Bord Gáis decision shows that we are finally learning
The history of the sale of Irish State assets is not a happy one
The fundamental reason the Aer Lingus, Coillte and Bord Gáis deals fell through is that the price was not right
The Government’s plan to raise money through the sale of State assets would appear to be in a shambles. It has had to abandon, in quick succession, plans to sell its stake in Aer Lingus, dispose of Coillte’s forests and find a buyer for Bord Gáis. The only success is the National Lottery, but in effect that was just the sale of a licence, albeit for a very long time. The final part of the plan, the sale of non-core ESB assets, also looks like it is going nowhere fast. The State-owned power company is on the verge of a strike about not only the size of its pension deficit but who should pay for it. It’s hard to see the trustees of its pension scheme letting any assets out the door before this matter has been settled.
It is tempting to try and turn all this on its head and present them as some sort of cunning plan to best the troika which has come good. One thing is for certain and it is that the troika were behind the drive to sell the assets.
The history of the sale of Irish State assets is not a happy one. The biggest disaster was, of course, the flotation and subsequent multiple asset strippings of Eircom. But there have been others since – such as the sale of Aer Lingus into the suffocating embrace of Ryanair.
These disasters have done little to build popular support for privatisation. When you added that to a coalition government that included Labour you would have been scratching your head in 2010 to picture how a massive sell-off of State assets was going to happen. And not surprisingly it hasn’t. We have had a lot of activity – presumably for the troika’s benefit – but very little action. Advisers, banks and interested parties have been marched up the hill and down again but no strategic asset has changed hands. The Lottery, for the sale of this argument, is not considered strategic.
Pleasing as this analysis may be, sadly it is probably wrong. For a start, if the institutions of Government were really that smart, would we have have got into the position of having to sell off the family silver in the first place?
The truth is sadly more prosaic. But after a fashion it is pretty good news. The fundamental reason the Aer Lingus, Coillte and Bord Gáis deals fell through is that the price was not right. The opposite holds true with the National Lottery where the price bid by Camelot surprised everybody, including apparently the Government itself.
It would seem then that the system has learnt from the past mistakes and developed the ability to say no! Anybody involved in a big transaction such as the sale of State assets knows that it is very like selling a house. Once the seller has committed themselves, the process takes on its own momentum.
The various advisers – estate agents, solicitors – want the deal done so they can get their fee. They will try and get the best price for you within reason; the extra 10 or 15 grand that could be squeezed out of the buyer may be a big deal for the seller but in terms of their fees it’s neither here nor there.
Interests of Irish State
What they won’t do is step back and tell you if you are getting good long-term value and whether it’s actually a good idea for you to sell your house in the first instance.
It is the same with the sale of State assets only you replace the homeowner with a Government minister and the estate agents and solicitors with corporate financiers and – funnily enough – more expensive solicitors. They too are there to get the deal done, not to worry about the long-term strategic interests of the Irish State.
But it would appear that somebody seems to be taking a longer view and, thanks to a better-than-expected performance of the economy, was able to turn down offers that did not correctly value public assets and walk away from transactions which made no sense.
So who gets the credit for this? The answer is all the various entities currently being blamed for the “failure” of the Bord Gáis privatisation.