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Ireland Shelves Plan to Privatize Energy Firm, Minister Says

Ireland Shelves Plan to Privatize Energy Firm, Minister Says
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Τετ, 27 Νοεμβρίου 2013 - 19:31
Ireland's government has shelved a plan to sell a state-owned energy company, one of the country's largest privatizations under its international bailout, because bids for the business were too low, the energy minister said Wednesday.
Ireland 's government has shelved a plan to sell a state-owned energy company, one of the country's largest privatizations under its international bailout, because bids for the business were too low, the energy minister said Wednesday.

The process to privatize the Bord Gais Energy had formally started earlier this year and was part of an agreement that Ireland struck with its international bailout lenders--the European Union and the International Monetary Fund--to raise funds to sell some state-owned assets. The government had hoped to receive about 1 billion euros ($1.35 billion) from the sale of Bord Gais Energy to inject into a fund to boost jobs, and not only to pay down the country's large debts, as it emerges from its bailout in the coming weeks.

The sale of the utility company, which included a 445-megawatt power station in County Cork in southern Ireland , onshore wind generation, and a distribution network business in the Northern Ireland , failed to attract the right price despite strong interest because "current conditions in the power and commodity markets were not favorable," Energy Minister Pat Rabbitte said. "None of the final bids received for its energy business were at an acceptable value," he said.

The coalition government that swept to power in early 2011 persuaded the EU and IMF to let it use most of the proceeds from any asset sales for a new so-called Strategic Investment Fund, which it plans to use to promote recovery in certain parts of the battered economy. Most of the investments will be financed from about EUR6 billion that remains in the country's National Pension Reserve Fund, and not from privatization receipts.

Mr. Rabbitte said the government would continue to review the future of Bord Gais Energy.

The decision comes amid signs that Ireland's battered economy is at last showing signs of recovery following the collapse of its property market over five years ago that brought the country close to bankruptcy. Official data Wednesday showed that Irish home prices rose for the seventh successive month in October. On Tuesday, the Irish government cited data that showed employment growing strongly in the third quarter as evidence that the economic recovery is under way.

Some analysts say that Ireland has a relatively small state-owned sector. Potential sales of other state-owned assets, including the Electricity Supply Board, which is the country's largest power firm, as well as transport companies, forests and a 25% stake in airline Aer Lingus PLC--would therefore not raise substantial amounts of cash for the government. The coalition had said that despite the country's debt woes it wouldn't be forced into making "fire sales" of state-owned companies.

 Ireland pumped in huge sums and nationalized a handful of lenders to keep the country's banking system from collapse.

The government hopes that it will get back at least some of its investments in surviving banks in future years. It owns Allied Irish Banks PLC and Permanent TSB outright, and has a 15% stake in Bank of Ireland PLC.

Earlier this year, the government said it had agreed to sell its national lottery license to Premier Lotteries Ireland--a group that includes Ontario Teachers Pension Plan, the owner of U.K. lottery operator Camelot--for EUR405 million. That marked the first large-scale sale of a state-owned asset under the country's international bailout. The funds are meant to help build a long-delayed new national children's hospital in Dublin .

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