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'No Justification' For Energy Prices - Report

Written By Unknown on Selasa, 03 Februari 2015 | 14.47

The big six energy companies are failing to pass on price cuts in full - costing the average household £145 a year - a new report says.

Which? said its research shows a failure to align retail prices with wholesale costs has seen consumers forced to fork out an extra £2.9bn over the last year.

It came as Ofgem, the government department charged with protecting the interests of electricity and gas consumers, was criticised for advising families to save money by making packed lunches or by jogging instead of joining a gym.

According to Which? there was "no justification" to increases in gas and electricity prices in late 2013, based on wholesale costs.

And it argued the recent cuts of up to 5.1% in standard gas tariffs by the so-called 'big six' energy suppliers should have been higher.

The report claimed that if they were aligned with wholesale energy costs, the reductions in gas and electricity prices should have been around 10%.

Which? executive director Richard Lloyd said: "Our analysis places a massive question mark over how suppliers have been setting prices over the last two years.

"They now need to explain to their customers why bills don't fall further in response to dropping wholesale prices.

"While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they'll deliver fair and affordable energy prices in the future."

Ofgem was accused of "adding insult to injury" over its cost-cutting advice to consumers, which also included switching to a second-hand phone and not buying coffee.

Eva Jasiewicz, from Fuel Poverty Action, told Sky News that Ofgem was not protecting the interests of consumers, 68% of whom she said want energy brought back into public control.

"Ofgem are blaming the poor, they should be putting the blame on the big six," she said.

"The big six energy companies have been making massive profits (and) no one's asking the CEOs of these companies to cut down.

"They're giving themselves multimillion-pound pay packets, but they're not passing on the cuts at all in the price of fuel to consumers."

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BP Full-Year Profit Down 9.7% Amid Crude Slide

Oil giant BP has seen its full-year profit drop by almost 10%, amid a global slide in crude prices.

It said the underlying replacement profit for the 12 months ending in December was $12.1bn (£8bn) against $13.4bn (£9bn) in the previous year.

The fall of 9.7% was less than expected by industry analysts.

Its major production partnership with Russia's Rosneft saw a profit decline of almost 15%.

BP said net debt for the company at the end of 2014 stood at $22.6bn, compared with $25.2bn in 2013.

The company, which is still feeling the effects of the Gulf of Mexico oil spill in 2010, said it suffered a fourth quarter pre-tax charge of $477m, taking the full-year total to $819m.

The declining fortunes come as global crude prices have dropped by around half since June.

On Monday an oil summit was held in Aberdeen where Scotland's First Minister Nicola Sturgeon described the situation as "very challenging".

Industry leaders called for tax cuts in the sector that employs around 440,000 people across Britain.

BP said it would reduce its global capital expenditure this year to around $20bn, down from a previous estimate of some $25bn.

Last week rival Shell said it would cut its expenditure by around 4.5%, while Chevron said it would slice spending by 13%.

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Ocado Sees First Profit Since Launch In 2000

Online grocery firm Ocado has reported its first annual pre-tax profit since it was launched in 2000.

The company said in the year to November 30 its profit reached £10.1m.

The figure was in line with expectations and comes on the back of a £3.8m loss in the previous year.

The company signed a deal with supermarket chain Morrisons in 2013.

Analysts said the online delivery sector was currently growing at around 15% a year.

Group sales for the year rose by a fifth, to £1.03bn.

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Sovereign Funds Dial Up Â£3bn O2 Mobile Stake

Written By Unknown on Senin, 02 Februari 2015 | 14.47

By Mark Kleinman, City Editor

A pack of the world's biggest sovereign wealth funds are pursuing a stake in the company that is poised to become the UK's largest mobile phone operator.

Sky News has learnt that state-backed investors from China, Singapore and the Middle East have approached advisers to Hutchison Whampoa, the Hong Kong-based conglomerate, about acquiring shares in a merged O2 and Three.

The combined group, which will be created by Hutchison's purchase of O2 for £10.25bn, is expected to have an enterprise value of approximately £15bn.

It would carry debts of roughly £6bn, and Hutchison has signalled that it will sell about 30% of the new company - worth in the region of £3bn - to institutional investors.

Sources said on Saturday that the Hong Kong-based company had already received a string of enquiries from potential buyers of shares.

The discussions are at an early stage, but are said to include approaches from the Government Investment Corporation of Singapore and a number of giant Canadian pension funds.

The appetite from sovereign investors underline the continuing interest in UK companies following the Qatari takeover of London's Canary Wharf business district and Friday's purchase of a 9.9% stake in British Airways' parent by Qatar Airways.

Hutchison Whampoa won a period of exclusivity to negotiate a takeover of O2 with Telefonica, its Spanish parent, earlier this month, with talks said to be progressing well.

The deal is the second major transaction in the UK mobile sector in quick succession, with BT expected to finalise the terms of its £12.5bn takeover of EE - currently the country's biggest network - in February.

The mergers have sparked concerns about the prospect of higher charges for mobile phone customers, with Three's status in the market as a 'challenger' to its bigger rivals seen by analysts as unsustainable if its owner's takeover of O2 is completed.

This week, Sky plc, the owner of Sky News, struck a deal with Telefonica UK that will allow it to offer mobile voice and data services for the first time.

Like rivals BT, Vodafone and TalkTalk, the move will enable Sky to provide the 'quad-play' of fixed and mobile telecoms, broadband and pay-TV to its customers.

The O2 purchase will be the latest in a series of takeovers led by Li Ka-shing, the Hutchison chairman who has become the UK's biggest foreign direct investor.

In addition to 3, Mr Li's businesses own Superdrug, the container port at Felixstowe and the Eversholt rail company.

Telefonica had been in talks to sell O2 to BT before the British telecoms group decided instead to pursue talks with EE, which is jointly owned by Deutsche Telekom and France Telecom.

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Greece In New Debt Deal Talks With Osborne

Greece's finance minister is due to meet British counterpart George Osborne, as Athens launches its drive to secure a new debt agreement.

Yanis Varoufakis is in London after holding talks in Paris, where he compared Greece to "drug addicts craving the next dose" of loan tranches.

Greece wants to end its existing arrangement with the European Union, the European Central Bank and International Monetary Fund "troika" when its aid deadline expires on 28 February.

Mr Varoufakis said it was time for his country to go "cold turkey".

"For the last five years, Greece has been living for the next loan tranche," he said.

"We have resembled drug addicts craving the next dose. What this government is all about is ending the addiction,"

Greece has begun to roll back on austerity measures imposed under its existing bailout deal and France says it will try to help the country's new government find a debt agreement.

French finance minister Michel Sapin ruled out cancelling the debt but said Athens was right to be concerned about the burden of its repayments.

"France is more than prepared to support Greece in this approach," he said.

"I am confident that Greece will be in a position to overcome the present challenges. I am confident that the Greek government will be in a position to produce indispensable reforms.

"Anything that can alleviate the Greek debt burden will be welcome... but of course there is no question of cancelling the Greek debt."

Mr Osborne said: "I welcome this opportunity, so soon after the Greek election, to discuss face to face with Yanis Varoufakis the stability of the European economy and how to boost its growth."

Prime Minister David Cameron initially responded to Syriza's rise to power by warning it would increase "economic uncertainty across Europe" but later offered the new leader UK help on tax collection.

Greek Prime Minister Alexis Tsipras wants to agree a bridging deal with the troika to gain breathing space.

He hopes a new deal can be negotiated to reduce Greece's unmanageable public debt burden of more than 175% of its economic output, or €320bn (£240m).

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Ex-BP Boss Hayward Lures Monaghan To Genel

By Mark Kleinman, City Editor

The oil company led by Tony Hayward, the former boss of BP, is poised to announce a shake-up of its executive team four years after it was founded.

Sky News has learned that Genel Energy, which is listed on the London Stock Exchange, will issue a statement on Monday in which it will say that Julian Metherell is to step down as its chief financial officer.

Mr Metherell, a former partner at Goldman Sachs, is expected to retire at Genel's annual meeting in the spring, having played a key role in the company's development.

He will be replaced by Ben Monaghan, one of the City's top oil and gas sector bankers.

Mr Monaghan is understood to have resigned from his role leading JP Morgan's European energy business on Friday, and a source close to the bank said that he had done so in order to join Genel.

The timing of Mr Metherell's departure is understood to have been planned for months, and is likely to presage further change in the next year or so, with Mr Hayward expected to move into the chairman's role.

The management change comes as the world's oil producers grapple with the implications of the fall in crude prices over the last six months.

Genel, whose operations are focused on Kurdistan, reduced its revenue forecasts earlier this month in the wake of the declining oil price.

The company said revenue in 2015 would be up to $200m lower at between $350m and $400m, reflecting its expectation that Brent crude prices will remain subdued at around $50-a-barrel rather than the $80 on which earlier projections had been based.

Mr Hayward, who raised hundreds of millions of pounds to acquire Genel after leaving BP in the aftermath of the Gulf of Mexico oil spill in 2010, said the company remained in solid financial health.

"Our robust balance sheet, coupled with rising onshore oil production amongst the lowest cost in the world, and the significant financial flexibility in the portfolio, leaves us well-positioned to continue to grow even in a period of sustained low oil prices," he said on January 21.

As part of that statement, Genel also said it expected to record a write-off of $480m in its accounts for last year in relation to offshore drilling near Angola, Malta and Morocco.

The company saw the removal of an important obstacle in December when it began receiving delayed payments owed to international oil exporters by the Kurdistan Regional Government.

Other London-listed oil explorers in Kurdistan have also received millions of pounds in such payments, although they have otherwise fared less well than Genel.

Sky News revealed earlier this month that Afren was in talks with its lenders about a financial restructuring, while Gulf Keystone Petroleum has been hit by a string of rows with shareholders about pay and corporate governance.

A Genel spokesman declined to comment on Sunday.

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Merkel Rules Out Debt Writedown For Greece

Written By Unknown on Minggu, 01 Februari 2015 | 14.47

German Chancellor Angela Merkel has ruled out a writedown of Greece's massive debt, as EU officials threatened a funding cut-off to Greek banks.

Mrs Merkel and European Central Bank (ECB) policymakers have hardened their stance on the weekend over fears the Greek government does not agree it renew its bailout package in February.

"There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt," Mrs Merkel said on Saturday.

"I do not envisage fresh debt cancellation."

In a thinly veiled threat to Athens and rising anti-austerity political movements such as in Spain, she added: "Europe will continue to show solidarity for Greece, as for other countries hit particularly hard by the crisis, if these countries undertake their own reforms and savings efforts."

Greece's newly elected anti-austerity government earlier said it would not co-operate with its international "troika" of creditors - the EU, ECB and the International Monetary Fund.

Greece's finance minister Yanis Varoufakis said that despite warnings his country would shortly run out of money, his government preferred to do without fresh funds and instead renegotiate its entire €240bn (£180bn) bailout package.

Athens has been promised another €7.2bn (£5.4bn) in funds from the troika if it completes reforms required by its lenders by 28 February, when the bailout programme runs out.

Erkki Liikanen, a member of the ECB's policymaking Governing Council, said that funding could dry up if Greece does not remain in an agreed programme.

On Friday Mr Varoufakis slammed the current system: "This government was elected on the basis of analytically questioning the very logic of the programme now being applied."

"We don't want the €7bn ... We want to sit down and rethink the whole programme."

Greece believes repayments pegged to the economic growth rate would better support the fragile economy.

Mr Varoufakis said Athens was willing to negotiate with its lenders but not with the troika, which he described as a "committee built on rotten foundations".

The troika was formed in 2010 to rescue debt-riddled Greece with the bailout on the condition Athens imposed huge spending cuts and fiscal reforms.

Prime Minister Alexis Tsipras was elected last Sunday on a platform of ending austerity and erasing most of the country's national debt.

Mr Varoufakis meets French counterpart Michel Sapin in Paris on Sunday and British Chancellor George Osborne on Monday.

Mr Tsipras will meet Italian Prime Minister Matteo Renzi on Tuesday and French President Francois Hollande on Wednesday, but has no plans to visit Germany - Europe's biggest economy and its effective paymaster.

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US Economic Growth Slows To 2.6% Annual Rate

US economic growth slowed in the final quarter of 2014, but its performance was enviable when compared to new woes for the eurozone and Russia.

It was confirmed on Friday that the fastest pace of US consumer spending since 2006 was offset by lower business spending and a wider trade deficit in the three months to December.

The annualised measure for the period came in at 2.6% - meaning gross domestic product (GDP) rose 2.4% for 2014 as a whole - only behind that of Britain in the major industrialised economies.

Consumer spending, which accounts for more than two-thirds of US economic activity, advanced at a 4.3% pace in the fourth quarter - they key holiday season for retail.

Improved jobs and wage figures, coupled with a 43% fall in petrol prices since June, have meant that Americans have more to spend.

The strong pace of consumer spending was overshadowed by a drop in capital expenditure.

Business spending on equipment fell at a 1.9% rate - the largest contraction since the second quarter of 2009 - possibly reflecting cutbacks in the oil industry given the plunging prices.

Economists did not see a connection to world economic weaknesses denting confidence.

The growth figures were released as other economic developments highlighted pressures facing much of the rest of the world.

It emerged that negative inflation deepened in the struggling eurozone last month.

Price growth was measured at an annual rate of -0.6% amid the crash in oil values, which is actually expected to support economic activity ahead of the European Central Bank's €1.1tn quantitative easing programme starting in March.

The central bank action is aimed at halting a slide towards deflation - an entrenched period of falling prices, which tends to put consumers and businesses off making purchases in case they can secure goods and services cheaper, later.

Russia's reliance on its oil revenues - coupled with the impact of Western sanctions over Ukraine - is set to tip the country's economy into recession.

Its central bank confirmed on Friday that such was its concern about its economic outlook, it would cut its core interest rate from 17% to 15%.

It was moved to the higher rate just late last year to try and shore up the rouble, which has dived in value against the dollar, and prevent inflation soaring out of control.