Councils are grappling with steep costs for breaking off contracts with Russian suppliers such as Gazprom as the government presses public bodies to cut funding for “Putin’s war machine”.
The Cabinet Office has told taxpayer-funded organisations to urgently review their ties with such companies after the invasion of Ukraine.
Local authorities, some of which have deals worth millions of pounds with Gazprom’s UK supply arm, face potential termination fees for breaking deals.
If they do get out of the contracts, cash-strapped councils will need to strike new deals that could be up to six times more expensive at a time of surging energy prices, Sky News has been told.
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They also face a potential hurdle because of laws banning them from allowing non-commercial issues to influence contracting decisions and obliging them to seek the best value.
In a consultation published last week by Portsmouth council, it said breaking its Gazprom contract could cost more than £100,000 in termination and broker fees.
But an even bigger headache could result from the council being liable for a contract worth just under £1m for gas supply this winter if Gazprom is unable to find an alternative buyer.
The new government guidance issued on Monday relates to public bodies including hospitals and Whitehall departments and their contracts with Russian and Belarusian companies.
Public sector organisations are being urged to examine the small print of deals to see if they can extract themselves from them.
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Source : skynews
