UK considers sale of aviation fuel network

LONDON Tue May 22, 2012 8:00pm BST

An airport worker walks across the apron past British Airways aircraft at Heathrow airport's Terminal 5 in London March 30, 2012. REUTERS/Phil Noble

An airport worker walks across the apron past British Airways aircraft at Heathrow airport's Terminal 5 in London March 30, 2012.

Credit: Reuters/Phil Noble

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LONDON (Reuters) - Britain's Ministry of Defence (MoD) said on Tuesday it was considering selling its 2,500-kilometre long aviation fuel network to generate income for the government looking to reduce its debt burden.

The ministry launched a consultation on the sale on Tuesday and said it would call for an official tender if it decided to go ahead with the sale, a spokeswoman said.

"The benefits of selling GPSS (Government Pipeline and Storage System) include: generating a capital receipt for government; enabling increased private sector investment in the pipeline in order to increase the resilience of the system; and allowing commercial development," the ministry said in a legislation document.

The spokeswoman said the ministry could not speculate on how much the network was worth.

The legal framework needed for the sale passed a first hurdle on Tuesday when the publication of the Draft Energy Bill proposed to allow the sale.

The final Energy Bill is expected to pass through Parliament in the autumn.

The MoD's network distributes around 40 percent of Britain's aviation fuel and supplies sites such as Heathrow and Gatwick airports, as well as British and U.S. military airbases in England and Scotland.

Once sold, the MoD will contract the buyer to continue supplying its and associated sites with aviation fuel, the legislation document said.

The network was built in 1939 to establish an oil distribution network in Britain coinciding with the start of World War Two.

It has been extended since to include storage depots, pumping stations and other sites.

(Reporting by Karolin Schaps; editing by Jason Neely)

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