Business Irish

Friday 22 September 2017

ESB silent as the government orders €400m asset sales

Disposal is part of troika demand to bring in €3bn

Donal O'Donovan and Paul Melia

THE Government has ordered the ESB to raise €400m by selling power generation assets over the next two years, the Irish Independent has learned.

The order to the ESB board was made just as the latest "troika mission" by EU and IMF officials was drawing to an end. The sale is part of a wider disposal of state assets ordered by the troika.

The latest news comes after the ESB provoked controversy earlier in the week when it reported a huge surge in profits just weeks after hiking prices for ordinary customers.

In an extraordinary development, news of the plan to sell €400m worth of state assets was announced in a note to the bond markets, but was not communicated to the public by the ESB itself or the Government.

Instead, the revelation is contained in an "investor update" for bondholders published without fanfare in a sub-section of the ESB's corporate website.

It sets out an explicit timetable for the asset sales and lays down a target for how much money is to be raised.

The investor update states: "The Government has now, in a request communicated to the ESB Board today (October 24, 2012), asked ESB to develop proposals for the sale of some non-strategic generation capacity, with the specific objective of delivering special dividends to the Government targeted at up to €400m by the end of 2014."

Jeopardised

It was known that the Government planned to privatise parts of the ESB, but details had never been revealed until now.

Privatisation plans have been mooted since a review of state assets recommended that parts of the company, including its energy supply and electricity distribution businesses, generation assets, international investment and consulting and engineering businesses, be sold.

The latest plans stop well short of those proposals -- the plan is to sell some power stations but not to split the ESB into its various parts.

The ESB is to remain as a "financially strong state-owned Vertically Integrated Utility (VIU)", according to the note.

The ESB has 13 major power stations at home and abroad including Ardnacrusha, Moneypoint, Coolkeeragh, Dublin Bay Power, Aghada, Poolbeg, Corby in the UK and Amorebieta in Spain.

Any move to sell power stations could be jeopardised by opposition from unions which have threatened to ballot for industrial action over any disposal of plants employing hundreds of workers.

The UNITE union has vowed to fight any "break-up" of the company.

The €400m target for ESB sales is part of the €3bn the State must raise by selling off assets in order to meet the demands of the troika.

Plans for the sale of Bord Gais Energy, the retail and power generation parts of that state-owned company, are already at an advanced stage.

It is expected to hit the market early next year, and UK-based energy companies are already known to be jockeying for position in the impending auction.

Irish Independent

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