“ONEROUS” electricity charges have been blamed for the collapse of Ellesmere Port-based Bridgewater Paper Company (BPC).
Administrators Ernst & Young (E&Y) said BPC was paying “above market value” to its power supplier Npower and was unable to secure agreement to cut those costs.
The comments formed part of the administrators’ statement of proposals to creditors filed at Companies House recently. The report also revealed that the paper company owed up to £200m when administrators were called in.
The Ellesmere Port plant, which made paper for newspapers throughout the country and employed 295 staff, had been trading at a loss for many years and was supported by parent company AbitibiBowater.
But administrators were appointed in February after its owner decided it could not support BPC’s losses any longer.
Joint administrators Tom Jack, Roy Bailey and Alan Bloom said BPC faced high costs and pressure from its customers to cut its prices. Its problems were exacerbated by the “overall inefficiency and obsolescence” of its mill.
AbitibiBowater itself filed for bankruptcy protection in the US and in Canada in April last year.
Administrators were appointed at BPC in February and began negotiations with creditors, employees and suppliers.
BPC had teamed up with Npower in 1998 to build a combined heat and power (CHP) plant to supply electricity and steam.
But the administrators said the resulting contract left BPC with “onerous energy costs”. They said BPC was paying £2.2m a month when energy prices peaked in 2008 and 2009 – “significantly above market value”.
