industry

UK bailout of US CO2 firm unfair while energy suppliers go under, says gas boss


The boss of an energy firm that went bust amid the gas price crisis has accused ministers of giving a US-based fertiliser firm special treatment by handing it cash, while leaving other companies to fail.

Peter McGirr, the founder and chief executive of Newcastle-based Green, predicted that as more suppliers fell victim to spiralling wholesale costs they could not fully pass on to consumers, given the energy price cap, bigger companies would have to seek bailouts.

Green’s 250,000 customers and Avro Energy’s 580,000 were the latest energy suppliers to collapse, taking the total number of households affected to 1.5 million. They will become a “supplier of last resort”.

McGirr said his firm and the six others that have sunk in just six weeks had not done anything wrong, and had hedged – a form of insurance against price fluctuations – properly. “As we continue on in this gas crisis – and it will continue through the winter, no doubt – you will see larger suppliers feeling the pain as well, and at some point, they will come cap in hand asking for a bailout,” he told BBC Radio 4’s Today programme.

McGirr took issue with the government refusing to offer any support to firms teetering on the brink while using taxpayers’ money to reopen a US-owned firm’s plant in Teesside that produces carbon dioxide as a byproduct of its main goods, fertiliser. The sum given to CF Fertilisers was £50m, McGirr said, but this was denied by government sources.

He said Green was hedged, and added: “If we’re all bad businesses because we’re not 110% hedged, does that not make the fertiliser business a bad business? If they need within their supply chain gas to produce fertiliser and CO2, why do they get a bailout and we don’t? And that’s only for three weeks, so in three weeks’ time, when the market’s still in the same place, are the government going to keep writing blank checks for this to keep food on the table?”

Paul Scully, the business minister, said it would be a “tough winter” but defended the bailout for CF Fertilisers. He said the government wanted to ensure adequate food supply, given carbon dioxide was used for the stunning of animals slaughtered, packaging food and creating dry ice to ensure food stayed fresh during transportation.

“It’s a valuable one for the wider supply,” Scully said of the importance of restarting the Teesside plant and ensuring CO2 production continued. “It’s different solutions for different situations, and so CO2 itself is an important byproduct for the food sector. In the energy sector … we have a mature system because companies do leave the market each year, especially around this time as winter pressures come on.”

Asked if bigger companies taking on large numbers of new customers from failed firms would get financial support, Scully said: “I’m not going to speculate on what’s happening with each and every individual company. You wouldn’t expect me to do so, because that in itself creates instability and a run on confidence.”



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.