Inspired Energy’s shares slide as concerns over Gazprom Energy’s future mount
Inspired Energy’s (Inspired) shares have plummeted 14 per cent on the FTSE AIM All-Share today, warning of a £3m hit if Gazprom Energy ceases trading
In a statement to the London Stock Exchange, the board revealed that five per cent of its revenues are dependent on clients contracted with Gazprom Energy.
Inspired said: “The impacts of the war in Ukraine have been fast moving and continue to cause significant volatility and uncertainty across commodity and energy markets. The group notes that Gazprom is a significant gas supplier to businesses across the UK, including both clients of Inspired and businesses within their supply chains.”
The troubled Kremlin-backed supplier is chasing buyers following a mass exodus of major clients following Russia’s invasion of Ukraine.
Ofgem faces challenges if Gazprom Energy collapses
Gazprom Energy supplies energy for UK businesses, which rely on the firm for around 20 per cent of domestic commercial energy needs.
The supplier is likely too big for Ofgem’s supplier of last resort process.
This has raised the prospect that if the firm does collapse – it will fall into special administration alongside Bulb Energy.
The UK’s seventh biggest energy firm has been propped up on life support since November – reportedly requiring £3bn of public money to stay afloat and protect its 1.7m customers.
Ofgem told City PM it is aware of the size of Gazprom Energy’s presence in the energy retail market – and confirmed it continues to trade with a supply licence.
It refused to comment on reports of its financial position – which suggest Gazprom Energy’s executives have been holding talks with rivals over a potential takeover.
Gazprom Energy is well placed to attract interest from buyers, as it does not sell gas from its Russian parent but instead resells gas from the National Grid.
This comes from multiple providers including the North Sea, which is an appealing factor considering Business Secretary Kwasi Kwarteng and Prime Minister Boris Johnson have both called for further exploration in the region.
Meanwhile, in contrast to households, business energy suppliers are not limited with any cap on how much they can charge.
When approached for comment by City PM, a spokesperson for the Department for Business, Energy and Industrial Strategy said: “We are aware that Gazprom Energy has a large presence in the non-domestic energy retail market. Gazprom’s retail business continues to trade in the UK and customers should exercise their own commercial judgement with regards to energy supply contracts they have in place at the moment.”
Inspired confident of surviving setback
Inspired is an energy services provider that helps businesses with cost control, energy generation and operational efficiency.
It has stressed that even if Gazprom Energy folded, the company would still comfortably meet its banking covenant and liquidity tests and maintain its operations.
Mark Dickinson, chief executive of Inspired, said: “Whilst the potential impact on the financial performance of the Group should Gazprom cease to trade in the UK would be disappointing, these factors are unfortunately outside of the Group’s control. We have proactively considered the impact of this event in its entirety and are already focused on the mitigating actions we can take by supporting clients with contract replacement. Inspired remains focused on helping its clients manage their costs and sustainability challenges through this crisis.
The group will announce its full year results on Wednesday 30 March.
Dickinson added: “With regard to the invasion of Ukraine, I am sure many share our shock at the abhorrent actions of the Russian regime and our hope that the war and resulting humanitarian crisis ends soon with a peaceful resolution.”