BP threatens to sue
BRITISH Petroleum, whose Grangemouth plant is Scotland’s heaviest user of water, is threatening to sue Scottish Water because of the publicly-owned authority’s refusal to allow the use of alternative supplies at the petrochemicals complex.
BP, led by chief executive Sir John Browne, consumes 60 million litres of water per day at Grangemouth, at an annual cost of £12.7 million but Harry MacMillan, president of government and public affairs at BP Scotland, said Grangemouth could cut the amount it pays for water and effluent treatement by “at least half” were Scottish Water to adopt a more flexible approach, securing jobs and a healthier future for the Grangemouth complex.
The oil firm, led by chief executive John Browne, has devised a plan which would dramatically cut the amount of “potable” water used by Grangemouth through the use of “grey” water (from rivers and canals) and recycled supplies.
British Waterways, which manages the Forth-Clyde canal, is keen to able to sell its surplus overflow water to companies such as BP for “grey” water use.
“Our proposals involve reducing the amount of potable water we use at Grangemouth by 98%,” said MacMillan. “In our view, it would be much more efficient to give all that potable water back to Scottish Water for it to provide to other customers.”
However, BP is so disappointed at Scottish Water’s refusal to budge on this issue — which along with business rates and the UK’s failure to join the euro is claimed to be undermining Grangemouth’s competitiveness — that it is contemplating legal action.
“That is one of the options we are looking at,” said MacMillan. “We’re currently taking legal advice.
“The frustration has arisen because we know that we can [switch to alternative supplies] in an economic manner. But the position being taken by Scottish Water is undermining the economics of our plan.”
MacMillan said Scottish Water still intends to charge BP £12.7m per year, even if it cuts its usage of potable supplies by 98%. He said: “Our view is that, if we don’t want their water, we shouldn’t have to pay.”
Scottish Water, formed from the merger of the three Scottish water boards in April 2002, seemed bemused by BP’s allegations. A spokesman said: “Scottish Water has been involved, over a considerable period, in detailed discussions with BP over water charges at Grangemouth. As these confidential discussions are still ongoing, it would be inappropriate to comment publicly on them.
“However, we can confirm that the charges for 2003-04 are the first increase BP will have experienced in four years. We also have some difficulty understanding the figures being suggested by BP as they bear no relation to any figure we have discussed with the company.
“It should be stressed that Scottish Water chaired the Grangemouth Water Users Group, the actual initiative which identified examples of off-network, alternative water supplies, such as commercial development of canal water, which BP and other companies in Grangemouth could use to help reduce their costs.”
Speaking at the CBI Scotland lunch in Edinburgh last Friday, director-general Digby Jones said members were concerned about the cost of water compared to that in England. Some firms are seeing 500% rises in water bills this year.
Jones said: “We realise that Scottish Water faces a difficult task in dealing with accumulated indebtedness and an infrastructure which suffered from under- investment for decades. But we cannot go on like this. It’s time for the Scottish Executive to look again at the ownership question.”
However an Executive spokesman said it had no intention of reviewing the status. He said: “Scottish Water has only existed for a year and its board is responsible for running the company.”
This article was published in the Sunday Herald on 15 June 2003