Inside the world of business

Why Nama needs to be reorganised

THE SIZE of the National Asset Management Agency portfolio is such that it was only matter of time before it ended up competing with itself. But the situation that has developed in London’s Battersea is particularly intractable. Ernst Young – receivers to the eponymous power station site seized from Treasury Holdings – are opposing what is one of Nama’s better bets: Ballymore Properties’ nearby Embassy Gardens development.

Nama’s ability to cut this particular gordian knot is circumscribed by the fact that Ernst Young have been appointed jointly by the agency and Lloyds Bank. They presumably cannot compromise or withdraw their objection unless Lloyds agrees. No doubt there is a deal to be done but when the Dublin market comes back to life we can expect plenty more Battersea-style standoffs.

Which all lends credence to the argument that Nama is simply too big and needs to be reorganised now it has started to try and generate a return from the assets it has so laboriously acquired.

Corrib field will benefit everyone eventually

SHELL EXPLORATION Production (EP) Ireland’s estimates of the economic benefit from the Corrib Field project should be read in light of the fact that all companies are keen to point out that their activities benefit more than just their shareholders.

Given the controversy that has raged around this project, Shell is keen to advertise the benefits, contained in a study commissioned by the company ad produced by Goodbody Economic Consultants, even if some question its independence.

Nevertheless, the fact remains that even a medium-sized natural gas field such as Corrib is a valuable resource and will produce considerable wealth.

Some of this wealth will go to the field’s shareholders – Shell, Statoil and Vermillion – and in turn to their shareholders, who have so far seen €3 billion of their money invested in the project.

The €800 million that the partners expect to spend over the next three years to get the gas flowing will support jobs. Operating the field and processing plant will employ 175 people and provide a reliable source of natural gas, our main fuel for electricity generation, over 20 years.

The profits will be taxed, at the rate of 25 per cent, twice the normal corporate rate.

The field is going to bring direct benefits to both the northwest and to Ireland as a whole. The vocal opposition to the project is unlikely to go away, but once it is up and running, and people can see the benefits flowing from it, it is likely to be softened considerably.