Brendan Howlin (Wexford, Labour) | Oireachtas source

I propose to take Questions Nos. 1, 2 and 4 together.

The House will be aware from my announcement in February 2012 of the shape and scale of the State asset disposal programme that is being pursued. The asset disposal programme agreed at that time by the Government consists of the sale of Bord Gáis Éireann's energy business, not including its gas transmission and distribution systems or the two gas interconnectors, which will remain in State ownership; the sale of some of the ESB's non-strategic power generation capacity; and the disposal of the State's remaining shareholding in Aer Lingus, when market conditions are favourable in circumstances that accord with Government transport policy and at an acceptable price to the Government. After further consideration, and having ruled out the sale of Coillte's land holdings, the Government determined that a concession for harvesting rights to Coillte forests would be proposed for sale. I am pleased to report that significant progress has been made to date in this area.

On 24 March, Bord Gáis Éireann entered a definitive agreement to sell the Bord Gáis Energy business to a consortium comprising Centrica plc, Brookfield Renewable Energy Partners LP and iCON Infrastructure on the basis of an enterprise value of €1.1 billion. The final sale price and net receipts to the State will be subject to adjustments at completion for certain balance sheet items, such as net debt and working capital, and the level of certain of Bord Gáis Energy's earnings from 1 January 2014 to the completion of the transaction, the value of which will remain with Bord Gáis Energy. The board of BGE will then begin paying special dividends to the Exchequer, commencing immediately following the completion of the transaction, as funds are both available and required. It is currently expected that this transaction will be completed in the second quarter of this year.

The ESB announced in October 2012 that it would sell some of its non-strategic power generation assets on a phased basis, commencing last year. In February 2013, the ESB announced its intention to sell its 50% shareholding in each of its international tolling plants, Marchwood in the UK and Bizkaia Energia in the Basque country, and in October it announced that it is to sell its two peat stations, West Offaly Power and Lough Ree Power. The ESB completed the disposal of its interest in Marchwood last November for a price that was in excess of expectations. Approximately €153 million in dividends accrued to the Exchequer in January 2014 as a result. It is expected that the sale of Bizkaia Energia will be completed very shortly.

With regard to the two peat stations, the ESB is proposing to prospective buyers an arrangement under which it will continue to operate and maintain the stations, with all existing staff.

The ESB has appointed financial and legal advisers to perform due diligence on this transaction. I am informed that this process is likely to conclude this year.

In regard to Coillte, the Government decided last June that it was not the appropriate time to proceed with the proposed sale of harvesting rights and that instead there should be a focus on restructuring of Coillte overseen by NewERA and the relevant stakeholder Departments. Work to give effect to this decision is proceeding. An evaluation of how to give effect to a beneficial merger of Coillte and Bord na Móna in the context of the programme for Government commitment to create a streamlined and refocused commercial State company in the bio-energy and forestry sectors is also being finalised.

Ryanair's 2012 bid for Aer Lingus, the subsequent investigations by the European Commission and the Competition Commission in the United Kingdom and the court cases being taken by Ryanair have complicated the planned disposal of the State's stake in the airline.  However, the Government remains open to the sale of this stake when market conditions are favourable, a price acceptable to the Government can be achieved and, importantly, in circumstances that accord with Government transport policy.  As I have informed the House on a number of occasions, the funds realised from asset disposals will, in one form or another, go towards supporting job creating initiatives in the economy. Some €110 million of the proceeds has already been factored into the budgetary figures for 2014. This is being used to meet up-front Exchequer costs associated with the new PPP programme. The Exchequer stimulus package which I announced last year will be encompassed in these moneys. 

I have already indicated that additional capital investment has been authorised to deal with the flooding crisis and the determination of the amount of money available for further stimulus investment will be considered in this context. In addition, a review of the public capital programme, led by my Department, has recently commenced. This review will culminate in the setting of the Government's capital investment framework for the next five years. It is my intention that the use of further proceeds arising from the sale of assets over the course of the next few years will be considered as part of the review. The jobs impact of this investment is dependent on how the proceeds are reinvested. A 2009 survey, carried out by the Department of Finance, found that the labour intensity of capital projects generally fell within the range of eight to 12 jobs for every €1 million invested. While this estimate for labour intensity is used as a general rule of thumb, the exact employment impact varies from project to project, as different types of public construction project have different levels of labour intensity. For example, smaller scale projects tend to be more labour intensive than major national infrastructural projects. To get the maximum jobs impact from the reinvestment of proceeds, the main focus will be on such small scale and labour intensive works.

See this speech in context