Jersey Gas dispute reaches stand-off

Wednesday 06 May 2020

Jersey Gas and the government are locked in a stand-off, with the firm refusing to disclose its parent company's accounts to prove it's in sufficient financial distress to access emergency support.

The government says the documents are crucial for taking part in the co-funded payroll scheme, which was set up to help businesses hit by covid-19, but the privately-owned utility company argues that presenting the documents would not be appropriate, as it is only asking for short-term funding.

The deadlock emerged after Jersey Gas put up its prices for customers by 6.5% after being refused access to the scheme, despite claiming to have experienced a 50% drop in revenue.

Speaking to Express about the reasons behind the price hike last week, Managing Director Ian Plenderleith said that Jersey Gas supplies 6,000 domestic properties as well as 400 businesses in the island. Among the latter are 70% of the Island’s hotels, restaurants and leisure facilities within the commercial sector.

“Since the beginning of April, we have lost 50% of gross sales overall,” Mr Plenderleith said, explaining later that this represented a 50% drop in revenue.

Pictured: Ian Plenderleith, Managing Director of Jersey Gas.

In a critical statement released the same day, the Government hit back at the suggestion they had refused support, saying Jersey Gas had “chosen” not to provide “vital financial information” on their business and their parent company despite several requests to do so.

“This information is a necessity to progress any applications for government support during this crisis,” the government's statement read.

“Jersey Gas is owned by Isle of Man based International Energy Group, which is in turn owned by a private equity fund,” it added.

“Before committing taxpayer support, the Government needs to understand what investor or lender support has already been sought by IEG and its owners, and why Jersey Gas does not have access to sufficient working capital of its own. This information has also not been received from Jersey Gas.”

Pictured: Jersey Gas says they have given more information to Jersey Government than the States of Guernsey where Guernsey Gas has been given access to the co-funded payroll scheme.

But Jersey Gas are now saying they have given the Government “the same detailed financial information, including all historic financial information and forward-looking forecasts” that is required of any business looking for access to the payroll co-funding scheme. 

“We have given the Jersey Government more information than we gave to the Guernsey Government, where payroll co-funding was given to Guernsey Gas,” a spokesperson for the company added.

The utility company says it is only asking for short-term funding in the form of the local payroll co-funding scheme in order “to stabilise the company during this challenging time and to contribute towards the continuation of a safe and secure supply of gas to homes and businesses across the Island throughout the pandemic and once it is over”, and not long-term support.  

Pictured: Jersey Gas says it is not appropriate to give the detailed information the Government is asking since they have not requested long-term support.

The spokesperson noted that, despite Jersey Gas being a “critical service provider” and experiencing a reduction in sales “far higher than the material detriment criteria”, the company has been excluded from the scheme. 

“We have been informed that Jersey Gas is not eligible, and will not be eligible at any point, for the payroll co-funding scheme,” they said. “This decision to exclude Jersey Gas takes no account of the current situation of Jersey Gas.”

The company argues that, since they have not asked for longer-term funding, it will not provide the information requested by the Government. 

“To be considered for this, they have asked for much more detailed information on other non-Jersey based companies linked to Jersey Gas,” the spokesperson said.

“It is this information that we have not shared, as we do not feel it appropriate given that we do not seek this type of longer-term support.”

Pictured: Senator Lyndon Farnham says discussions with Jersey Gas are ongoing.

Senator Lyndon Farnham, the Economic Development Minister – who threatened to use legal powers on Jersey Gas if the company didn’t reverse the price increase – said on Friday that discussions were continuing with the company and that they had so far been productive.

“Jersey Gas are, as a utility, excluded from Phase 2 of the payroll scheme,” he explained.

“But we do have a separate recovery fund that fund is to deal with the situations and challenges that Jersey Gas face. 

“We have asked for further information, we’ve seen Jersey Gas accounts - we’d like to see the parent company’s accounts to understand their financial position. 

“We made that clear this morning. We’ve confirmed exactly what further information we require and we await for their response.”

Video: Senator Farnham answered questions about Jersey Gas at a press conference on Friday.

When asked to clarify what powers he had considered to use within the  Jersey Gas Company (Jersey) Law 1989 – which allows the government to force price changes on Jersey Gas if deemed necessary, take shares in the company or take it over entirely with 12 months' notice – the Minister said there were no plans for a takeover. 

He said: “I am reluctant to say any more at this stage other than both sides are looking for a solution that helps Jersey Gas’ customers and Jersey Gas if necessary because they are an important part of our utility infrastructure, through this.”