The councils are preparing for court proceedings as proposed abandon contracts with Gazproman energy giant controlled by the Kremlin.
Local authorities are preparing for compensation claims after calling on them to sever ties with the gas giant for fear of indirectly financing Vladimir Putin’s war in Ukraine.
Michael Gove, the secretary for raising the level, called on the heads of the councils to carefully examine their contracts with Gazprom, and set up a team in his department to help them get out of commercial business.
He wants to help the councils avoid paying exit fees when contracts expire.
But sources said local authorities are also facing payment of compensation to Gazprom. The Local Government Act prohibits councils from allowing non-commercial matters that affect contractual decisions.
One source said: “This is true in the context of terminating contracts with Russian-related companies, as is the case for any country, for politically or morally sound decisions. Termination without a legal right to do so is likely to result in a power of attorney open a claim for damages. “
Another source said it would be much easier to walk away from contracts if the government sanctioned by Gazprom instead of asking them for moral decisions.
A government source said Mr Gove would support councils that want to abandon the Russian company.
“Gazprom should not be in doubt: if you support Putin, the price will have to be paid. They can threaten with all the legal proceedings they want; we will not be deterred from taking action and we will support the councils in doing so.”
The government has banned shipments of Russian gas from UK ports, but is still looking for other ways to end the UK’s dependence on Russian supplies.
The Councils’ relationship with Gazprom is through its Gazprom Marketing & Trading subsidiary, which buys gas on the wholesale market for sale to customers, which means that gas does not necessarily come from Russia.
In addition, Gazprom has earned about $ 340 million (£ 266 million) a day from EU gas sales to The Telegraph, according to market intelligence firm ICIS, since the start of the war on 24 February. The calculation is based on the quantities supplied and the estimated fair value prices for long-term contracts.
In total, it amounts to almost $ 7 billion paid by EU countries to Gazprom between February 24 and March 15. The EU gets about 40 percent of its natural gas from Russia, with countries such as Germanymost dependent Poland and Estonia.
The United Kingdom gets less than 3 percent of its gas from Russia. Kwasi Kwarteng, Business Secretary, wants to completely stop Russian gas imports.
Mr Gove praised the councils for trying to sever ties with Gazprom. Merton Council voted last week to suspend the deal with Gazprom and is moving to Corona Energy.
Merton’s leader Mark Allison said: “I am proud that our world has been strengthened and acted upon quickly to ensure that not a single penny of our residents’ money goes to support the Russian state or its invasion of Ukraine.”
The Leveling Up department is now preparing guidelines for councils on how to deal with all legal matters arising from their offer to isolate Gazprom.
It is understood that the government could amend the law to allow councils to bypass Gazprom if it is the cheapest supplier in the procurement process.
Officials also hope that existing laws under the Social Value Act will allow councilors to suspend business with Gazprom without having to pay large exit fees.
A spokesman for the local government association said: “The Saints are deeply saddened by the tragic events taking place in Ukraine and are closely monitoring the situation.
“Individual councils decide how to act locally, but like many organizations, they are reviewing what they can take in the light of UK sanctions and the current situation.”