Written answers

Tuesday, 8 April 2014

Department of Public Expenditure and Reform

Sale of State Assets

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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241. To ask the Minister for Public Expenditure and Reform if he will provide an update on the programme for Government commitment on the roll-out of disposal of State assets in accordance with recommendations from the McCarthy report; if he will list the planned disposals and when tendering will begin; and if he will make a statement on the matter. [16436/14]

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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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 by this Government.

In brief, the asset disposal programme then agreed by the Government consists of:

- The sale of Bord Gáis Éireann's energy business (but not including BGÉ's gas transmission or distribution systems or the two gas interconnectors, which will remain in State ownership);

- The sale of some of ESB's non-strategic power generation capacity;

- 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 Government;

- After further consideration, and having ruled out the sale of Coillte's land holdings, the Government also determined that a concession for the 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 March 24th, Bord Gáis Éireannentered into 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 €1.1bn.  It is currently expected that this transaction will be completed within Q2 2014. ESB announced in October 2012 that it would sell some of its non-strategic power generation assets on a phased basis, commencing in 2013.  In February 2013, 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.

ESB completed the disposal of its interest in Marchwood in November 2013 for a price that was in excess of expectations. Approximately €153m in dividends accrued to the Exchequer in January as a result. It is expected the sale of Bizkaia Enegia will complete shortly.

In relation to the two peat stations, ESB is proposing to prospective buyers an arrangement under which it will continue to operate and maintain the stations, with existing staff.  ESB has appointed financial, legal and vendor due diligence advisors for this transaction, and I am informed that the process is likely to conclude in 2014. 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 but instead the focus should be on the restructuring of Coillte, overseen by NewERA and the relevant stakeholder Departments. Work is proceeding to give effect to this decision. An evaluation on 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 currently being finalised.  Ryanair's 2012 bid for Aer Lingus, the subsequent investigations by the European Commission and the UK's Competition Commission and the court cases that Ryanair is currently taking, 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, at an acceptable price to the Government and, importantly, in circumstances that accord with Government transport policy.  Favourable conditions do not currently appear to exist for a sale of our Aer Lingus stake, and so the Government is currently focusing on managing its holding in a responsible manner in order to protect the State's interests and with the aim of maximising its value in the longer term.

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