The European Investment Bank has agreed to lend £250 million for the replacement, reinforcement and expansion of the gas distribution networks operated by Scotland Gas Networks and Southern Gas Networks. The two companies, wholly owned by Scotia Gas Networks (SGN), will receive £150 million and £100 million respectively.
SGN is the UK’s second largest gas distribution company, operating two of the largest gas networks. SGN covers the whole of Scotland and Southern Gas Networks covers central southern and south east England. The combined distribution networks deliver gas to over 5.7 million homes and businesses.
The loan will be for up to 16 years and will enable replacement of nearly 1,000 km of cast iron pipes, increase connections to final customers and provide new pipelines linked to the national distribution network. The three year infrastructure development programme will be undertaken from 2010 to 2013 and will ensure the maintenance of a safe and reliable service for existing customers, as well as catering for increased capacity/storage and peak requirements.
Increasing domestic, commercial and industrial gas use will replace less efficient use of more polluting energy sources, contributing to EU energy and environmental objectives, in particular concerning the supply security and diversification. The project will also involve expanding the gas network by 120km in Scotland and 175km in southern England, and provide gas services to remote parts of the Scottish Highlands and Islands, an EU convergence region. It is expected that around 40,000 new customer connections will be made during the year, with approximately 20,000 in each network area.
Over the last five years the European Investment Bank has provided over £4.5 billion for key energy infrastructure across the UK. In addition, UK energy projects totalling £1.8 billion are currently being examined by the European Investment Bank. Key funding has been provided to six of the eight UK gas distribution networks by the EIB.