Vol. 402 No. 9
5 Mr. R. Bruton asked the Minister for Energy the way in which the valuation of woodlands handed over to Coillte Teo was decided; the way this valuation compares with the value which could have been obtained on the open market; and if he will make a statement on the matter.
The valuation of the 400,000 hectare forest estate transferred to Coillte Teo was based on discounted cash flow. This method of valuation is well estabished in the forest industry, and was adopted by the Forest Review Group in 1985 for its own evaluation of forestry operations.
The open market value of the estate was, and is, in practice unascertainable, as the sale of an entire forest estate of this size is unprecedented in this country. The experience of selling small forest areas is quite limited and confined to specific choice lots, and cannot be extrapolated with any degree of accuracy to the whole estate.
Would the Minister not agree that the review group set the valuation of the forestry at the time at £800 million which, indexed up to current values, would be over £1,000 million, almost double what the Minister sold it for? Would the Minister not agree that the undervaluation of the forestry will mean the taxpayer is losing an asset and it will interfere with the competitiveness of Coillte as against other companies?
The final valuation was £575 million for the transferred forest estate and the other properties and, in my opinion, that is a reasonable figure. It neither subsidises the company unfairly nor prevents them from earning a commercial rate of return after improving their efficiency.
I should also point out that the estate was not "handed over" to the company, but, rather, transferred in return for shares issued to the same value to the Minister for Finance. Coillte are quite aware of the taxpayers' investment in the forest estate and have been given a specific mandate to carry on the business of forestry on a commercial basis.
Would the Minister be willing to release the basis of his calculation to the Oireachtas Committee on State-sponsored Bodies so that this issue can be looked at in much more detail, as it is important?
I would refer the Deputy to the review group report in November 1985.
It is valued at £800 million.
Be magnanimous.
