Michael McGrath (Cork South Central, Fianna Fail)
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336. To ask the Minister for Public Expenditure and Reform his views on commercial semi State bodies taking on additional borrowings to pay increased dividends to the State; and if he will make a statement on the matter. [33398/14]

Brendan Howlin (Wexford, Labour)
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I presume that the Deputy is referring to the recent announcement by ESB that it no longer intends to proceed with the planned sale of its two peat-fired power plants under the State assets disposal programme, but instead will fund the remaining amount of the special dividend requirement for the Exchequer from borrowings drawn down within its existing banking facilities.

This decision of the ESB Board followed detailed analyses undertaken in preparation for the sale of the peat plants which indicated that it would be financially more beneficial, for both ESB and the shareholders, if ESB was to retain ownership of the peat plants and instead fund the payment of the remaining amount of the special dividend target by drawing down additional debt from ESB's existing bank facilities, with the future cashflows resulting from the retention of the assets available to support the additional funding requirements arising from payment of the special dividend.  

In this way, rather than selling the physical assets and getting upfront proceeds to enable payment of the remaining special dividend, the cash-flows from the assets are now to be utilised in a different manner, to yield an overall better financial result, but with the substance of the approach being the same as if the assets had been sold.  I am satisfied that this course of action is consistent with the Government's overriding objective of seeking to realise value from non-strategic assets of ESB, while ensuring that this is done in a manner that maximises the value achievable from the assets while also ensuring that the company's financial strength continues to be protected.