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Departmental Contingent Liability Notification: UK Green Investment Bank PLC

On 3 March, I formally launched the process of sale of UK Green Investment Bank plc (GIB) into the private sector (Transaction). The company’s success means there is strong market interest in GIB from a number of long term institutional investors and Government funding is no longer needed.

As Government is the selling shareholder and receiving the proceeds of the sale, I believe it is reasonable and appropriate in the context of the transaction to grant the following indemnity on behalf of Government.

BIS will be entering into an agreement with Poyry (electricity market report and associated price forecast provider) to release and share their information as part of the sale process to potential bidders. It is an important component of a bidder’s due diligence, risk assessment and ultimately the price they would be willing to pay. BIS would indemnify for any liability that Poyry incurs as a result of using their information in the sale process that may be brought by potential bidders in relation to the transaction. Poyry has been clear that they require such indemnities to share their information with potential bidders.

The indemnities are uncapped and are not time limited; however, the chances of the indemnities being called upon will reduce over time. It is not possible at this stage to accurately quantify the value of such indemnities. HMG has considered the risks throughout the process and I believe the likelihood of such indemnities being called upon is low.

It is normal practice when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created, explaining the circumstances and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency and/or confidentiality.

Copies of the departmental minute will be placed in the Libraries House explaining the procedure followed and containing a description of the liabilities undertaken.