Sale of State assets considered
Airports, ports, RTÉ and the ESB are included in a list of State companies that a Government-appointed group will consider selling in an effort to cut the €84 billion national debt.
Minister for Finance Brian Lenihan announced yesterday he has appointed economist Colm McCarthy, who led the body that recommended €5 billion in public service cuts last year, to chair the new Review Group on State Assets.
It is charged with looking at the possibility of disposing of public-sector assets, including commercial State companies.
The Labour Party said any move to offload valuable state assets to plug a hole in the public finances would be a retrograde step.
According to a preliminary list published yesterday by the Department of Finance, the organisations it will cover include all major State companies, such as ESB, Bord Gáis, RTÉ, Iarnród Éireann, Dublin, Cork and Shannon airports, (all owned by Dublin Airport Authority) 10 port companies and Bord na Móna.
The national debt stands at €83.98 billion, but the sale of these companies could generate a lucrative return. For example, the ESB’s assets, its power plants, networks and energy business, are valued at €7 billion. Bord Gáis has assets worth €3.5 billion.
Department of Finance official Donal McNally and TCD’s Prof Alan Matthews will join Mr McCarthy on the review group.
Mr Lenihan said its initial focus would be commercial State companies. It will look at other assets, such as the radio spectrum, used to carry mobile phone and TV signals, and mining and exploration licences.
The group’s work won’t necessarily stop at establishing if the companies can be sold. It will also consider how best they can be used to boost growth and contribute to the State’s own investment plans.
Where appropriate, the group will be able to scrutinise companies’ investment and financing plans, business practices and regulation.
They will also have to examine any liabilities that the State may have as a result of owning these businesses.
For example, many of the companies involved have pension deficits. Bord na Móna said this week that the shortfall in its staff retirement fund was €20 million at the end of last year.
The group will report at the end of the year. Mr McCarthy said yesterday that it would give an explanation at that stage for its findings and recommendations.
None of the companies involved commented. Most have already said that they would co-operate with any review of State bodies.
Eamon Ryan, the Minister for Energy and Natural Resources, whose department is responsible for many of the companies and assets involved, indicated that he would not like to see energy companies such as the ESB and Bord Gáis sold.
The Minister said he wanted to engage fully with the group, and would both listen to it and make his own views known.
However, he added that he was “loathe to break up business models that were working” in the energy sector, and pointed out that these companies had plans to invest €30 billion between them in Ireland over the next decade.
Mr Ryan also added that the group should learn the lessons of the Eircom sale, which resulted in the sale of the State’s telephone network, which subsequently delayed the development of broadband services in the Republic. About 10,000 people are employed by the State companies that fall under Mr Ryan’s remit.
Noel Dempsey, whose department is responsible for the public transport, port and airport companies, did not comment.
Labour spokeswoman on natural resources Liz McManus said state companies showing potential should become leaders in delivering renewable energy and that selling them off could put "all that potential" at risk.
"One only has to look at the disastrous sell-off of Eircom and the many changes of ownership which followed, which has resulted in capitalist vandalism destroying Ireland's prospects of becoming a world leader in broadband and next-generation network," she said.
"Quick fix solutions are not the way forward. Using the privatisation of these successful companies to plug holes in our public finances is not the answer. Instead we need to see an expansion of the role of these companies in job creation to deliver greater prosperity in a sustainable way."
Mr McCarthy is a well-known economist. Last year he chaired the Government’s Special Group on Public Service Numbers and Expenditure Programmes, dubbed “an bord snip nua”, which recommended cutting the number of public service employees by 17,000 and spending by €5.3 billion.
Mr McNally is second secretary general of the Department of Finance. He also worked on the McCarthy report. Mr Matthews is professor of European Agricultural Policy at Trinity College and a director of its Institute for International Integration Studies.