British Gas gets it wrong again: Comment

Another day, another farce in the affairs of that much loved company, British Gas. This time British Gas has been forced into an embarrassing climbdown on the legal action it launched against the Government last summer to recover pounds 1.2bn in North Sea gas levies. We don't have a case after all, BG admitted yesterday. Which rather begs the question of why it came to launch such a no-hoper in the first place.

There are three possible answers. The company's own explanation is that it was forced to launch the action last summer because if it didn't it would fall victim to a time block and any hope of recovering the money would have vanished for ever. In other words it was merely a question of keeping options open.

For the more conspiratorially minded there is the theory that the action was launched as a way of putting pressure on the Government to help British Gas settle its costly dispute with North Sea producers over take-or-pay contracts. The evidence for this is that British Gas's action against the Government prompted counter-claims by the Government against the North Sea producers, some of whom squared the circle by taking action against BG. Wonderful for the lawyers, but ludicrous too. Actually there is some movement on this front, with a number of the North Sea producers likely to settle with BG over the coming months.

The best explanation, however, is the least complicated one. It is that this is simply another of those misjudged initiatives by BG and that again it has backfired.

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