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Contingency Liability Notification: Baglan Operations Limited and Baglan Group Companies

Volume 692: debated on Tuesday 20 April 2021

I am tabling this statement for the benefit of hon. and right hon. Members to bring their attention to the details of a contingent liability following the provision of an indemnity from the Department of Business, Energy and Industrial Strategy to the Official Receiver acting in the insolvency of Baglan Operations Limited (BOL) and the wider Baglan Group companies.

It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above, for which there is no specific statutory authority, for the Department concerned to present Parliament with a minute, giving details of the liability created and explaining the circumstances.

BOL entered liquidation on 24 March 2021 and owns a site hosting a gas generation plant—now closed—and operates a private wire which provides electricity to the Baglan Energy Park in Port Talbot. The energy park accommodates various businesses—primarily a paper product manufacturer, Intertissue—public sector buildings —local authority offices and a NHS medical centre—and a water pumping station.

The departmental minute I lay today is to notify Parliament retrospectively of the provision of an indemnity to the OR.

Departmental officials and I are aware of the presence of several chemical substances at the site that will require safe disposal. There is also a gas plant and 12 km of pipeline that will require decommissioning. BOL supplies the electricity through a private electricity wire, which is exempt from being licensed. As it is licence-exempt, BOL is not capable of being covered by the energy regulator Ofgem’s supplier of last resort arrangements or any energy special administration regime.

My Department has been monitoring this fast-moving situation since December 2020, working closely with the Welsh Government, Wales Office, the Insolvency Service, UK Government Investments (UKGI) and HM Treasury.

My Department has provided the OR with an indemnity in respect of:

carrying out the proper performance of the OR’s duties as liquidator of the Baglan Group companies;

seeking the appointment of, engaging and instructing the special managers in respect of the Baglan Group companies; and

maintaining, securing and funding the ongoing operation of the Baglan Group companies undertakings, and distributing the assets of the companies in the ordinary course of the OR’s duties as liquidator of the Baglan Group companies.

HM Treasury has approved the proposal and I will be laying a departmental minute today containing a description of the liability undertaken.