Centrica, the conglomerate which owns British Gas, received a double boost yesterday after selling its loss-making credit card business, Goldfish, for £112m and gaining conditional approval for its acquisition of the Rough gas storage facility.
Patricia Hewitt, Secretary of State at the Department of Trade and Industry, demanded that Centrica agree to stringent controls on how it can use the Rough facility, off the Humberside coast. Rough accounts for 85 per cent of the UK's gas storage capacity and sells gas to retailers including British Gas and its rivals.
But Ms Hewitt rejected the views of the industry regulator, Ofgem, and many of British Gas's rivals, who had argued ownership of Rough would allow Centrica to influence gas prices and manipulate the market and who had wanted the deal blocked outright.
Centrica agreed to buy Rough and the Easington onshore terminal on the east coast from Dynegy, the US energy company, for £304m.
Sir Roy Gardner, chief executive,welcomed the decision. "We have always believed that appropriate undertakings could be agreed to overcome any competition concerns. We are comfortable with the remedies recommended."
The conditions recommended by the Competition Commission and agreed by Mrs Hewitt include selling Rough's full capacity on non-discriminatory terms, some of it at fixed prices. Centrica must also reserve no more than 20 per cent of the capacity for British Gas, and face annual checks by the Office of Fair Trading and Ofgem.
The company could still be forced to sell Rough or other assets if it has not formally agreed the conditions with the OFT by 1 December.
Centrica shares rose 4.25p 181.5p, one of the best performances in the FTSE 100. Earlier in the day, it had revealed the £112.5m sale of its 70 per cent interest in Goldfish to Lloyds TSB, which owned the other 30 per cent. Centrica will book a £45m loss on the credit card venture, which was in the red to the tune of £30m in the six months to 30 June.
The Goldfish credit card and its associated loyalty scheme were originally developed as a customer retention initiative within the group's energy supply business. Cardholders will still be able to redeem loyalty points against British Gas bills.
Sir Roy said: "Goldfish has developed into a very strong brand but we believe that the capital investment required to achieve the necessary scale would be better directed towards our core businesses."
Lloyds TSB said the administration of Goldfish would be subsumed within its own back office, but would not say how many of Goldfish's 400 staff would be made redundant.