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BP profit jump sparks for bigger windfall tax

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The government is facing growing calls to raise more money from the windfall tax on energy firms after oil giant BP reported a huge rise in global profits.

BP made $8.2bn (£7.1bn) between July and September, more than double its profit for the same period last year.

Surging oil and gas prices have led to big gains for energy firms but are also fuelling a rise in the cost of living.

BP expects to pay $800m in UK windfall taxes this year while rival Shell recently said it will pay none.

The windfall tax was introduced by Rishi Sunak in May when he was chancellor. A Treasury spokesperson said the tax was expected to raise £17bn this year and next “to help fund cost of living support for eight million people”.

But Ed Miliband, shadow climate change secretary, said that BPs’ profits were “damning evidence of the failure of the government to levy a proper windfall tax”.

“Rishi Sunak should be hanging his head in shame that he has left billions of windfall profits in the pockets of oil and gas companies, while the British people face a cost-of-living crisis,” he said.

Alok Sharma, UK’s COP president and the former Business Secretary, tweeted: “We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”

Treasury sources have indicated an extension to the windfall tax is being discussed ahead of the Autumn Statement on 17 November, which will detail plans for tax rises and spending cuts as the government attempts to fill a “black hole” in public finances.

That could include increasing the rate oil and energy companies have to pay on extraordinary profits, extending the timeframe it applies for or expanding it to include other firms benefitting from higher oil prices such as electricity generators.

The Treasury has warned that everyone will need to pay more tax “in the years ahead”.

Last week, Shell revealed that it had paid no windfall tax in the UK because it had invested millions of pounds here. But it said it expected to start paying the levy next year.

BP expects to pay $2.5bn in tax on its North Sea business this year, which includes the windfall levy.

The company also plans to buy back an additional £2.5bn of its shares. So-called share buybacks help boost a company’s share price and are popular with investors.

“Companies like BP are making huge profits and channelling these straight back to already-wealthy shareholders through share buyback schemes,” said George Dibb, head of the Centre for Economic Justice at the IPPR, the left-leaning think tank.

“Instead of reducing costs for consumers or investing in renewable energy, these fossil fuel giants are prioritising transfers to shareholders.”

‘Windfall of war’

Oil and gas prices, which began increasing once Covid restrictions eased, accelerated after Russia invaded Ukraine in late February, resulting in huge profits for energy companies. But they have also exacerbated price rises – or inflation – for consumers which hit 10.1% in September.

All the big oil firms, including Total and Exxon Mobil, have announced bumper profits in the past week. Overnight, oil giant Saudi Aramco said it had made a profit of $42.4bn over just three months due to higher commodity prices.

On Monday, US President Joe Biden urged major US oil firms who are bringing in big profits to stop “war profiteering”, threatening to hit them with higher taxes if they do not increase production which would help lower prices.

“Their profits are a windfall of war,” he said.

BP profit

Commenting on whether oil firms should pay more tax, Nick Butler, a former BP executive who is now a visiting professor at King’s College London, told the BBC’s Today programme: “They have to balance what they pay in tax, what they invest in the future and what they pay back to shareholders.

“I think the next tax squeeze will come on the electricity retailers who haven’t been subjected to it yet,” he said.

“But if BP has to pay more in tax I think their shareholders will have to pick up part of the pain.”

Higher energy bills

Higher energy prices have fuelled the rise in gas and electricity bills for both households and businesses.

The government is limiting the impact by temporarily capping the cost of gas and electricity, but instead of lasting for two years as originally planned, this scheme will now end in April.

There have been warnings that typical household gas and electric costs could reach more than £4,300 when support is scaled back.

Oil and gas firms operating in the North Sea are taxed differently to other companies and pay a total tax rate of 65%.

Companies have been able to reduce the amount of tax they pay by factoring in losses or increasing investment.

The UK windfall tax includes a measure that allows energy companies to apply for tax savings worth 91p of every £1 invested in fossil fuel extraction in the UK.

Liberal Democrat Treasury spokesperson Sarah Olney said the tax was “incredibly weak”.

But a Treasury spokesperson said: “We also want to see the sector reinvest its profits to support the economy, jobs, and our energy security, which is why the more investment a firm makes into the UK, the less tax they will pay.”

BP’s worldwide profit for the quarter was much higher than analysts had expected but dipped from the previous three months due to a fall in the wholesale price of oil.

Oil prices hit $128 per barrel in early March as the assault on Ukraine intensified and a number of countries imposed sanctions on Russia and have since fallen back.

But BP said on Tuesday that even if oil prices dropped as far as to $60 per barrel, it could still afford to return billions of dollars to its shareholders.

Reports /TrainViral/

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Six tonnes of cocaine found in banana shipment

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Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.

The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.

The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.

Five people had been arrested following the discovery, according to the prosecutor-general’s office.

Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.

The cocaine parcels had been hidden beneath crates of bananas destined for export.

One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.

They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.

Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.

Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.

Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.

These security forces have stopped large amounts of cocaine from being shipped to Europe.

In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.

However, extortion, kidnappings and murders remain high in the Andean country.

Reports /Trainviral/

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Thailand expands v-free entry to 93 countries

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Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.

Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,

Previously, passport holders from 57 countries were allowed to enter without a visa.

Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.

Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.

Most of the visitors were from China, Malaysia and India.

Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.

Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.

The revised visa-free rules are part of a broader plan to boost tourism.

Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.

The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.

In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.

However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.

“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.

“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.

Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.

Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.

fatal shooting in Bangkok’s most famous shopping mall last year has also caused concern among visitors.

Reports /Trainviral/

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Royal Mail will deliver letters forever

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The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.

“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.

Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.

Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.

Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.

In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.

However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.

The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.

But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.

As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.

The USO is a potential sticking point for both the government and unions.

Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.

How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.

Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.

Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.

‘Unconditional commitment’

Mr Kretinsky has committed in writing to honouring the USO, but only for five years.

And after that, in theory, the new owners could just walk away from it.

However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.

“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”

Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.

Woman's hand posting a letter into a red post box

Another potential stumbling block for the deal, however, is how the company will be structured.

Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.

Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.

To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.

It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.

If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.

Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.

“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.

“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”

Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.

The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.

Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.

“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”

He said if the management, union and employees work together, “we will be successful”.

Another concern is the potential break-up of the business.

The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.

Mr Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.

But he has a way to go to convince the CWU.

“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.

However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”

The union cannot stop this deal but the government can block it under the National Security and Investment Act.

Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.

Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.

Who is Daniel Kretinsky?

Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.

He then made serious money in Central and Eastern European energy interests.

This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.

He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.

The Czech businessman is worth about £6bn, according to reports.

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