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Tuesday 21 February 2017

Mixed messages raise doubts over ESB sell-off plans

Fionnan Sheahan Political Editor

Published 23/01/2012 | 05:00

Pat Rabbitte: officials failed to address speculation
Pat Rabbitte: officials failed to address speculation

THE Government's troubled plans for the sell-off of state assets were shrouded in doubt last night amid confusion over the sale of the ESB.

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The indecision follows mixed messages emerging from the Government and IMF-EU bailout team on the use of the proceeds of the privatisation.

Energy Minister Pat Rabbitte's officials were unable last night to rule out an embarrassing U-turn on the partial sale of the ESB.

Government sources gave conflicting views on reports it was poised to reverse its decision on the ESB sale and switch instead to selling Bord Gais and Coillte.

The suggestions arise from a special report by a group of senior civil servants, which recommended not selling the ESB because it wouldn't get a good price.

Mr Rabbitte's spokesman failed to address the speculation about the status of the ESB decision. He would only say no decision had been taken by the Government, the reports were being considered by cabinet and the Coalition had ruled out a 'fire sale'.

The lack of a definitive dismissal of the proposal merely added to the uncertainty.

But a government source said there was "no suggestion" of a U-turn being on the cards and the Coalition would be sticking to its existing decision.

Although the Government did make a decision on a partial sale in September, selling the ESB is fraught with problems, including getting value for money, the strategic importance of the company and regulatory issues.

Last week, Public Expenditure Minister Brendan Howlin said the Government had secured agreement with IMF-EU that a substantial proportion of cash raised from selling stakes in state assets would be put into job creation.

But the bailout team did not back up his version of events, saying it was awaiting the Government's plan on the sale of assets first.

Meanwhile, Transport Minister Leo Varadkar last night said a failure to pay back €1.25bn to bondholders of the former Anglo Irish Bank this week would lead to higher borrowing costs for banks and semi-state companies.

He said the knock-on effects would be higher electricity and gas bills and homeowners with variable mortgages having to pay more.

Mr Varadkar said the bonds were being repaid "because the Government had to weigh up the costs on the one side and the risks on the other".

The minister said that a default would put it in conflict with the European Central Bank and other EU member states at the very time it was trying to re-negotiate a deal on the "bigger prize" of the €30bn that is due to be paid on the separate Anglo Irish Bank promissory notes.

"What the ECB has said to us, and what the troika has said to us -- because they do speak with one voice on most of these things -- and what they said is really, is that, it's on your head.

"We don't want you to default on these payments, it is your decision ultimately.

"But a bomb will go off, a bomb will go off in Dublin, not in Frankfurt, because of the reasons I've outlined," Mr Varadkar said on RTE's 'The Week In Politics'.

Irish Independent

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