Administrators reveal state of Harrogate firm CNG Energy’s finances

The state of CNG Energy’s finances has been revealed after its administrators published its first report into the company.

The Harrogate-based company, which had offices on Victoria Avenue, fell victim to spiralling wholesale gas and electricity prices and went out of business last year.

A report published by Interpath Advisory, the administrators appointed to take charge of the company, has revealed CNG owes £3.6 million to HMRC and other “secondary preferential creditors”.

Although the administration process is still in the early stages, the report says it expects to pay “a dividend” to those creditors.

The report says:

“Based on current estimates, we anticipate that secondary preferential creditors should receive a dividend.

“We have yet to determine the timing and quantum, but we will do so when we have completed the realisation of assets and the payment of associated costs.”

The company also owes more than £4 million to trade creditors and £6 million to consumer creditors.

London-based IT consultancy firm Gentrack UK Ltd is owed £450,759 and is among the highest creditors in the report.

Read more:

Meanwhile, the company has also made all but 21 employees redundant. CNG employed around 145 staff in Harrogate.

Staff still working are currently assisting with the transition of customers over to new suppliers.

Company was operating on ‘thin margins’

Administrators also found that the company had been experiencing financial difficulty for some time due to “significant cash flow pressures primarily caused by sharp price increases in wholesale gas prices and the general volatility in the energy market”.

The company was already operating on “thin margins” prior to the covid pandemic and had taken out a secured loan of £35 million from Glencore, a multi-national oil and gas firm.

However, the failure of a number of key customers and spiralling wholesale costs left the company unable to finance itself. The report says:

“In the absence of the financial and operational support of CNG Wholesale and other group entities, the company did not have the financial resources required to operate as a standalone business or bear the £35 million loan that was due to Glencore.

“As a result, the directors and Glencore began to explore ways to facilitate an orderly exit from the market.”

Ofgem appoints company to take on CNG customers

Energy regulator Ofgem has appointed a new company to take on customers of Harrogate firm CNG Energy.

CNG ceased trading this month after 27 years and entered the regulator’s Supplier of Last Resort process.

The SoLR procedure was established as a safety net to ensure that when a company stops supplying energy, affected customers are guaranteed continuity of supply through other companies.

Ofgem has now appointed Pozitive Energy, which is based in Colchester, to supply energy to 41,000 customers of both CNG Energy and CNG Electricity.

In a statement on Pozitive Energy’s website, it said:

“We’ve reached out to all current CNG customers by post and email to let them know we are taking over their supply and what to expect over the next four weeks. We’ve confirmed current rates and how to secure more competitive rates with Pozitive Energy.”

Read more:

Meanwhile, Neil Lawrence, Ofgem’s director of retail, said:

“We understand that this news may be unsettling for customers, however they do not need to worry.

“Their energy supply will continue as normal, and domestic customer credit balances as well as some non-domestic credit balances, will be honoured.”

Downfall of CNG

The move follows the demise of Harrogate company CNG, which told its employees about the SoLR process in an email on November 3.

However, the company’s troubles became apparent in October when Paul Stanley, managing director of CNG, sent a letter to customers saying it was exiting the wholesale market.

The company, which is based on Victoria Avenue, supplied energy to about 15 to 20 retail energy companies through its wholesale business arm and also had around 50,000 business customers.

It had been impacted by spiralling global gas prices over the past few months.

About 145 jobs have been lost and staff have been told that wages for days worked this month are not guaranteed to be paid.