The government is preparing to nationalise Gazprom’s British supply arm within days, amid a stand-off between the Kremlin-backed firm and a Wall Street banking giant.
Ministers are drawing up plans to place Gazprom Marketing & Trading Retail (GM&T) – the trading name of UK firm Gazprom Energy – in public hands if it fails to reassure financial counter-parties about an ownership change, according to Sky News.
The potential buyer remains undisclosed, with Gazprom announcing last week it had “ceased its participation” in its British division without providing details of any new owners.
A government takeover of the subsidiary could cost taxpayers billions of pounds,
Estimates from Bloomberg News suggest the price of maintaining its existing contracts could reach £4bn.
This would surpass the reported £3bn it has cost to maintain Bulb Energy (Bulb) and its 1.7m household customers over the winter.
It has survived the past four months since falling into de-facto nationalisation through regular transfusions of public money as part of Ofgem’s special administration regime.
Teneo Restructuring is being lined up as special administrator, according to Bloomberg, the same group that is overseeing Bulb.
The Gazprom division supplies roughly 30,000 customers, including many NHS hospitals, local authorities, large retailers and industrial users of gas.
Overall, it provides 20 per cent of the gas used by British companies – a growing number of which have been deserting it in recent weeks.
Big name clients have led a mass exodus in the past few weeks, including fast-food giant McDonald’s, German conglomerate Siemens and waste company Biffa.
Alongside departures in the business world, Health Secretary Sajid Javid has told NHS England it must stop using Gazprom, while councils across the country are also rushing to cut ties.
If customers’ existing contracts with Gazprom Energy were not honoured, this would force them to source gas at much higher spot prices which have spiked during the energy crisis.
The potential insolvency of the Gazprom Energy comes ahead of the government’s expected to unveil the UK’s energy security strategy later this week following Russia’s invasion of Ukraine.