It's bad news for shareloving Sid . . but better for customers
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The Thatcherite era of Sid, the small private investor targeted in the British Gas privatisation, drew to a close yesterday as the company faced up to a new world of tough competition.
Dick Giordano, chairman of British Gas, said that 1.8 million shareholders were too many, putting an "inappropriate and costly" burden on the company.
Mr Giordano said British Gas would be studying ways of reducing the size of the share register, perhaps by making it easier for investors with small numbers of shares to sell out.
When British Gas was sold in 1986, it was the flagship of Margaret Thatcher's campaign to extend share ownership into every home in Britain, using the famous "tell Sid" advertising campaign to reinforce the message.
Mr Giordano suggested that the two companies into which British Gas is to be split next year would eventually have "two different kinds of share ownership".
But as Sid bows out, British Gas will be confronted with radical changes in the way it meets the needs of domestic customers, which were welcomed yesterday by the Gas Consumers Council.
Ian Powe, its director, said: "This looks like good news, at last, for gas consumers. By combining gas supply, appliance sales and central-heating service in one company, we can expect a return to one-stop customer care."
He added that because it had access to its own offshore gas supplies, the new company British Gas Energy "should be able to compete equally with its rivals and bring its prices down to match theirs".
The key change for British Gas is the introduction of competition for domestic customers, starting with a pilot scheme this April and moving on to a nationwide coverage by 1998.
Price cuts of around 15 per cent are predicted as Mobil, Amerada Hess and even electricity suppliers fight to get into the market.
Many of the problems that led to Mr Brown's downfall and the plan to break up the company go back to decisions by the Government to open up the gas market far more rapidly than anybody expected at the time of privatisation.
Competition to supply industry has already been introduced and is slashing British Gas's market share, with prices plummeting. As its market share has fallen British Gas has found itself with far too much gas that it has to pay for but cannot sell - a problem that will get worse from spring onwards.
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