Report on semi-states 'has little to offer'

21 Apr 2011

Congress General Secretary David Begg has said that the report of the Review Group on State Assets & Liabilities has 'little to offer the country at this time.

Following publication of the report, Mr Begg said: "Of the 18 semi-state companies, the bulk of their value is embedded in the ESB and Bord Gàis. The greater portion of the value of these two companies lies in their transmission assets (the networks).

"Congress agrees with the conclusion of the Review Group that these assets should remain in public ownership. However, we disagree with the recommendation that they should be transferred to Eirgrid as no value will be released by this transaction and it may even end up costing money.

"Congress also notes that the Eirgrid proposal runs counter to the prevailing practice in Europe and that another consultant recently recommended in favour of the status quo.

"With regard to the suggested disposal of non strategic state assets, Congress questions whether many of the proposals of the Review Group are practical for a number of reasons:

  • Within the electricity industry worldwide power stations are not considered to be good investments at this time;
  • Supply businesses do not generally make money;
  • Many semi-state assets are already highly leveraged and the net return on their disposal would be minimal;
  • Many also have heavy pension obligations to the public which have an inbuilt cost;
  • Some, such as Bord na Móna and Coillte, have an ecological and public amenity remit. It is worth noting that the UK Government recently changed its position on the disposal of their forests.

"In summary the correct retention of regulated network assets in public ownership means that there is little of significant value left to sell. Moreover, the experience of privatisation of telecommunications assets with the Eircom debacle has been very bad, as evidenced by the poor quality of broadband infrastructure in this country.

"Therefore the initial response of Congress to this report is that it has little to offer the country at this time. However, we will undertake a forensic study of its contents and reasoning and issue a more comprehensive statement in due course," Mr Begg concluded.