UK energy provider to 1.7m customers seeks new funding to stay afloat amid gas price pressures

A UK energy provider has sought a bailout. Credit: PA

The UK's sixth largest energy company is seeking a bailout amid pressure on an industry facing surging wholesale gas prices.

The Financial Times reports that Bulb, an energy provider to 1.7 million customers in the UK, was working with financial advisory firm Lazard to help secure new sources of funding.

Options being considered include raising funds from investors or a potential joint venture or merger with another company, according to the newspaper.

A Bulb spokesperson said: “From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2. “Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.”

ITV News Political Reporter Harry Horton has reported on how the rise in gas prices has led to a shortage of CO2, which could lead to food shortages

Boris Johnson sought to assure the public on Sunday that supply issues would be addressed.

"On the current supply-chain squeeze, it is fundamentally caused by the global economy coming to life again: the guy ropes are pinging off Gulliver and it’s standing up, and it’s going to take a while, as it were, for the circulation to adjust,” he said.

"Months? It could be faster than that, it could be much faster than that: but there are problems as you know with shipping, with containers, with staff – there are all sorts of problems.

There is a concern about a spike in wholesale gas prices. Credit: PA

"But then these are problems that affect the entire world. The gas supply issue is global, the HGV issue is in the United States as well as in Europe.

"So we’re seeing these same sorts of problems everywhere. But I think market forces will be very very swift in sorting it out, and we’re going to do whatever we can to help.”

His comments come after the Business Secretary stressed that customers would be protected if more small energy companies go to the wall as a result of surging wholesale gas prices.

Following talks with the regulator Ofgem and chief executives from energy suppliers, Kwasi Kwarteng said he could appoint a special administrator to ensure power supplies were maintained in the event of further market failures.

His assurance came amid fresh warnings from the food and drinks industry of shortages on the shelves within days as a result of the knock-on effects of the price hike.

The increases have resulted in a sharp cut in the supply of carbon dioxide (CO2), which is a vital component to an array of products- from poultry and pig products to the packaging used in salads.

Mr Kwarteng also met on Sunday with Tony Will, the global chief executive of CF Industries, the UK’s biggest supplier of CO2. The company last week shut down two major fertiliser plants in Teesside and Cheshire, where CO2 is produced as a by-product, citing the high cost of natural gas. Following their meeting, Mr Kwarteng said they had discussed the pressures the business was facing and “explored possible ways forward to secure vital supplies, including to our food and energy industries”.

However, the Food and Drink Federation chief executive Ian Wright warned that the impact of the shortages could be felt in the shops in a matter of days.

“Towards the end of the week to come and into the following week we are going to see really serious consequences,” he told the BBC.

“I would think that by the middle of next week – 10 days’ time – we would see a really, really big hit to poultry production, to pig producers and probably increasingly in other sectors – so in packaging materials and in bakery and drinks.”

Adding to shortage concerns, one of the UK’s biggest poultry supplier warned otherwise, however, Ranjit Singh Boparan, owner of Bernard Matthews and 2 Sisters Food Group, says the issue (combined with a shortage of workers) will hit the supply of turkeys for Christmas.

Several more small companies told ITV News on Saturday that they could go bust within the next week due to the shortage

Mr Kwarteng is set to hold further talks on Monday with energy industry representatives and consumer groups as they grapple with the surge in gas prices, with wholesale costs up 250% since January.

Four small energy companies have already folded and, following his meeting on Sunday with Ofgem chief executive Jonathan Brearley, Mr Kwarteng said he had been assured that if another failed supplies would continue uninterrupted.

“Our priority is to protect consumers. If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the Government,” he said in a series of tweets.

“The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers.”

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

OGUK, which represents the nation’s offshore oil and gas industry, said wholesale prices for gas have surged 250% since January with a 70% rise since August alone.