Bord Gáis may move into the gas supply market in Britain following the awarding of a licence from the British regulator Ofgem.
The company's activities in Britain so far have focused on gas transportation, but Ofgem's decision clears the way for the company to "supply gas to any non-domestic premises situated in Great Britain".
Bord Gáis was not in a position to comment last night on the reasons for seeking the supply licence, but various possibilities may be explored in the months ahead. Other sources suggested the awarding of the licence was a purely defensive measure.
The British gas supply business is highly competitive and there has been considerable controversy over rising prices in the last year. Energy regulator Ofgem has blamed high oil prices and problems with the UK's supply of gas for a steep rise in wholesale gas prices.
High oil prices have fed into UK prices through a pipeline connection to continental Europe where gas prices are linked to the oil market. If Bord Gáis attempted to create a presence in the UK market it would face competition from powerful competitors like Centrica, Shell, BP, Exxon Mobile, Total, Amerada Hess and Perenco. Bord Gáis currently has one main subsidiary in Britain, a company called Utility Grid Installations.
The business, while currently loss-making, is in an early stage of development according to the company.
The firm is involved in the sale, construction and operation of gas transportation networks throughout the UK. It primarily focuses on new housing developments and the company has built up strong connections with major buildings firms in the UK.
According to the company's 2003 annual report: "Transporter investments in the UK are anticipated to yield an 8 to 9 per cent return over a 20 year period compared to 5.74 per cent on our regulated assets over a longer period in the Republic."
In 2001, UGI's connected its first new housing site in Cambridge. Over the next five years UGI plans to connect in the region of 20,000 new houses to its network.
Bord Gáis is currently trying to find other income streams outside its core distribution and supply businesses in the Republic. Both these businesses are highly regulated and the company is eager to expand its share of the electricity market which currently stands at about 17 per cent.
