Decision by end of next year on ESB sale

STATE ASSETS:THE GOVERNMENT will have to decide within a year whether to sell the ESB and An Bord Gáis to shore up the State's finances.

The memorandum outlining the details of the €85 billion package that the Government agreed last weekend with the European Commission and the International Monetary Fund (IMF) says that the State could have to sell electricity and gas companies to aid its financial situation and boost competition.

The document states that, following on from the current review of State companies led by economist Colm McCarthy, the Government will independently assess the electricity and gas sectors in order to increase their efficiency.

It will then consult the European Commission on the results of this “with a view to setting appropriate targets for the possible privatisation of State-owned assets”.

Minister for Energy Eamon Ryan has already made it clear that he opposes the sale of An Bord Gáis or the ESB and repeated this yesterday.

“I remain opposed to the break-up and sale of State energy assets, they are investing in a growing area and providing clean, competitive power for Ireland,” he said.

The ESB group of unions is also opposed to any change in the status quo, while Bord Gáis staff would also be likely to be against a sale.

A group chaired by Mr McCarthy began its review of State assets and liabilities in the autumn.

It is understood to be on schedule to report to the Government by the end of the year.

Its brief is to evaluate all State companies in light of the Republic’s pressing financial situation.

The ESB and An Bord Gáis compete with each other in the generation and sale of electricity to consumers and businesses.

The ESB owns, but does not manage, Ireland’s electricity grids, while its rival owns the natural gas networks.

These assets are seen as particularly valuable.

If their networks were included in any sale, An Bord Gáis could fetch an estimated €3 billion while the ESB could be worth €4 billion.

However, industry and Government sources acknowledge that a sale of either would be more likely to involve the State maintaining the ownership of the networks and selling the generation and supply businesses.

The networks are strategically important and the Government does not want to risk a repeat of the Eircom situation where a succession of private entities controlled the Republic’s fixed-line telecoms network and failed to invest sufficiently in it.