Wednesday 24 January 2018

Euro crisis won't hit €3bn sale of State assets: Howlin

Nick Webb

Nick Webb

THE sovereign debt crisis raging in Europe will not affect the €3bn sale of State assets including Bord Gais Energy, parts of the ESB and the National Lottery, according to Public Expenditure Minister Brendan Howlin.

"We have had no advice that suggests that the European situation will affect this," he told the Sunday Independent. "There's a wall of money looking for a home. There's plenty of money for these kinds of assets." Mr Howlin added that there has been "very robust interest". "Until we actually put them up we won't know, but we have been very careful about testing the market."

Trade buyers such as EDF and Hutchison Whampoa have been linked with moves for energy assets, with infrastructural investors such as the Massachusetts state pension fund also thought to be interested.

Mr Howlin is preparing to bring a memorandum to Government regarding the sale in the coming weeks. A number of teams have been working on sales plans for various assets, with the NTMA and NewEra fronting the process. The minister said no assets would be sold before 2013. He also ruled out the potential flotation of any State assets as part of the slate of sell-offs.

It is understood that Coillte is far more valuable than had been previously thought, with the sale of trees and harvesting rights potentially worth "hundreds of millions". Mr Howlin's department is "significantly advanced" in examining potential plans for the semi-State forestry company.

Mr Howlin has ring-fenced himself from involvement in the asset sales, having introduced a protocol which prevents politicians or their political advisers from being able to influence the process. NewEra will handle the nuts and bolts of selling the assets, although external advisers such as investment banks may also be appointed later this year.

Following agreement with the Troika, the Government may use half of the estimated €3bn generated from the sale of Bord Gais Energy, Coillte and some ESB power stations for a bumper stimulus package. "The other €1.5bn may be used as a backstop to guarantee other funders," said Mr Howlin.

This new guarantee may help break the logjam for public private partnerships, which have been paralysed by a lack of financing since 2007. A separate funding vehicle using the €1.5bn could be set up to help guarantee the finance for a swathe of new schools, road completions and primary healthcare centres planned under the Government's near €5bn stimulus proposals.

This stimulus package will be boosted by money from the National Pensions Reserve Fund. The European Investment Bank has also allocated €250m to Bank of Ireland and AIB to spread around the cash-starved SME sector.

Last week, the EIB agreed to stump up €100m to help finance a bundle of new school buildings, which will be constructed under a public private project.

Sunday Indo Business

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