Big state sell-off begins as ESB on the market
The Government is going to assess the value of a raft of state assets, but is only committed to selling off part of the ESB.
The coalition decided yesterday to sell a minority stake in the ESB but won't be breaking up the semi-state energy company.
No decision has been taken yet on the percentage of the company to be sold and there is no indication yet of how much will be raised.
The Government will have to convince the IMF-EU of the merits of retaining part of the proceeds to invest in water, broadband and energy infrastructure.
Ministers will talk to the Troika during negotiations in the first week of October and the Government has already flagged its preference to invest some of the funds in a jobs stimulus package. The plan for the sell-off of the ESB will be ready by the end of November.
Communications Minister Pat Rabbitte announced the decision to sell off part of the ESB yesterday.
The Government considered all the options open to it in terms of the sale of state assets. Ministers looked at everything in the semi-state sector and even went beyond the recommendations of the report on asset sales by economist Colm McCarthy.
But the only formal decision taken was to proceed with a minority sale of the ESB.
A group is being set up to evaluate the best way to sell off part of the company.
The group will be headed up by the Department of Communication and the Department of Public Expenditure and Reform.
It will also include officials from the Department of Finance and use the expertise of the National Treasury Management Agency and New Era -- the new office set up to manage investment in infrastructure.
Every option for investment is being examined, including a stock-market flotation, trade sale, private equity, sovereign wealth fund or pension fund.
The most likely outcome will be investment by a major European energy company, which would buy into the ESB.
But a separate process to the ESB privatisation will examine other state assets, which would not be sold off just yet.
The in-house financial experts in the National Treasury Management Agency will be involved in assessing the value of the other assets.
The Government will look at other assets for sale to raise funds for the New Era infrastructure investment and a Strategic Investment Fund.
New Era is Fine Gael's big plan from the General Election to invest in infrastructure and create 100,000 jobs.
Under the terms of the IMF-EU bailout, the Government has to present its plans for assets sales by the end of the year.
The Memorandum of Understanding says: "The Government will prepare a draft programme of asset disposals in this context and discuss it with the staff of the European Commission, the IMF and the ECB by end December 2011 in advance of taking final decisions on the programme to be pursued."
Mr Rabbitte said there was no question of the Government handing over control of the ESB.
"The ESB is of strategic significance in the Irish economy. There is no question of control passing out of the authority of the ESB. I'm no fan of the deal foisted on us. It was a bad deal," he said.
Eirgrid, the State company responsible for electricity networks, is owned by the ESB.
But Mr Rabbitte said this would not be privatised.
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