Bord Gais buyer put UK prices up by 9pc
A BRITISH power company that sparked a national outcry when it hiked prices by 9.2pc in November is poised to buy the lion's share of Bord Gais Energy (BGE) under a new privatisation deal.
Centrica will take over the main BGE business that supplies 900,000 homes and businesses next year under a €1.12bn deal announced last night.
The 9.2pc hike by Centrica-owned British Gas has since been cut back to 5pc -- but there are fears that the BGE sale will result in price rises here.
While a sale of BGE is now back on, some elements of the huge transaction are still at the negotiating stage, according to sources on both sides.
The 900 staff at Bord Gais are set to share a windfall of more than €70m, thanks to their 3.25pc stake in the company held through an employee scheme, though details of how and when they will be paid are still up in the air.
A spokeswoman for Energy and Communications Minister Pat Rabbitte said the sale would put an "enterprise value" of €1.12bn on BGE.
Centrica lowered its prices in the UK after the outcry forced the government there to intervene and agreed to relax stringent environmental targets so that Centrica and other British power companies would agree to reduce the rates they charge households.
The British company blamed higher costs it has to pass on to customers for rising UK prices. In the UK, energy companies can charge what they believe the market can take for gas and electricity, unlike Ireland where prices are regulated. The planned 9.2pc increase would have added €129 a year to a typical UK household's power bill and was on top of a 6pc price increase in 2012.
BGE will be broken up following the sale to a consortium made up of Centrica, Brookfield Renewables and iCON Infrastructure, the Irish Independent has learnt.
The three firms are in final negotiation to buy BGE as a consortium, and will then split it between them, a spokesman for Centrica said.
The 900 staff at Bord Gais are set to share a windfall of more than €70m, thanks their 3.25pc stake in the company held through an employee scheme, though details of how and when they will be paid are still up in the air.
If the deal goes ahead as planned, Centrica will take over the main Bord Gais Energy sales business, which supplies gas and electricity to around 900,000 households and businesses, and is also buying the Whitegate gas-powered electricity station in Cork.
Canada's Brookfield Renewables will buy Bord Gais's windfarms and planned windfarm developments.
UK-based iCON Infrastructure will buy Firmus Energy, a Bord Gais unit in Northern Ireland that supplies and distributes gas there.
However, the Irish Independent understands that all of the workers whose jobs will transfer over when the business is sold will work for Centrica.
It will take on the staff and then charge the other two financial buyers for looking after the parts of BGE each of them acquires.
The three bidders are now in exclusive final-stage negotiations with the Government on a deal that is expected to close early next year.
The surprise sale announcement comes just two weeks after it was pulled by Communications and Energy Minister Pat Rabbitte, because three bids of €1bn each fell short of his price target.
The bids were from Centrica, and rivals Viridian and Blackstone.
Last night, Mr Rabbitte confirmed that a sale was back on the agenda after independent.ie had yesterday earlier reported the sale.
It is understood the Government was originally expecting up to €1.4bn for Bord Gais.
Most of Bord Gais is to be sold, however the network that carries gas across the country will not be sold because it is regarded as vital national infrastructure.
Bord Gais has begun contacting staff at the state-owned company to update them on how the sale will affect their jobs.
SIPTU official Oliver McDonagh, whose union represents many employees at the group, said he was disappointed that most staff only learned a sale was back on through the media.
Staff at Bord Gais own 3.25pc of the firm through a share scheme known as the employee stock ownership plan (ESOP).
That scheme's stake now has to be bought back by the group, Mr McDonagh said.
In total, Bord Gais is valued at around €2.25bn, valuing the stake held by staff at just over €70m, or €80,000 each. Only employees who were working for the company when the scheme was put in place in 2008 will share in any windfall.
Mr McDonagh said he expects ESOP members to be paid out for their shares over a number of years, not in a one-off payment when the sale goes ahead.
The final deal on the ESOP is one of a number of issues still under discussion in relation to the sale, a spokeswoman for Bord Gais said.