Rónán Mullen (Independent) | Oireachtas source

Cuirim fáilte roimh an Aire. I am concerned that this is an ill-conceived Bill proposing to sell the competitive energy business that is Bord Gáis Energy to the highest bidder. I note the Minister's reassurances, sincerely given no doubt, that we are retaining the strategic gas networks. However, I wonder at the same time whether we are not trading certainty for risk in this situation with a strategic asset.

Currently, Bord Gáis Energy has an estimated value of between €1 billion and 1.5 billion. The Bill provides for the retention in State ownership of strategic gas networks but would allow for the sale of the company. As we know, this is as a result of the November 2010 agreement with the Troika. There is no binding provision in the bailout agreement with the troika stipulating that State assets should be sold at an undervalue or sold at a time when there is no robust demand from the market. We are concerned rightly about any firesale, although the Minister reassures us this is not the case. The Minister has informed the House that a new subsidiary of Bord Gáis Éireann would be established to own and operate the gas network business and that this would ring-fence and protect strategic gas network assets, something to which I will return.

I understand there are only two suitors left the bidding process or in contention for the semi-state firm, a consortium led by Viridian and a British power firm, Centrica. Original estimates circulated by market watchers for the value of Bord Gáis Energy pegged it as €1.4 billion, including debt. Last week, it was reported that Centrica had bid less than €1 billion with the Viridian-led group offering more than €1 billion. Considering that the offers appear to be far lower than anticipated, I have a real concern that the Government might move to sell Bord Gáis Energy with less debt and thereby leave some of the significant debt on the network side of the business. I call on the Minister to reassure the House that this will not be the case. Why might that happen? It would be to increase the sale price of the company.

It has also been reported that Bord Gáis Energy would face an immediate break-up under plans being advanced by Viridian. The Northern Irish power company has assembled a consortium of financial investors to mount the €1 billion bid and the plans would involve each member taking over a distinct part of the business. There is a tangled web of financial arrangements which involves several companies. Among these are Macquarie, an Australian investment bank and corporate financial adviser, which is expected to take over the substantial development plan for wind farm assets; Allianz Capital Partners, part of a giant German insurance company, which would take over the operation of the wind farms; and Hermes GPE, another partner in the consortium, lined up to take over Firmus Energy, Bord Gáis Energy's Northern Ireland natural gas supply company.

Viridian would then take over the retail gas supply business, the largest in the country, thereby giving it increased market share in the Irish market, as it already operates the Energia business here. I ask the Minister whether consideration has been given to whether any competition or market distortion issues could be created by such a sale. The other leading bidder, Centrica, is understood to have launched its bid with the Canadian renewable energy group, Brookfield, and that strategy also might result in Bord Gáis Energy being carved up, with Brookfield taking over the wind energy assets and Centrica holding onto the retail business. The point I am getting at concerns what I believe could be a dismal picture, with various investors looking to turn a quick buck, garner profit and perhaps exit the market while losing the company with debt. This was Ireland's previous experience with Eircom when that company was passed from one international investor to another with every penny being squeezed from it and debt being loaded onto its balance sheet. In the meantime, as a result of all that, Ireland has one of the worst broadband networks in the developed world as no investor is capable of investing into the physical infrastructure that is necessary.

Furthermore, the undershooting of the expected €1.5 billion price for the sale of Bord Gáis Energy will have a significant impact on Ireland's budgetary position. What do the expensive Canadian bankers, RBC Capital Markets and NewERA, which are handling the sale process for the State, have to say about that? I am asking whether this is the right time for this sale or whether consideration has been given to postponing such a sale into the future. While one has heard the phrase "selling the family silver" many times, it seems this is a case of selling the family boiler. Although one is being assured that Ireland gets to keep the pipes and the wall of the house, I wonder whether one is dealing with phoney economics in this regard. The concern to which I referred earlier that the debt might be retained at the network end of the business arises from my fear that the Government will do whatever it deems necessary to increase the sale price. However, retaining the debt in the new network business would lead to the question as to what the State and the consumer would be left with after the sale process. Were the boiler to be sold and all the debt from the boiler put onto the pipes, the consumer would end up being obliged to pay for the pleasure of helping the bidders buy a company with no debt.

While the Minister should reassure Members this will not happen, were it to do so it would raise the question as to whether we ever learn from our mistakes. One cannot sell what is a strategic asset to venture capitalists and international financial vultures, to be frank, if so doing departs from investing in Ireland's future and instead focuses on their profitability. That would be a short-sighted way to go about trying to create a cost-effective energy market. When one considers that energy prices here for consumers and small businesses are among the highest in Europe, one must ask how much higher they will be after profiteers get their hands on Bord Gáis Energy. More than €1 billion has been invested by Bord Gáis in energy projects in Ireland, which is to be welcomed. However, rather than a long-term investment in Ireland's energy security, I am worried that we are giving in to bidders that seek to create a quick buck. In such a case, who is left? The squeezed customer, perhaps unaware of the financial wizardry being proposed, could be left with higher bills to pay off debt on investments while at the same time profits flow out of Ireland. Has an analysis of the possible impact of this process on energy and gas bills been carried out by the Minister? I certainly intend to write to the Commission for Energy Regulation to ask that this sale be forestalled until such an impact analysis has been undertaken into costs for the consumer.

Finally, what will happen to the employees who have worked in Bord Gáis to build up the company? It certainly is not true to suggest they all will become wealthy shareholders because the employee share option scheme closed in 2008 and therefore, most current employees do not qualify. I am concerned that despite the Minister's best intentions, this could be a fire sale of a strategic State asset with little thought given to how it will affect the energy market, employees of the company or customers. The leading bidders have stated they wish to break up the company post sale, which appears to be a matter of concern. Will, as I outlined earlier, this valuable asset be broken up and asset stripped? That certainly would be greatly to be regretted but I would be grateful for the Minister's views on what will happen in respect of the debt on the company and who will be left with it.