Vol. 470 No. 6
1 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the plans, if any, he or the ESB have to sell, lease or otherwise assign Moneypoint power station, County Clare, to a United States of America firm; and if he will make a policy statement on the issues involved. [19563/96]
The Minister for Finance and I have approved a proposal by the ESB to lease a part of Moneypoint, involving approximately one third of the value of Moneypoint, to US investors who will then lease it back again to the ESB for rental paid over a period of about 21 years. A benefit arises under the transaction because it allows the US investors to defer their tax liabilities. After transaction fees and expenses, the net gain will be about $50 million of which the ESB will receive the lion's share of $32 million or £20 million. This represents a positive benefit for Irish electricity consumers. The transaction does not involve any change of ownership of Moneypoint or impact on its operation or use by the ESB.
State power and rail utilities in several other EU countries including the UK, Germany, the Netherlands, Sweden, France and Belgium along with Switzerland and Australia have concluded such transactions. The total value of such deals amounted to US$3.3 billion in 1994 and US$8.2 billion in 1995.
The benefit to electricity consumers will come about from the up-front £20 million cash realised by the ESB resulting in lower borrowings and consequential interest savings of between £1 million and £2 million per year by the ESB.
The transaction is a recognised form of financial engineering of a kind transacted on a regular basis in the main international financial markets both in Ireland, Europe, the US and elsewhere. The transaction is clearly permitted by US taxation regulations and forms part of overall US taxation policy.
Will the Minister tell the House the name of the American consortium to which one third of Moneypoint is being leased and the list of everybody involved in it? Are there any Irish partners?
As I have stated, the proposal involves the ESB leasing one third of Moneypoint to a US trust for £250 billion and then subleasing it back. The US trust receives a tax break under US laws, which is legitimate, and the ESB's share of the benefit is £20 million which represents a positive benefit for electricity consumers.
Could I get the name of the consortium?
It is a US trust. I am not privy to its membership, which is a matter for the ESB. The ESB put forward its proposal which was agreed by the Department of Finance and the Revenue Commissioners. I brought it to Cabinet where it was approved. I look forward to the benefits of this deal accruing to the ESB and particularly to the consumers.
It is strange that the Minister will bring a proposal to Cabinet for a £250 billion deal but he does not know the name of the consortium. One of the first things the Minister should do is to ask with whom he is dealing. Who are these American bankers?
The Deputy can rest assured that since the initial offer the US trust has been in constant discussion and negotiation with the chief executive and management of the ESB. The bona fides of the trust are well established. The deal has been approved by the Government and complies and conforms in full with US tax law.
Who are they?
This is the first time this has ever happened in the State. Moneypoint is our largest power station so it is an extremely important issue for all semi-State companies. The Minister has still not given us the name of the consortium. Will he publish the agreement so we can examine the small print? Does colluding with trusts and other concerns to avail of what seems to be a United States tax loophole raise ethical questions for the Government? I presume the Labour Party supports helping other Administrations to avail of tax loopholes. Has the Minister discussed this ethical aspect with the United States Administration?
The agreement is already in the public domain and has been referred to in several articles. I have no difficulty providing the Deputy with the details of the agreement. It is a matter for the ESB as it has already been approved by its board. The agreement is freely available and the Deputy or the public should have no difficulty getting access to it. This proposal is permitted by US tax regulations and forms a part of overall US taxation policies. It complies with US tax regulations. Furthermore, such transactions are being concluded by large companies and State owned utilities across the world. Such deals are well known to the US authorities. State power and rail utilities in several other European countries, including the UK, Germany, the Netherlands, Sweden, France and Belgium, along with Switzerland and Australia, have concluded such transactions. I have already given the Deputy the moneys involved in those transactions. This arrangement is common practice and complies with both Irish and US taxation law and regulations.
I ask the Minister to confirm that there will be no diminution of the State's control of Moneypoint during this lease arrangement.
I have already covered that point. The transaction has been assessed and evaluated by the ESB.
Will there be any diminution of control?
The board of the company has approved the transaction. It sought the permission of the Minister and I brought forward the proposal, which the Cabinet approved. We look forward to the benefits of this deal for the ESB in the near future.
The Minister did not answer my question.
We have already spent ten minutes on this question. I ask Deputies to be more co-operative and expeditious.
