Pensions Putting Off Tata Buyers, Javid Says

Several potential buyers of Tata Steel (BSE: TATASTEEL.BO - news) 's UK assets have told the Government they would not be willing to take on the company's pensions liabilities.

Business Secretary Sajid Javid made the claim as he appeared before a committee of MPs to discuss plans for the sale of the British arm of the firm.

The Government said it is working with the pension scheme trustees of Tata Steel to reduce the impact on any buyer, including whether it could separate the scheme from the business.

Mr Javid said: "A number of the potential buyers ... have said that we won't have much interest if we have to take over the current pension plan as it is.

"It (Other OTC: ITGL - news) 's a very big plan, it's expensive compared to today's plans and it's not unreasonable for many buyers ... to say 'look we're interested in the assets but this would be an issue.'"

He said he wanted to see a resolution of the sale as soon as possible and claimed the Government was not prepared to take a stake above 25% in the assets.

Meanwhile, the head of Tata Steel UK said there was no "dead drop" deadline for the sale, but underlined it was a matter of urgency and made it clear Tata could not continue to "bleed indefinitely".

If the pension fund liability was not taken care of, there will be no buyer, Bimlendra Jha went on.

He also said there were serious question marks over the viability of its Port Talbot steel plant in South Wales.

Speaking to the same committee of MPs, Mr Jha said the Government would probably have to do more to help the firm find a buyer for its steel plants in the country.

A few weeks ago, Tata Steel announced it planned to pull out of the UK and was putting its assets up for sale, with tens of thousands of jobs at risk.

Mr Jha told the business select committee that there were "structural disadvantages" in the steel industry in Britain which made production unprofitable.

He said this had forced the firm to sell its steel assets and it would not have made the shock move if it was making money.

If energy prices were the same as in Germany for example, Tata would be £40m better off, he said, but he was determined to find a buyer.

However he pointed out: "I continue to hold the view that currently there are serious question marks over the viability" of the giant Port Talbot plant and "we have said it is better for someone else to give it a try".

Mr Javid said more needed to be done to lower energy costs for the British industry.