Ditching Gazprom Going To Be Expensive

Merton leader says decision will have an impact on council finances

Merton Council offices
Merton Council offices. Picture: Google Streetview

The decision to cut ties with a Russian gas firm will impact the finances of Merton council, the leader has said.

Merton has cancelled a planned contract with Gazprom in light of the ongoing conflict in Ukraine. Instead, the council will enter into a one-year contract with Corona Energy starting in April 2022.

It will supply gas to public buildings across the borough including council offices, libraries, leisure centres and some schools. The contract begins in April 2022 with an option to extend for a further year.

Gazprom supplied gas to Merton Council for the past eight years and the authority said it had “no choice” but to enter into a contract with the Russian firm as it was the only bidder to respond during procurement of the contract.

The switch in suppliers comes at a time of rising energy prices and will see increased costs to the council. Council leader Mark Allison has called on the government to help councils ensure the cost won’t impact on local services.

Councillor Allison said, “I’m proud that our council has stepped up and taken swift action to ensure that not one penny of our residents’ money goes towards supporting the Russian state or its invasion of Ukraine.

“However, there is no doubt that with energy prices rising and the costs of starting a new contract at short notice, this is going to impact the council’s finances.

“The change in supply management will save us money; but overall, the current steep rise in energy prices means we will still pay more next year. We are asking the Government to discuss a package of support which would ensure those increased costs don’t impact our residents.”

Cllr Allison wants to see local government legislation changed so councils take into account non-commercial interests when awarding contracts, like moral concerns or political affiliations.

The leader added, “Councils like ours continue to be at risk of this law leaving the door wide open for firms like Gazprom to come back in at the next attempt. Changing the Local Government Act to allow us to take into account non-commercial considerations would change that permanently.”

Tara O'Connor, Local Democracy Reporter

March 21, 2022