British Gas abandons pounds 1bn claim
Wednesday 13 November 1996
The news came as TransCo announced that its managing director, Harry Moulson, had retired with immediate effect for health reasons. Mr Moulson has played a key role in preparing the business for demerger from British Gas's trading arm. He was also involved in TransCo's decision to take its prices dispute with the industry regulator, Ofgas, to the Monopolies and Mergers Commission.
The climb-down on the Gas Levy claim prompted immediate speculation that British Gas was close to a breakthrough in negotiations with North Sea oil companies over its pounds 40bn take-or-pay contracts. When British Gas issued its writ against the DTI for refund of Gas Levy the DTI immediately counter-sued, issuing "protective writs" against 27 oil and gas companies in case the claim went against it. In response the DTI yesterday also dropped its action.
Several of the oil companies named in the DTI writs had been preparing their own counter-claim against British Gas, arguing that liability in the contracts could be passed back. One of these firms, Lasmo, welcomed the news.
Although British Gas has consistently denied that its legal action was linked to the take-or-pay negotiations, it was widely interpreted as a manoeuvre to put pressure on the oil companies to reach a deal. There is mounting speculation that British Gas Energy, which will inherit the take-or-pay liabilities on demerger, is near to a deal on renegotiating up to a quarter of the contracts.
The deal is likely to involve British Gas auctioning off some of its interest in the Morecambe Bay gas field off the north-west coast. British Gas contracted to buy the gas from North Sea suppliers at prices of around 20p a therm compared with spot prices of under 10p earlier this year.
The take-or-pay problem has been considerably eased in recent months by a strengthening of spot prices to between 14p and 17p depending on the delivery date. The writ related to 24 old supply contracts between British Gas and North Sea oil companies covering eight gas fields on which it claimed it had overpaid Gas Levy, a tax of 4p a therm introduced in 1981.
Comment, page 19
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 3 US? China? India? The 10 biggest economies in 2030 will be...
- 4 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
General Election 2015: David Cameron catching up in polls – but he badly needs a clear lead
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
South Africa xenophobic attacks: Shops looted and violence on streets of Johannesburg as foreigners are forced to hide in police stations
18th century sex toy found in 'toilet of sword fighting school' in Poland
'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...