The UK government is considering a £4.2 billion foreign buyout of a key piece of the country’s gas infrastructure amid growing concerns about energy security.
Sale of 60% stake The investment in National Grid’s gas transmission business to an international consortium led by Australia’s Macquarie, the world’s largest infrastructure investor, will be reviewed under the National Security and Investment Act.
The intervention comes as Russia’s invasion of Ukraine and rising fuel prices have put more attention on who controls energy infrastructure and supplies.
actionThe law, which took effect earlier this year, significantly expanded the government’s powers to scrutinize acquisitions of foreign companies in 17 sensitive sectors of the economy, including energy, defense, transportation, data infrastructure and telecommunications.
spokesperson for national gridThe UK’s national electricity grid operator said the review process was expected.
In its annual report, the FTSE 100 company said the sale of its gas transportation business is subject to “certain antitrust and regulatory conditions” and is expected to close in late 2022.
The deal means the Macquarie-led consortium will acquire more than 7,660 km of pipe that transports gas to supply homes and the power industry across the UK.
The consortium said the transaction is subject to “various competitive and regulatory approvals,” including a review under new legislation. “We are working with relevant agencies to advance these approvals,” he said.
Macquarie is already a significant investor in the UK, having spent around £50bn on UK utilities infrastructure over the past 15 years.
In 2017, a consortium of investors, including Qatar and China sovereign wealth funds, acquired half of the UK’s eight local gas distribution networks from National Grid for £5.4bn.
National Grid has sought to shift its business from fossil fuels to providing low-carbon power.last year it bought Acquired Western Power Distribution, the UK’s largest electricity distribution business, from PPL for £7.8 billion.
Officials said the review is now standard procedure for acquisitions by foreign companies of this size in the energy sector. The Ministry of Business, Energy and Industrial Strategy said in a statement that the government has the authority to “monitor and intervene in acquisitions if necessary.”
Ministers have been given 30 working days to consider the Macquarie deal, but can extend it for up to another 45 days.
The UK government will not normally notify the public if it chooses to consider a transaction under the Act.
But in May, Business Secretary Kwasi Kwarteng said the government would review Acquisition of Newport Wafer Fabis a manufacturer of silicon wafers used in semiconductors by the Dutch subsidiary of Chinese company Wingtech.
The government was supposed to decide on Nexperia’s acquisition of the Newport Wafer Fab in July, but has since extended the timescale.