Portsmouth council to scrap deal with Russian energy giant
The contract sees it supply gas to council homes and libraries
Last updated 10th Mar 2022
A new multi-million pound contract with Russian state-controlled energy giant Gazprom to supply gas to Portsmouth City Council buildings is to be scrapped in the wake of the invasion of Ukraine.
Council leader Gerald Vernon-Jackson said it would use a break clause to end the three-year deal early but also urged the government to ban its UK subsidiary to make the process easier.
‘As I understand it, there will be a financial penalty but that’s a small price to pay compared to what Ukraine is facing and goes towards showing our solidarity with them,’ he said.
However, he is facing calls to take action sooner.
The contract with Gazprom Marketing and Trading Ltd, which was only signed in October, is estimated to be worth almost £5.5m and sees the it manage the supply of gas to buildings owned by the city council, including council homes, libraries and the civic offices.
The London-based arm of the world’s largest natural gas company provides more than a fifth of commercial gas in the UK and works with a number of public bodies.
Gazprom has close ties to Russian president Vladimir Putin who brought it back under state control when he came to power in 2000.
Many organisations are now seeking to cut ties with it, with Porstmouth City Council becoming the latest to confirm its intention to cancel its contract.
‘We have reviewed what we can do to get out of this contract and there’s a break clause we can use which allows us to leave after a year.’ Cllr Vernon-Jackson said. ‘To use that we have to give notice in June and that’s what we are planning to do.’
A council spokesman added: ‘Via a broker, we have a contract with Gazprom Energy for the supply of gas to council-operated buildings. We’re urgently reviewing our options for bringing this agreement to an end.’
The contract which had been due to end in September 2024 is worth an estimated £1.8m a year.
Portsmouth North MP Penny Mordaunt welcomed the decision.
‘The UK will have phased out the use of Russian oil by the end of this year,’ she said. ‘We are not dependent on it but want to eradicate it altogether.
‘Gazprom has been sanctioned by the UK already and I’m glad to see the council doing this.’
But opposition councillors have urged the council to end the contract sooner.
‘Through this contract we are subsidising Russia off the back of the blood of Ukrainians,’ Conservative group leader Simon Bosher, adding that he would be ‘seriously looking’ at what could be done now ‘as a matter or urgency’, rather than waiting six months.’
And Labour group leader George Fielding urged the council to make ‘the breaking of the contract a matter of priority’.
‘The Liberal Democrat administration should break the contract with Gazprom as soon as possible and not wait until the end of the fixed term,’ he said.
‘As the Russian invasion of Ukraine worsens, world leaders are leveraging every diplomatic measure they can to stop the war. Sanctions to Russian companies such as Gazprom are vital in applying pressure.
‘As a city, we should be doing all we can to act in solidarity with the people of Ukraine.’