British Gas seeks option to dispose of supply arm
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Your support makes all the difference.BRITISH GAS has called on the Government to allow it to sell its gas trading business.
Cedric Brown, chief executive, said that if the Government pursued plans for competition in the domestic market it should also allow the group to sell its supply arm. Under its present licence British Gas is prevented from divesting itself of that part of its business.
Mr Brown said that people bought shares in the company on the basis that it had a domestic monopoly, but the value of its business would be affected by increased competition and squeezed margins.
The sale of the supply arm would leave British Gas with its growing transport operation, which has assets of about pounds 14bn, and its global exploration and production activities.
The Government has said it will introduce competition in domestic gas supply in 1996, with the market fully open by 1998, although as yet there is no legislation in the parliamentary schedule to implement the change.
Mr Brown said: 'The directors need full commercial freedom to take whatever they deem to be the most appropriate decisions and action. All we seek is that legislation should give us the facility to divest.'
British Gas announced an increase in interim pre-tax profits from pounds 938m to pounds 973m. The dividend has been held at 6.4p. Mr Brown said the company's dividend policy and business strategy in Britain and overseas would be made clear at a meeting on 29 September.
Turnover in the six months to 30 June was pounds 5.7bn compared with pounds 5.5bn a year ago, and earnings per share fell to 14.5p from 14.7p. The company said its performance to date in the current year reflected pressure from regulation and increased competition.
Rivals, including electricity firms and North Sea producers, have taken 84 per cent of the firm-contract market and almost half the total market of customers using more than 2,500 therms where competition is allowed. The rivals claim to undercut British Gas by up to 20 per cent and say they would reduce domestic bills by 12 per cent if allowed to compete in that sector.
About 10,000 jobs have been shed by British Gas over the past 12 months in a programme aimed at reducing the workforce by 25,000 in three to five years.
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