Newspaper article The Christian Science Monitor

Critics Razz Plan for British Gas Sell-Off

Newspaper article The Christian Science Monitor

Critics Razz Plan for British Gas Sell-Off

Article excerpt

SEVEN years after it privatized British Gas - until then a state-owned monopoly - the government is being urged to split it up and provide consumers with a free market in gas supply.

If it does so, it will be admitting that the campaign of industrial privatization spearheaded by Margaret Thatcher in the 1980s created distortions in Britain's energy market and in some cases benefited shareholders more than consumers.

Proposals published Aug. 17 by the influential Monopolies and Mergers Commission (MMC) would reduce British Gas to the role of a pipeline and storage operator by stripping it of its marketing arm, and allow independent companies to supply up to 18 million households by early next century. Paradox of breaking the monopoly

The MMC recommendations, however, if implemented, would have the paradoxical effect of raising gas prices for domestic users while the monopoly was dismantled and the industry restructured. This is because British Gas would be allowed to increase its prices to domestic users to pay for decommissioning large chunks of its current operations.

This aspect of the commission's plan has drawn the ire of Labour and Liberal Democrat opposition spokesmen who say it offers nothing to the consumer in its present form.

The plan has also been heavily criticized by trade unions. British Gas has forecast that it will have to cut its current labor force of 60,000 by one-third. A gas industry union leader said a further 20,000 jobs would go in companies which currently supply British Gas with equipment and services.

Michael Heseltine, the trade and industry secretary, will have to decide later this year whether to implement the MMC proposals or let British Gas retain its much criticized monopoly.

Ofgas, a government-appointed watchdog body, has accused British Gas of overmanning, and tardiness in passing on price reductions to consumers. Ofgas spokesman Greg MacGregor welcomed the proposals and forecast a 10 percent fall in the price of gas to domestic users when they had been implemented. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.