Ownership of the Government Pipeline and Storage System (GPSS) could be transferred to the private sector, according to international legal firm Pinsent Masons.
The GPSS has its origins in measures taken by the UK Government during World War II to provide a secure oil distribution network for the UK. The network has been expanded and restructured over several decades and today includes approximately 2,500 km of cross-country pipelines, storage depots, pumping stations, and other facilities.
The GPSS distributes approximately 40 per cent of the aviation fuel which is used in the UK, including at international and military airports.
According to Pinsent Masons Energy Specialist Murdo MacLean, proposals announced in the draft Energy Bill would allow certain assets within the GPSS to be transferred to the private sector.Article continues below…
Mr MacLean said “These measures will be of particular interest to utilities or other investors who may wish to acquire interests in cross-country pipelines and related infrastructure and earn revenues from the provision of oil transportation and storage services to Government departments and commercial entities such as airports, which source fuel through the GPSS.
“GPSS is still strategically significant in that it is used to supply major commercial airports such as Heathrow and Gatwick, as well as bases of the Royal Air Force and the United States Air Force throughout the UK.”
Pinsent Masons says that although there would be an “upfront benefit” in terms of the capital the Government could receive for the asset, it remains to be seen how quickly the Government will move to invite private sector bids. The move was announced as part of a package of measures which commentators say will lead to the biggest shake-up of the UK energy market since privatisation.