Business Irish

Tuesday 2 September 2014

€405m National Lottery sell-off delayed as deal talks drag on

Published 30/12/2013 | 02:30

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THE €405m sale of the National Lottery licence has become the latest state-asset privatisation to be hit by delays.

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The deal was due to be signed before Christmas and half the cash -- already earmarked for the new National Children's Hospital and for a jobs stimulus programme -- was due to be paid over to the State by now.

However, cash from the deal is no longer expected to reach state coffers in 2013, the Irish Independent has learnt.

The December deadline for contracts finalising the terms of the sale to winning consortium Premier Lotteries Ireland -- made up of UK lottery licence holder Camelot and An Post -- passed without a final deal being in place.

Last night, both sides insisted that the sale of the National Lottery licence remained on track, but admitted the December target for contracts to be signed by the Government and the consortium had been missed.

The delay is the latest in the troubled programme to sell off state assets following the on-again, off-again sale of Bord Gais Energy that had to be revived earlier this month after almost collapsing in November.

Planned sales of Coillte and the government-held stake in Aer Lingus have been put on hold.

In October, Public Expenditure and Reform Minister Brendan Howlin named Premier Lotteries Ireland as the preferred bidder for the licence to operate the National Lottery.

Under a timeline set out by the minister, negotiations were due to be finalised in November with the final contracts signed in December.

Under that plan, half of the €405m price was due to be paid this month -- including the cash earmarked for roads, schools and retrofitting of local authority housing.

However, that December target has been missed.

"Discussions on finalising the National Lottery licence are ongoing and expected to conclude early in the new year," a spokeswoman for Mr Howlin said yesterday.

It means the Government will be forced to wait until at least the new year for the initial €202.5m payment, which includes the cash earmarked for the jobs plan.

However, the spokeswoman insisted the delay would not have any negative implications for the stimulus plan, which was announced in Budget 2014.

The second instalment is due to be paid over next October, when the new licence is predicted to go live. That money is earmarked for the National Children's Hospital.

A spokeswoman for the winning consortium confirmed that the deal had not yet been finalised, but declined to elaborate.

"Premier Lotteries Ireland is not able to comment about this matter whilst the final terms of the licence are still being finalised with the Government," she said.

Sources close to the situation blame the delay on a rumbling industrial relations issue among the 103 staff who operate the National Lottery under current operator An Post and are pushing for a so-called "right of return" to their original employer -- state-owned An Post -- once the new operator takes control.

Any additional costs incurred by such a move, including pay and pensions, could have implications for the amount of cash the State eventually receives out of the proceeds of the sale.

Some €150m of the proceeds will go to the jobs stimulus programme to be divided equally between schools, roads and local authority housing.

Donal O'Donovan

Irish Independent

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