Now China is keen to buy our gas pipelines

A NEW row over Chinese investment broke out last night after it emerged that one of the country’s firms is bidding to take control of half of Britain’s gas pipelines.

The state-owned operator China Gas has joined together with the Shanghai-based investment firm Fosun to bid for a majority stake in the National Grid’s £11billion gas distribution business.

It operates four gas distribution pipelines that supply an estimated 11 million homes and businesses in the Midlands, North-West and East of England and North London.

The Chinese consortium is one of three trying to buy a controlling stake.

The move will raise fresh national security fears only days after the Government approved the £18billion Chinesebacked Hinkley Point nuclear power station in Somerset.

In the wake of that announcement, Theresa May promised there would be a thorough assessment of any future foreign takeover bids to determine whether they were in the national interest. And last night, Downing Street insisted the

‘We have been far too generous in the past’

gas deal would not go ahead if it is shown there could be implications for ‘national security’.

But Tory grandees said the Prime Minister needed to go much further to prevent the takeover of vital UK companies by foreign state monopolies.

Last year, it was claimed that Chinese hackers try to breach the National Grid’s computer system 1,000 times a day.

At the time, a source reportedly said: ‘The only time it drops off is during Chinese New Year.’

Yesterday, Tory MP John Redwood said the UK was being far too generous to countries such as China – and demanded Government intervention to stop state monopolies buying up our industries.

He said the Government needed to be much ‘firmer’; likening the situation to the failure to stop the Stock Exchange being taken over by the Germans.

‘There could be security concerns, but my main concern is that this is not a fair market,’ he said. ‘I have suggested to the Government that they should amend the competition rules to allow intervention if the bidder is a foreign government or is a foreign nationalised industry.

‘This is on the grounds that Britain cannot do the same and invest in their industries like this. As I understand it, there is a lot of Chinese state money behind this potential deal.

‘They do not allow us to invest in their economy in the same way. We have been far too generous in the past.’

The National Grid has decided to carve out the gas operations into a standalone business. It is selling its pipelines so it can focus on more profitable parts of its business.

While the gas itself is owned by the various energy companies, the National Grid is responsible for it while it is being transported.

UK Liberal Democrat leader Tim Farron said: ‘This Government is getting it completely wrong when it comes to energy security.

‘Instead of working with our allies to develop sustainable, low-cost energy solutions, we are offering up our ageing systems based on fossil fuels to the highest bidder, without considering whether it is in our long-term national interest.’

The National Grid said: ‘We will not speculate on the identity of potential bidders. Regardless of their identity, all bidders will have to go through the same rigorous approval process. The new owner will have to be approved by regulators and operate under the relevant requirements.

‘Networks are subject to strict rules and criteria in terms of security, reliability and availability and any buyer will need to prove to Ofgem and the Government that they can meet these criteria.’

Government sources said the deal would be subject to the additional safeguards that Mrs May put in place following the Hinkley decision.

A No10 spokesman said: ‘We have a robust regulatory system in place, and any inward investment must meet the relevant legal and regulatory standards and requirements.

‘The additional safeguards proposed last week mean that in future there will be a formal gateway through which investments in critical infrastructure are interrogated for their implications for national security.’

The second bid for the pipelines is led by the Canada Pension Plan Investment Board, and the third by Australian bank Macquarie and the China Investment Corporation.