Ministers WON’T bar a Chinese bid for National Grid

THE Government will not apply new rules over foreign takeovers of the UK’s key assets to the looming buy-out of National Grid’s gas distribution arm, leaving the way open for a Chinese-led bid to snap up the £11billion business.

The move comes despite calls this weekend for the sale to be put on hold until the Government’s proposed rule changes on ‘critical infrastructure’ are in place.

Bids for the gas pipe network owned by National Grid were due on Friday and offers are thought to have been received from stateowned China Resources Gas as well as a number of other internationally led groups.

Earlier this month the Government said it would introduce new safeguards that could restrict key parts of the UK’s infrastructure being owned by overseas groups. The move followed unease over the Chinese involvement in the Hinkley C nuclear plant.

The new rules are set to be included in a review of the 2002 Enterprise Act. This weekend the GMB Union called for the sale to be halted until the review is completed.

Government sources however indicated the takeover would be allowed to take its course. ‘The Secretary of State will consider the legal framework in place at the time that the transaction goes through,’ said the source. They added: ‘The forthcoming review will consider whether [the National Grid gas network] is critical infrastructure at all.’

The sale covers National Grid’s gas distribution business which has four regional networks providing gas to about 11 million British homes. The group announced plans to sell a majority stake in the business last year. Bids were due to be tabled on Friday last week.

As well as China Resources Gas, bidders are thought to include Hong Kong-based billionaire Li Ka-Shing who is understood to have been putting together a consortium through his Cheung Kong Infrastructure arm. Cheung Kong owns an electricity distribution operation in the UK and a smaller gas business.

Another bidder is understood to be Canada Pension Plan Investment Board which is working with sovereign wealth funds from Kuwait and Abu Dhabi. The Australian investment bank Macquarie is also thought to have submitted a bid with backing from China Investment Corporation, the Chinese sovereign wealth fund. A privately held Chinese company, Fosun, was also lining up a bid last week.

The Government gave the goahead to the Hinkley Point C nuclear power station ten days ago after at first delaying the plan, backed by a £6 billion investment from China.

While approving the Hinkley scheme the Government said it would impose a new legal framework for future foreign investment in the UK’s critical infrastructure to ‘ensure that the full implications of foreign ownership are scrutinised for the purposes of national security’. It added that this would apply to ‘all significant investments in critical infrastructure’.

The scepticism in Theresa May’s Government over Chinese involvement in Hinkley is thought to have contributed to last week’s resignation from the Government of Treasury Minister Lord O’Neill.

The former Goldman Sachs banker, known for his belief in the importance of the Chinese economy, was appointed by former Chancellor George Osborne, but resigned the Government whip.