Dáil debates

Wednesday, 20 October 2010

Priority Questions

State Assets and Liabilities

1:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

Question 47: To ask the Minister for Communications; Energy and Natural Resources if he has met with or made a submission to the Special Group on Public Service Numbers and Expenditure Programmes that is looking into the sale of State assets; and if he will make a statement on the matter. [38300/10]

Photo of Eamon RyanEamon Ryan (Dublin South, Green Party)
Link to this: Individually | In context

Together with officials of my Department I met with the review group on State assets and liabilities on 13 October. The Department, with my approval, made a submission in the matter to the review group in advance of the meeting. The meeting was a useful and wide ranging discussion. The review group is expected to report to the Government by the end of the year. It will then be for the Government to decide on the issue.

I fully agree that given the current economic situation and the severe pressures on the public finances, full consideration must be given to making the best use of State assets. I have responsibility for a considerable number of commercial semi-State bodies. These companies play a critical role in the Irish economy, by providing essential infrastructure and services to consumers and enterprises. They are also significant employers and most of them contribute significant dividends to the Exchequer.

The principal bodies under my remit are the State energy companies, public service broadcasters and An Post. I also have policy responsibility for the exploitation of spectrum and a number of natural resources.

The major energy utility companies, namely, ESB, Bord Gais, Bord na Móna and EirGrid, are pivotal contributors to the achievement of Government energy policy objectives. They ensure security of supply to the economy and consumers through investment programmes in the national energy networks and power generation including major renewable energy investments. They are collectively committed to decarbonising the energy system in support of the smart economy. The supply companies, ESB and Bord Gais, have also contributed to the much more competitive regime now operating in the electricity and gas markets.

I would expect that the review group will take strong account of the major contribution made by the State companies at both sectoral and national economic levels. As I stated already, any decisions on disposal of any State assets will be a matter for the Government.

The work of the review group also presents an opportunity to examine existing structures and practices within the State ownership model, and to assess how best these valuable assets can contribute to national investment priorities and help restore growth. I believe for instance that the review group should give consideration on how best to extract further sustainable value for the State by exploring innovative ways to secure investment, including new private sector financing models, in renewable energy sources. There is major untapped potential in the national forestry sector, and in the energy biomass and environmental sectors. Both Bord na Móna and Coillte, with their core skills and resources, and considerable land banks, are well placed to develop these sectors further and I have raised this specifically with the group.

3:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context

There is a tied theme between Deputy McManus's last question and my previous question. The Minister is just not interested in working out the cost of anything. During the boom period, "Champagne Charlie" gave tax cuts, pay increases and tax shelters to everybody, and during the bust, "Easy Eamon" is prepared to sign any blank cheque without ever working out the cost. Ministers may change, but this Minister really fits in with Fianna Fáil. He is more Fianna Fáil than Fianna Fáil itself.

I believe the Minister wants a consensus on a four year budget strategy, and I think we do need such a strategy. It will hopefully be possible to do this within four years. For that to be credible, we need a four year growth strategy. To achieve growth in the economy, we need stimulus and we need competitiveness. My party takes the view that the sale of State assets may form part of that, provided that money is invested in new assets, such as next generation networks, forestry, on-shore wind and other forms of renewable energy.

Does the Minster have any principled objection to the sale of State assets?

Does he have any principled objection to the sale of State assets or can he agree to them if they add up? What strategic benefit does the State have in owning three generation companies and two supply companies?

Photo of Eamon RyanEamon Ryan (Dublin South, Green Party)
Link to this: Individually | In context

I do not have any principled objections; I treat each question on a pragmatic basis, looking to see what value we can get. In response to the Deputy's second question, I see the energy companies group slightly differently. I see Bord Gáis and ESB competing in the electricity and gas markets and they will probably become increasingly integrated. I also see them managing our electricity distribution network in ESB's case and the gas network in Bord Gáis's case, which they do in a very effective way. I believe they can compete with each other while still having a common owner. I do not see that impeding competition; in fact day in and day out they are competing very effectively against each other and bringing benefits with it.

They are also bringing great benefits to the State in that they are able to raise funds, which is difficult for certain companies in the State at present, and spend it very effectively. They are providing a very significant stimulus, along with EirGrid, in terms of developing our transmission and distribution networks that will be of long-term economic value to the State. Those companies are continually able to raise funds and spend large amounts of €1.5 billion to €2 billion each year in this country, which provides a major stimulus for the country and I want it to continue. The greatest value we can get from those companies is through the economic lift they give through their competent management and competitive instincts.

I would put Bord na Móna and Coillte in the same space although they have a slightly different energy space. While to date Bord na Móna's generation has been from biomass, from peat, I see that changing and moving away because the PSOs we are reviewing will come to an end in the latter part of this decade so those companies are already on a path towards seeking alternative markets and alternative space in the energy side. Bord na Móna in particular has a great opportunity in a range of environmental services and bio-energy businesses that are different in nature from the work that Bord Gáis and the ESB would do. They may well develop wind farms and their land bank may be very useful for the development of such resources, but I would imagine that would be done as it has been to date whereby they contract with other energy companies and in that collaborative basis get facilities built.

I believe Bord na Móna has great opportunities in its logistics skills and its ability to handle biomass and also its skills in providing environmental services in waste, water or energy services. It is quite different from a gas or electricity utility service, where there is a supply company, a network company and an energy company. That is a very different market and a very different business.

Coillte has a similar opportunity. This State asset review group could help us with working out the links between Coillte and Bord na Móna or the competitive market we want to create. It could help us to ascertain how we might access long-term finance, through pension funds and so on, to fund some of the forestry applications that could then provide material for such a bio-energy industry. That is where there is an opportunity to raise finance and generate economic activity that does not come from the State but from private finance sectors using the expertise of State companies.