State's energy bodies worth €5bn in sell-off
THE Government could raise more than €5bn by selling the ESB, Bord Gais and Bord na Mona according to the McCarthy review group. But it says that while Ireland's biggest energy companies should all be sold, the State should hold on to their power transmission assets for strategic reasons.
It recommends the ESB's energy supply and electricity distribution businesses as well as its power generation assets and its international operations should all be put up for sale. Its electricity grid, including the Northern Ireland system it acquired last year, should not be sold as part of that process. Based on 2009 figures the report values the ESB at €4bn.
Bord Gais should also go under the hammer, but again, the State should hold on to its power transmission assets, potentially transferring them to EirGrid, while selling the rest of the company. This business is valued at just over €1.4bn.
Commenting on the recommendations yesterday, Mr McCarthy said there was "no strong case" to retain these companies in public ownership.
Bord na Mona should also be sold as a single entity. As part of this process bidders should be offered a licence to use its land bank to extract peat. The report values that company at more than €224m.
The risks associated with privatising parts of the electricity industry are dependent on getting an adequate price and ensuring efficient regulation exists when it moves into new ownership, it said.
And Mr McCarthy played down concerns about higher electricity prices for consumers.
"Retail price of electricity reflects fuel prices and the amount of capital tied up in those businesses. If we end up with more expensive electricity in 10 years it will be due to high energy costs or because they have over-invested on the capital side," he said yesterday.
The Government can control the risks of selling the ESB by staggering the sale of its component parts over time.
The report wants to see the company sell its power-generating operations in Ireland, regardless of whether the Government decides to sell it fully or partially.
The group's energy supply, electricity distribution business, consulting and engineering businesses should all be sold together. It also calls for the sale of its ESB Energy International business that has 20 power generation stations in Ireland with two in the UK and one in Spain.
It states that this should also go ahead even if the Government decides against full privatisation of the ESB.