THE GOVERNMENT has decided to sell a stake in the ESB, the most valuable State company.
The Cabinet agreed in principle to the sale yesterday and will consider the matter again when an expert group has reported back by November 30th.
Minister for Energy, Communications and Natural Resources Pat Rabbitte refused to say how much money the Government hoped to raise through the sale. “We are not going to put it up on eBay next week. There is a process that has to be completed,” he said last night.
He expressed the hope that the proceeds would not merely be used to write down the country’s debt but that a share of it would be used for reinvestment in the economy to create jobs.
The Minister said this issue would have to be negotiated between the Government and the EU-International Monetary Fund-European Central Bank troika. He refused to be drawn on the Government’s view about the value of the ESB, saying it would not be prudent to get involved in that kind of speculation.
However, the company’s chief executive, Pádraig McManus, said in February a sale of the entire company could raise €6-8 billion. Last year the company reported revenues of €2.7 billion.
Assuming a valuation of €6 billion, a sale of a 33 per cent stake in the company would raise €2 billion. The Coalition is committed to raising €2 billion from the sale of State assets in the programme for government and, in theory, the ESB sale could cover that amount. The IMF has urged the State to raise €5 billion in asset disposal.
It is believed that the Cabinet considered a memo from Minister for Public Expenditure and Reform Brendan Howlin on the sale of other State assets yesterday. Mr Rabbitte said the “rubric” of yesterday’s Cabinet discussion concerned the ESB and he refused to comment on the likely sale of stakes in other companies.
He said one of the issues to be considered with regard to the sale of the ESB stake was picking a time when the market is propitious. “We have to extract the best value from the sale and balance that with the strategic needs of the country,” said the Minister, who emphasised that only a minority stake would be sold.
Mr Rabbitte also said he would be anxious to find a compatible investor for the ESB. He said the stake could be sold through a trade sale, an IPO (selling shares on the stock market) or an investment by a pension fund.
He said the process will be handled by a group co-chaired by the Departments of Communications, Energy and Natural Resources and Public Expenditure and Reform, and it would include officials from the Department of Finance and avail of expertise from the National Treasury Management Agency and NewEra.
“The Government decision to sell a stake in the ESB is a significant decision and it is important that we get the process right,” said the Minister. He said that, in his view, the sale of a stake in the ESB would not involve a stake in Eirgrid, the electricity transmission network. Asked if there was any difference of opinion between Labour and Fine Gael Ministers on the issue he said: “The level of agreement between Ministers in this Government has to be seen to be believed.”
The Unite trade union has attacked the Government decision and announced that it will ballot its members at ESB for industrial action up to and including withdrawal of labour over the proposed sale. The union said a motion had been passed unanimously by delegates at the biennial conference of the ESB Group of Unions calling for the maintenance of the ESB as a publicly owned asset. “As a result of today’s Cabinet decision relating to the sale of some part of the ESB, we will now begin plans to ballot our members,” said regional secretary Jimmy Kelly.