Tuesday 25 October 2016

State's €335m Aer Lingus windfall still lying idle

Published 05/09/2016 | 02:30

Former Transport Minister Paschal Donohoe Photo: Frank McGrath
Former Transport Minister Paschal Donohoe Photo: Frank McGrath

It's a year this month since the State received a €335m windfall from for the sale of its stake in Aer Lingus, but not one cent of the money has yet been allocated from a so-called 'Connectivity Fund' that was established to distribute the proceeds to projects around the country.

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But the Ireland Strategic Investment Fund - the State-owned vehicle - insists that there's now a pipeline of potential projects that could benefit from the money.

The State received the Aer Lingus proceeds a year ago this month after agreeing in May 2015 to sell its 25.1pc stake in the airline to British Airways owner IAG.

Then Transport Minister Paschal Donohoe revealed in May last year that the €335m the State would receive was earmarked for a special connectivity fund that would be administered by the Ireland Strategic Investment Fund (ISIF).

That was to see the Aer Lingus proceeds diverted to a broad range of commercial projects - anything from port improvements to energy development.

The expenditure would not be counted as government spending.

The €1.36bn sale of Aer Lingus to IAG closed on September 2 last year, with the State receiving its proceeds from the transaction the same month.

Ryanair owned just under 30pc of Aer Lingus and in September last year announced that it would share the €398m in proceeds from the sale with its own shareholders, and distributed the funds before the end of last year.

But the money the State received for its Aer Lingus stake has now been languishing unused in its coffers for a year.

But a spokesman for ISIF said the team has an "active pipeline of opportunities" which may qualify for investment by the connectivity fund.

"These investment opportunities fall under two broad asset types, each of which will benefit Ireland as an island nation," he said.

"Some are transport-based assets which will enhance the physical connectivity of Ireland.

"The pipeline also includes digital and fibre optic-based assets which will enhance the virtual connectivity of Ireland supporting, in particular, technology-based foreign direct investment."

He added that the connectivity fund will be deployed and invested in a manner that is entirely consistent with the mandate of the ISIF and following normal ISIF governance procedures.

"By their nature, the development and financing of these large-scale assets takes time and any announcement will be made in due course," he added.

The €335m that's sitting in the ISIF Connectivity Fund would be sufficient, when leveraged with additional funds from commercial enterprises, to bankroll a large number of infrastructure projects.

Ireland has a growing infrastructure deficit that could weigh on the country's ability to lure foreign direct investment, for instance.

Irish Independent

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