Dáil Éireann Debate, Wednesday - 9 July 2014
24. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the cost-benefit analysis that has been undertaken in respect of the merger of commercial semi-State companies; and if he will make a statement on the matter. [29678/14]
View answerI presume that the merger of commercial semi-State companies to which the Deputy's question refers is that proposed between Coillte and Bord na Móna. As the House will be aware, in June 2013 the Government decided, inter alia, that a fundamental restructuring of Coillte was required and that part of this process should involve a robust analysis of how to give effect to a beneficial merger of Coillte and Bord na Móna, with a view to creating a streamlined and refocused commercial state company in the bio-energy and forestry sectors in accordance with commitments made in the Programme for Government.
Since that decision, an Inter-Departmental Steering Group made up of representatives of my Department, the Department of Agriculture, Food and the Marine, the Department of Communications, Energy and Natural Resources and the NewERA unit of the NTMA, and involving consultation with the companies as appropriate, has been considering how such a beneficial merger could be progressed. This consideration has been informed by work undertaken for the Group by NewERA, which considered the potential merger from a financial perspective.
NewERA's financial work found that while a full merger had the potential to achieve significant material financial benefits, it would involve very significant up-front implementation costs if implemented immediately. Such an approach would, in addition, pose a significant number of implementation risks that could negatively impact on the level of benefits realisable and the costs incurred. Accordingly, a full merger in the short term could not be recommended.
On the other hand, NewERA's work found that a partial merger of the two companies, focusing on the areas of overlap between the two businesses, had the potential to deliver substantial financial benefit to the shareholder but with lower implementation costs and risks, over a shorter timeline, and with a better benefit-to-cost ratio than an immediate full merger. It was on this basis, therefore, that the Government decided last month that Coillte and Bord na Móna should now work towards a partial merger of their businesses, focusing on the areas of overlap between the two companies. This partial merger will involve the establishment of a joint ventures between the two companies to manage their common business activities in biomass, wind energy, shared services, and recreation and tourism with a view to maximising the levels of benefit to the State and the companies in the medium term, while minimising the implementation costs.
