Finance

Kwarteng blocks £1.2bn subsea cable project backed by Tory donors


Business secretary Kwasi Kwarteng has rejected a controversial £1.2bn undersea cable project backed by two tycoons born in the former Soviet Union, who have given £1.5m to Britain’s ruling Conservative party.

Aquind, the company behind plans for a 148-mile subsea, electricity cable linking the French and British power grids, said it would consider seeking a judicial review.

The decision was made at ministerial level after the government designated the scheme, which would have had the capacity to import enough electricity to meet up to 5 per cent of UK demand, a “nationally significant infrastructure project” four years ago.

The decision was greeted with jubilation by local opponents in Portsmouth, where the cable would have come ashore. The project would have required major works to channel the interconnector along one of three main roads into the city.

Gerald Vernon-Jackson, the Liberal Democrat leader of the city council, said the plan had been a “really stupid idea”, adding: “Everyone knows you do work on one (main road) and the whole city grinds to a halt”.

Existing and planned UK interconnectors

In a statement, Kwarteng noted the scheme would have had adverse impacts on a “very densely populated” urban area. Inspectors found the project could cause harm to the Fort Cumberland Scheduled Monument and a Grade-II listed cottage as well as some sports pitches. It could also have delayed work on a coastal defence scheme.

The UK grid is planning to expand its reliance on interconnectors, as part of its plans to reach 100 per cent clean electricity by 2035. Interconnectors with France, Belgium, and Norway already supply about 10 per cent of the UK’s electricity — a figure that could double by 2026 with four more under construction or development.

Aquind argued that its interconnector would have helped the UK meet its “net zero” climate target as well as reduce spiralling energy bills. The scheme would have included a large data pipe containing 180 fibre-optic pairs for use by companies such as banks, technology firms and telecoms companies.

Trade minister Penny Mordaunt — a local MP — wrote in a submission in December that the project would have “an extremely concerning impact on our security” because France could easily cut off energy supplies to the UK, in reference to threats made by Paris last year during the dispute over post-Brexit fishing rights.

The co-owners of Aquind are both British citizens but were born in the former Soviet Union. Viktor Fedotov is a Russian-born oil tycoon, while Alexander Temerko is a Ukrainian-born former arms executive and one-time director of Russian oil company Yukos.

Alexander Temerko, co-owner of Aquind
Alexander Temerko, co-owner of Aquind © Simon Dawson/Bloomberg

Temerko was on the board of Yukos before it was seized by the Kremlin, after which he moved to the UK in 2004 and became a British citizen in 2011. He has publicly criticised Russian president Vladimir Putin over the conflict in Ukraine. But he has spoken of his links to another senior Kremlin figure, security council secretary Nikolai Patrushev.

Fedotov previously controlled a separate company that was a contractor on a major oil pipeline project in the mid-2000s for Transneft, Russia’s state oil pipeline monopoly, according to a report by the Guardian and BBC as part of the Pandora Papers offshore leaks.

Stephen Morgan, Labour MP for Portsmouth South, described the decision as a “victory for the people of Portsmouth” after years of uncertainty and “Tory cronyism.”

The Conservative party has received a total of £1.5m in donations from Aquind — jointly owned by the two tycoons — and from Temerko himself and a company linked to him called ONG. The funds were channelled to 33 MPs or their local constituency parties.

Jeremy Hunt, a former leadership contender, received £72,500 from Aquind. Other recipients include cabinet ministers such as chancellor Rishi Sunak (£5,000 to his Richmond constituency) and chief secretary to the Treasury Simon Clarke (£20,000).

Lord Callanan, who is currently a junior business minister, was a non-executive director of Aquind from 2016 to 2017. He was recused from this week’s decision.

Additional reporting by Max Seddon in Moscow



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