I understand the reluctance of many people to contemplate the sale of any of our State assets. My party is among them.
Our commercial State companies have served this country well down through the years. Many of them have been, and will continue to be, a core part of our economy involved in delivering strategic infrastructure and key services across a number of different sectors over many years. They have innovated and developed significant expertise and technical knowledge and skills and have generated significant employment throughout the country. It is for that reason the Government remains committed to ongoing State involvement in critical areas of our economic development. However, we now find ourselves facing unprecedented challenges. As Deputies will be aware, we are currently dependent on the financial assistance provided under the EU-IMF funding programme for the continued day-to-day operation of this State. This year, the gap between Exchequer revenues and spending will be approximately €15 billion, even after the costs associated with repairing the banking system have been excluded. This is simply not sustainable. The overwhelming public need now, therefore, must be to bring sustainability to the public finances and to foster economic growth. In these circumstances, it would be negligent of Government not to carefully examine all reasonable means to raise revenue and to reduce expenditure, including the release of some of the value across a wide range of our State assets. However, the sale of State assets is not a decision for Government alone. The previous Government sealed our fate in this regard.
As the State currently has no other borrowing avenues available to it, the funds we require are being provided by the EU and IMF. These funds do not come without conditions. In return, we are required to have in place a credible programme to ensure the State's financial sustainability, with detailed conditions attached to the borrowings being set out in the memorandum of understanding between Ireland and the EU-IMF-ECB. One of these conditions is that the State commits to a programme of asset disposal as part of the solution to the current fiscal crisis. It is for these reasons that the Government has agreed to the sale of a minority stake in the ESB. The Government is of course mindful of the need to ensure that this process is not detrimental to the continued future growth of the economy. Having learned from past experience, the Government is determined that we will not relinquish control of any strategic assets without appropriate safeguards being put in place to ensure that investment in such assets is maintained at appropriate levels.
In this context then there is a need to seek to reach an informed view as to what is actually strategic and essential to the national interest. I welcome the views of the Deputies opposite in that regard. For example, while I acknowledge that it can certainly be argued that ownership and control of electricity, gas and other utility transmission networks, such as water, is strategic, it is questionable whether outright 100% State ownership of these assets is required. The same can be said for other areas of their businesses such as energy generation and supply.
With such issues in mind, the review group on State assets and liabilities was established by the previous Government to examine the potential for asset disposals to relieve the State's growing debt burden and how the assets in State ownership could be best used to help growth and investment in the economy. The assets focused on included the ESB, Bord Gáis, Coillte, Bord na Móna, Dublin Airport, the ports, RTE, CIE and An Post.
Since its publication in April, the report's recommendations have been closely studied by the Government. Having carefully considered all the options, it decided that, as an initial demonstration of intent, it would be prepared to sell a minority stake in the ESB as an integrated utility. The Government believes by releasing value from this State asset, while still retaining ownership and control of the company, valuable resources can be freed up that can be put to productive use in the economy and help reduce debt levels. However, the disposal will only be undertaken when market conditions are right and when adequate regulatory structures are in place to protect consumer interests. As Ministers have stated since the announcement of this decision, the State will not sell equity in the ESB at a fire sale price.
My Department and the Department of Communications, Energy and Natural Resources are jointly chairing an interdepartmental group which is considering the best approach to the sale of a minority stake in the ESB, taking into account energy policy, regulatory, legal, financial and economic considerations. This group will report back to the Government by the end of November with a recommendation on the best option for a minority sale and also the timescale in which the sale will be completed. No decision has yet been taken on the size of the minority stake to be sold or the amount to be generated from the sale. These matters will be determined by the outcome of the process I have referred to and will take account of the need to strike a balance between achieving the highest possible return for the Exchequer and maintaining appropriate policy goals.
The Government sees merit for the economy in retaining the ESB as a single unit. The decision to sell a minority stake in the company as an integrated utility presumes that the Commission for Energy Regulation certifies compliance with EU directives for the ESB to retain ownership of the transmission network in the State and subsequent approval by the European Commission. The process of seeking the necessary approvals in this regard is under way. I am interested in hearing the views of the Members opposite if they believe the ESB should be held together as an integrated entity or whether the transmission lines should be disaggregated. This may be a battle we may have to fight.
The Government also agreed it is prepared, in principle, to undertake further asset sales but no decision has been taken on any other particular assets at this stage. A separate process has, however, been initiated to value several potential assets in this context to inform any further decisions the Government may wish to make on this matter.
In all of this, the Government is conscious more may need to be done than merely look for assets to sell to reduce our debt. We also need to invest in the economy and restore competitiveness. The programme for Government contains a commitment to release value from the State's portfolio of assets with the intention of using these proceeds to fund investment in the productive capacity of the economy. It set a target of up to €2 billion in asset sales but only to be sold when market conditions are right and when adequate regulatory structures have been established to protect consumer interests.
One key issue that remains to be discussed with our funding partners on our asset disposal programme is how the proceeds of any asset disposals should be applied. There is still strong resistance from our interlocutors not to apply them exclusively to debt retirement.
