€500m gap in jobs plan after Bord Gais sale falls through
THE collapse of the Bord Gais Energy sale leaves a yawning €500m-plus gap in Government plans for a jobs stimulus package.
The semi-state energy giant was expected to sell for between €1bn and €1.5bn -- until the Government pulled the plug yesterday morning.
Half the proceeds had been earmarked for investment in jobs and the economy.
The sale of €3bn of semi-state assets is a key part of the bailout agreement inked with the troika. Bord Gais, the most valuable asset on the block, was to deliver up to half of this amount.
The Government will now have to find other ways of raising the money, or give up on the privatisation plans.
The business that was for sale consisted of the group's valuable 900,000-plus customer retail business, a gas-fired power plant, and wind farm assets. The Bord Gais network, considered of strategic importance to the State, was not included.
A lengthy sales process ran for much of this year, with foreign bidders including Malaysian energy group Tenaga vying to buy the thriving energy business.
Tenaga dropped out last month and at final stage were three bidders: Viridian, British company Centrica, and US-based Blackstone.
These three received the very latest updated Bord Gais Energy performance and due diligence information, which gives information on how the business is performing.
It's not known whether they saw something there that influenced their bids and encourage them to reduce their offers.
There appears to be a clash of version of events between Energy Minister Pat Rabbitte, who says that price was the issue that led to the cancellation of the sale, and bidders, who say that it was made clear to them that there was no reserve price in the final round of bidding.
The €1bn reserve price was apparently scrapped to lure in competing bids.
Yesterday, to the surprise of bidders, the process was cancelled, with the Department of Energy saying that none of the final bids "were of acceptable value".
One bidder told the Irish Independent that the first they knew about the end of the sales process was a media report.
"We had no direct communication from the department," a senior figure said. "We are very annoyed at how the sale process was conducted."
Plans to sell the State's 25pc share in Aer Lingus and the state forestry firm Coillte have also been cancelled.
Mr Rabbitte told the Irish Independent yesterday that although 50pc of the total Bord Gais sale price was agreed with the troika for use for "reinvestment in the economy", the amount set aside from the sale for 2014 was €110m.
"We are confident we can source that elsewhere," Mr Rabbitte said. "There was no presumption made or provision beyond that."
As to how the biggest planned semi-state asset auction fell apart at the eleventh hour, Mr Rabbitte blamed international factors hurting the energy industry.
"The power market is not in a good place right now," he said.
"The extraordinary shale gas revival in the United Sates is undoubtedly impacting on the gas market in Europe," he added.
He rejected any suggestion that the organisation of the sales process itself was at fault.
"The fact of the matter is the process was organised with impeccable probity," he said.