Tax bill pushes cost of BG demerger up to £80m

Click to follow
The Independent Online

The demerger of BG into the UK gas pipeline business Transco and an international oil and gas exploration company will cost shareholders £80m, it emerged yesterday.

The demerger of BG into the UK gas pipeline business Transco and an international oil and gas exploration company will cost shareholders £80m, it emerged yesterday.

The costs are higher than those for the original demerger of British Gas into BG and Centrica in 1997 and also higher than BG originally estimated. The increase is mainly due to a £24m tax bill that BG will pay to cover the early termination of a save as you earn scheme for its 12,000 employees.

News of the demerger costs came as Transco said it is to increase spending on its pipeline replacement programme by 50 per cent to £800m after a gas blast in Larkhall, Scotland, last year, which killed a family of four.

The demerger will take effect on 23 October. The exploration business BG International will be called BG Group while Transco will change its corporate name to Lattice at a cost of £125,000. The company said the new name captured the image of criss-crossing networks.

BG's last set of results before the demerger show it made a £30m loss in the three months to the end of June after taking £250m of exceptional charges. The group has written down the value of its Rough gas storage facility by £200m and has taken a £50m charge to cover penalty payments to gas shippers for breaches of the Network Code.

At the underlying level,second-quarter profits rose from £250m to £301m, mainly as a result of a near four-fold rise in BG International profits to £152m on the back of rising oil prices.

Comments