas producers to 32 per cent from 20 percent to help lower fuel duty for motorists.

"We continue to expect growth in our 2011 group earnings but at a more modest rate than anticipated at the time of our last results announcement as upstream profits have become more highly taxed," the company said in a statement.

The company said higher tax rates for oil and gas production would lead to reduced cash flow and higher fiscal uncertainty. "We no longer expect to maintain the previously projected high levels of investment in the UK," it said.