Sunday 4 December 2016

EU/IMF will decide how to use cash from sell-off

Published 21/04/2011 | 05:00

Semi-states on the chopping block (clockwise from top left, opposite page): An Post, Dublin Port, RTE, Coillte, Irish Rail and Aer LingusBrendan Howlin: no fire sale

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The Government can't guarantee that any funds raised in a planned €2bn sell-off of state assets will actually be used for investment in jobs.

The Coalition was presented with a range of options for privatising semi-state companies yesterday in a report by economist Colm McCarthy.

Mr McCarthy identified a potential €5bn worth of sales, including selling off the power generation sections of ESB and Bord Gais and privatising Aer Lingus in full.

The report also proposes privatisation of parts of the business side of Coillte and Bord na Mona, along with the National Stud and greyhound tracks.

But the Coalition admitted that it would have to negotiate with the EU and IMF on using any proceeds for jobs stimulus purposes -- rather than just paying off the country's debts.

Public Expenditure Minister Brendan Howlin said the Government would have to negotiate "on a case-by-case basis".

The Government insisted there wouldn't be a fire sale of semi-states and that valuable energy, transport and industry interests would only be sold off on the market when the time was right.

Mr Howlin said no decision on sales had been made.

"I think there will be things that will not be acceptable to the Government, but I'll let the Government debate that and we will be presenting our comprehensive response in due course," he said.

The McCarthy review of state assets -- the economist's second investigation into trimming public costs and raising finance -- looked at companies that have a total book value of €8bn.

Mr Howlin said if all the sales recommended in the review went through it could realise up to €5bn. But he again pointed to the €2bn target set out in the Programme for Government.

Mr McCarthy actually warned against jumping into a so-called "fire sale", claiming it was a matter of timing to secure the right market conditions.

"It's not practical to think about disposing of many of these companies in a big hurry," he said.

"There's also the question of what the market is like for commercial assets right now. There are always issues of timing."

Mr McCarthy said the report of the Review Group on State Assets and Liabilities should be seen as an advisory document.

"It is a matter for the Government and the Oireachtas to decide what should and shouldn't be done," he said.

Pressure

"The Government isn't under any immediate financial pressure, in the sense that the IMF/EU programme is in place, which means that the Government should be funded for the duration of that programme."

The dramatic money-making plan affects 16 semi-states across several sectors, including the ESB, which would stay semi-state even though all its foreign interests would be sold -- including Northern Ireland Electricity.

The transmission grid, including the high-voltage system in the North, should be transferred to EirGrid and kept in public ownership along with all hydro-electric units.

The Bord Gais gas and electricity generation and supply business should be sold. The high-pressure gas transmission network and interconnectors should be retained by the state, the report states.

Bord na Mona should be sold off, including peat extraction rights, but not ownership of the peat lands and likewise Coillte should dispose of forests and associated assets but not the land they grow on.

Irish Independent

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