Dublin has agreed to sell up to €3bn in state assets after a deal with a troika of international lenders that allows it to use a third of the proceeds to invest in job creation.
The retail and assets division of Bord Gais, the state gas company, some of the generating capacity of ESB, the state electricity company, and the government’s 25 per cent stake in Aer Lingus, the airline, will be sold. But Dublin has abandoned plans to sell a minority stake in the ESB, amid trade union concerns.
Dublin has been negotiating for months with the troika – the European Union, European Central Bank and the International Monetary Fund – to be allowed to use some of the proceeds of state sales for job creation, rather than simply to pay down debt. A breakthrough in the talks was achieved during last month’s EU-IMF monitoring mission to Dublin. Irish officials have indicated Ireland’s strong performance in meeting all its targets so far in its bail-out programme helped it win the concessions.
“This is a substantial change to the troika’s position and will help to promote recovery in the economy. This is unique it doesn’t apply to other programme countries,” said Brendan Howlin, Ireland’s minister for public expenditure on Wednesday.
Enda Kenny, Ireland’s prime minister, told parliament he envisaged the sale of some of the assets would begin in 2013.
On winning election last year the Fine Gael/Labour government pledged to make tackling unemployment its number one priority. But despite several jobs initiatives launched over the past year, unemployment remains stubbornly high at 14.2 per cent.
Under the agreement reached with the troika, Dublin must sell at least €1bn of assets before it can reinvest up to a third of the total sum raised.
Mr Howlin said the state would also consider selling some of the assets of Coillte, the state forestry company. But he said none of the company’s land would be sold and insisted that no state assets would be disposed of unless they generated value for taxpayers.
“There will be no fire sales; integral transmissions and distribution systems will be retained in state ownership and full value will be derived for the state,” he said.
Jack O’Connor, general secretary of the largest Irish trade union Siptu, said the government decision represented a sad day for the Irish people as there was no justification in selling assets in depressed market conditions.
The jewel in the crown of Irish state assets is ESB, which could attract a valuation of more than €5bn. The government said last year it would sell a minority stake in ESB but reversed that decision on Wednesday, citing regulatory problems in Europe.
However, strong opposition from the powerful ESB trade unions is likely to have been of far greater concern to the government, which wants to avoid industrial action.
Bord Gais could be worth more than €2bn, although the government has decided to retain its strategically important network division in state ownership. Dublin is evaluating whether it could sell some of ESB’s generating capacity along with the retail and assets division of Bord Gais to tempt a big international player such as Centrica to enter the Irish market.
Perhaps the biggest omission from the list of state assets likely to be sold is Dublin port, which could be worth up to €400m.
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