UK council explains why it cannot end Gazprom contract before 2024

Tandridge District Council has said the move to end the deal would have serious financial implications

Big Zero Report 2022

A district council in Surrey has said it is unable to terminate a contract with Gazprom before 2024.

In recent weeks, several local authorities and organisations unveiled plans to pull out of Gazprom deals in a show of solidarity with Ukraine.

In a meeting of Tandridge District Council’s housing committee, Sally Bayliss, Case Services Manager at the local authority said: “I can confirm the contract has a term that runs until September 2024. The current, most recent advice that we have is that it is a valid contract and if we try to end it earlier than that, we would be in breach of contract which would incur, we would still have to pay for the assumed energy usage for the duration of the contract.

“There is some speculation that it may become that the government will issue an edict requiring cancellation of all contracts with Gazprom, which would then change that position to enable that contract to be brought to the end and an emergency procurement exercise to take place to still set alternative supplier.

“But obviously when the implication is that again is the cost that will bring to the council in terms of the increased costs, increased rates for the fuel since we are engaged in that contract.”

A few days ago, ELN reported that Merton Council in the southwest of London announced it would seek government support after cancelling plans to renew its contract with Russian gas firm Gazprom.

Two weeks ago, the boss of energy company Ecotricity said breaking the contract could trigger a penalty of around £10 million.

Ms Bayliss added: “So that’s the current position, the advice at the moment is having no immediate mechanism of ending the contract earlier than the contract end date.”

She added that the council will keep that under review.

The UK trading arm of Russian gas giant Gazprom is reportedly under increasing pressure as major clients flee in response to the war in Ukraine.

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