Seán Fleming (Laois-Offaly, Fianna Fail)
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197. To ask the Minister for Public Expenditure and Reform the policy that applies in respect of dividends from commercial semi-State companies; his plans to review this; and if he will make a statement on the matter. [18237/15]

Brendan Howlin (Wexford, Labour)
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Historically, there has not been comprehensive central guidelines for State companies regarding dividend policy although, over recent years, dividends of approximately 30% of profits after tax have been expected from most commercial State companies.

However, with the establishment of NewERA in 2011, the current Government began the process of reforming how the shareholder role in relation to the commercial State sector is managed.  NewERA now provides financial and commercial advice to the relevant Ministers in relation to the six key commercial State companies in the NewERA sectors of energy, water, telecommunications and forestry.  The companies in question are ESB, EirGrid, Ervia, Bord na Mona, Irish Water and Coillte.

As part of the reform, NewERA, in conjunction with the relevant Government Departments, has developed a Shareholder Expectations Framework to provide clarity and guidance for the companies in relation to the Government's strategic priorities, policy objectives, and financial performance and reporting requirements.  One of the key areas addressed as part of this Framework is dividend policy. 

To-date the boards of ESB, EirGrid, Ervia and Irish Water have respectively engaged with NewERA and the relevant Government Departments with a view to developing a new formal dividend policy, striking an appropriate balance between the payment of dividends and re-investment in the business.  The Boards of Bord na Mona and Coillte are also currently considering the development of a formal dividend policy, in consultation with NewERA. 

In this way, a new formal dividend policy has been or will be agreed for each of the NewERA companies, thus giving greater clarity and certainty in relation to the State's future expectations in this regard. 

My Department has also been working with other relevant Departments, reviewing the shareholder management and oversight arrangements applying across the wider commercial state sector.  The intention is to introduce a more structured and consistent approach to the management and oversight of these companies also, and thus the entire commercial State sector, modelled on the approach already adopted for the NewERA companies.  This will include establishing a Shareholder Expectations Framework for each such company, which will include the development of a specific and appropriate dividend policy for each such company.