SSE To Buy Gas Networks

A consortium led by Scottish & Southern Energy is poised to buy two gas distribution networks worth up to £2.5billion from National Grid Transco. SSE plans to clinch the deal as part of the £6billion-worth of assets being auctioned by National Grid Transco.

The news emerged amid reports that National Grid was planning to hand back £1billion of proceeds from the sale to shareholders in a special dividend. National Grid is selling off four of its eight regional gas transmission networks. The company is expected to announce the winning bids within days.

SSE, backed by Canada's Ontario Teachers' Pension Fund and Borealis Infrastructure Management, is bidding against four other consortia. SSE's consortium is favourite to buy the networks in Scotland and the south of England for up to £2.5billion, though the deal is yet to be signed. It is able to bid competitively because it already operates in the two regions and so can make significant savings.

A consortium involving United Utilities is favourite to win the network in the north west, where United has its main operations. National Grid declined to comment on the auction process, reiterating that the company wants the process closed by the end of summer.

A spokesman declined to say when the company considers summer to be over. He said: "We said that we will say something later this summer. It depends on whom you speak to as to when summer ends."

The spokesman confirmed that returning cash from the sales to shareholders was one option, along with paying down debt and making acquisitions.