Dáil Éireann Debate, Wednesday - 4 December 2013
2. Deputy Michael Colreavy asked the Minister for Communications, Energy and Natural Resources in view of his rejection of private sector bids for Bord Gáis Energy, his views on the fact that privatisation is not a viable option and that the optimum strategy for BGE going forward is to retain and develop it in public ownership. [51805/13]
View answer4. Deputy Michael Moynihan asked the Minister for Communications, Energy and Natural Resources his future plans for the sale of Bord Gáis Energy; the way in which the deferral of this sale will impact on the Irish energy market; and if he will make a statement on the matter. [51861/13]
View answerI propose to take Questions Nos. 2 and 4 together.
In May of this year, a process was initiated to sell the Bord Gáis Energy business. This process was led by Bord Gáis Éireann and overseen by a government steering group which included officials from my Department, the Departments of Finance and Public Expenditure and Reform, and the NewERA unit of the NTMA. I am advised that the process was conducted in a professional, open and transparent manner and attracted significant interest from a broad range of potential international buyers, reflecting the positive international sentiment towards Ireland.
However, based on clear advice, I have determined that the bids received last week were not a fair reflection of the strength and potential of the Bord Gáis Energy business. On 27 November last, I announced that I had confirmed to Bord Gáis Éireann that none of the final bids received for the Bord Gáis Energy business was of an acceptable value. The Minister for Public Expenditure and Reform and I have been clear from the outset of this process that Bord Gáis Energy would only be sold if a sale price was achieved which fully recognised the inherent value of the business. This decision underlines our commitment to proceed with asset disposals only when we are satisfied with the outcome.
My Department and NewERA will now work with Bord Gáis Éireann to ensure continued investment in the development of the Bord Gáis Energy business. We will also work with the company to complete the separation of Bord Gáis Networks and Bord Gáis Energy, as required by the EU gas market directive. This work is already well under way. Last Wednesday, the Oireachtas passed the Final Stage of the Gas Regulation Bill, which underpins the restructuring of Bord Gáis Éireann and the sale of the energy business.
The Government will keep all options open as regards the future of Bord Gáis Energy, which is a growing and successful business. I am confident that regardless of its ownership structure, Bord Gáis Energy will continue to enhance competition in the all-island energy market for the benefit of the economy and consumers. The continued roll-out of the Bord Gáis wind generation portfolio will also help to ensure that Ireland meets its legally binding renewable energy targets, as well as building further value in this business.
The Government remains committed to retaining Bord Gáis Éireann’s gas networks and interconnectors in State ownership as strategic infrastructure. We are also continuing our programme of divesting non-strategic assets, the proceeds of which will be used for re-investment in support of employment and economic recovery.
I am very disappointed with the Minister's response. When it was first proposed that Bord Gáis Éireann would be sold off I predicted that the venture capitalists, or vulture capitalists as I called them at the time, would be swooping and looking for a basement bargain. I also pointed out that the privatisation of public utilities in the neighbouring island had been nothing short of disastrous and had resulted in poorer service and increased costs to consumers.
We need to remind ourselves why these companies were in public ownership in the first place. We need to put ourselves in the place of a board of directors or managers at Bord Gáis Éireann. How can any company engage in strategic or even short-term planning when the status of that company is uncertain? I am disappointed that the Minister has not said that the reasons it was set up as a public company in the first place are as valid today as they were then and that the door has been closed and locked on any privatisation of Bord Gáis Éireann.
Fianna Fáil opposed the sale of the company in the first instance and we raised concerns during the passage of the Bill. What has been the cost to the Exchequer in the process of preparing the company for sale?
It seems there is nothing I can do to make Deputy Colreavy happy.
The Minister could say that he is not going to privatise the company.
He does not want me to sell the energy business of Bord Gáis, yet when I do not sell it he is also unhappy. I am sorry about that, but I think it was the right decision because we did not get value in so far as we regard the energy business of Bord Gáis as a very good business. We made plain from the beginning that unless we got value we would not sell. It would appear that some people inside and outside the House did not believe that. The origins of why we are doing it have been well traced and I will not go back over them.
I cannot answer Deputy Moynihan's question because we do not yet know the position with regard to fees. Individual contracts were issued following a competitive tendering process and some of it was on a no-foal-no-fee basis. Therefore, figures are not yet available, but I will inform the Deputy as soon as they are available.
The Minister says it is impossible to make me happy, but that is not true. I welcomed the decision not to sell the company off to the bargain basement hunters. However, I am pointing out that privatisation would be detrimental to this company and to the people of Ireland, and there are ample examples - remember Eircom - in which privatisation damaged a utility that the public had enjoyed. The people of Ireland paid for this company. I argue that it is impossible for any company to plan for the future when its status is unknown. If the Minister wants to make me completely happy, there is a very easy way to do it. He should close the door and lock it on the future sale of Bord Gáis Éireann, because it would be the right thing to do.
There is an issue with regard to the privatisation of State companies in general. We have learned hard lessons from past experience with these companies. There is no benefit to the State in dealing with the lowest bidder, the lowest common denominator. Any privatisation of State companies should be put on the slow burner.
There are people who are trying to get it at the lowest possible cost. We should not be bargain selling.
Deputy Moynihan is correct in that market conditions are affected by various developments, not least the shipping of cheaper coal into Europe by the US as a result of the revolution in prices therein arising from the exploitation of shale gas. This is just one of the factors affecting gas market conditions to which the Deputy referred.
Deputy Colreavy raised a comparison with Eircom. We learned from the mistakes made in that case and we have retained the networks in State ownership. In the case of Bord Gáis, there is a parent company and essentially three subsidiaries, those being the networks company, the energy business and Irish Water. They are under the umbrella of Bord Gáis Éireann. All three are prospering. Irish Water will be a significant company in its own right. The legislation that we completed last week has the energy business as a stand-alone company, stripped out from the networks. If someone comes along and makes an offer that the Government believes is value for what is being purchased, we will consider it because of the agreement entered into with the troika and so on. Just in case anyone fears that there will be a fire sale or a sale of any State asset at a bargain basement price, it will not happen.
Deputy Colreavy is right in stating that the energy business of Bord Gáis is thriving. It will continue to expand and is providing valuable competition. It will not be impeded in the slightest by the fact that it constitutes a separate energy company in BGE's stable, like Irish Water and the networks company.
