Seán Fleming (Laois-Offaly, Fianna Fail)
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23. To ask the Minister for Public Expenditure and Reform his views on whether value for money was achieved for the taxpayer in the sale of Bord Gáis; the time period over which the proceeds will be invested; his target for the number of jobs to be supported from the investment of the proceeds; and if he will make a statement on the matter. [16779/14]

Brendan Howlin (Wexford, Labour)
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 As I have told this House on a number of occasions, in disposing of State assets, it is a primary concern of the Government that value is secured for the Exchequer and that fire sales are avoided.

In the case of the sale of Bord Gáis Energy, this position was underlined by the announcement that the Minister for Communications, Energy and Natural Resources and I made at end November that the bids received at that time did not fully reflect the inherent value and potential of the business, and that we were not prepared to agree to a sale at that price. When we took that decision, a number of commentators suggested that we had perhaps overvalued the business. However, I can confirm that throughout the process, both BGE and the Government received extensive and detailed valuation advice from financial advisers and our decision was based on this advice. 

The strong stance taken by the Government and our clear statement that we were not prepared to sell below acceptable value resulted in revised bids, which were materially better than those previously received. As a result, BGE was in a position to announce on 25th March that it had signed a definitive agreement to sell Bord Gáis Energy to a consortium comprising Brookfield, Centrica and iCon Infrastructure for an enterprise value of €1.1 billion.  

This  was the outcome of a competitive auction process, conducted in an open and transparent manner in which numerous international strategic and financial sponsor parties were invited to participate. In giving my consent to the transaction, I took account of the fact that the consortium made the highest bid and also of professional advice that this represented fair value for the Bord Gáis Energy business. Under EU rules on the sale of State assets, the core principle is that the assets to be sold must be sold to the highest bidder.

In relation to reinvestment of proceeds from the sale of State assets, €110m of the asset sale proceeds has already been factored into the budgetary figures for 2014. This is being used to meet upfront Exchequer costs associated with the new PPP programme and to fund the 2013 element of the €150m Exchequer stimulus package which I announced last year.  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 falls within the range of 8 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. In order to get the maximum jobs impact from the reinvestment of proceeds the main focus will be on such small scale and labour intensive works.