Don't hold your breath waiting for sale of ESB

BUSINESS OPINION:REGARDLESS OF where one stands on the merits or otherwise of selling a stake in the Electricity Supply Board it is very hard to believe it will happen any time soon.

We may well live under a new dispensation in which the state is dependent on what are euphemistically called “external partners” for money, but so much remains the same.

Taken at face value the initial responses of the ESB unions indicate the staff are as strongly opposed as ever to any sale. And this is despite the staff owning 5 per cent of the company and thus in line for a pay day.

No doubt those who want to believe a sale is possible will discount the initial union response as posturing. They will argue that the unions are aware of the bigger game that is afoot, which has the preservation of the Croke Park agreement at its heart.

Indeed the pressure that is apparently coming on from the Troika to crack on with asset sales may well be some sort of quid pro quo for allowing the Government honour its pledge not to cut public sector wages any further.

The two issues are certainly coming to a head simultaneously and this sort of grand bargain was common during the heyday of social partnership.

But it might be a mistake to assume that the trade union movement could deliver on such a behind-the-scenes deal. Social partnership is broken, or at least badly damaged, and the ability of the big unions to deliver their members, should they even want to, must be in question.

But if you suspend disbelief on this issue, the next hurdle is who would actually want to buy a minority stake in the ESB, which is apparently all that is on offer.

If the company in its entirety was up for sale it would be very attractive to other utilities and of course the type of private equity investors who looted Eircom so successfully.

Both would look for control. They are not likely to have much interest in being minority shareholders. Even in a company as profitable as the ESB.

The Government, however, seems to think that an equity or pension fund with a focus on dividend income and capital appreciation might be interested in being minority investors. Rare birds indeed.

But suspending disbelief once again, the wider strategy for the semi-State sector that is emerging seems almost designed to put even these elusive creatures off.

The ESB is apparently included in the plan to create some sort of “New Era” super holding company for state companies.

The various companies would have to work towards some overarching national goal and their dividends would be committed to funding important infrastructure projects.

There is much to be said for such an initiative but is it something an investment fund – even the sort of “nice” funds the Government has in mind – would want to tie its investors’ money up in? Don’t think so.

It is hard to not escape the rather cynical conclusion that the Government is really just going through the motions on this one.

The Troika want to see some progress on asset sales and they know that the sale of the ESB in its entirety, or piecemeal, is very doable and would produce a significant amount of cash.

As a result the Government needs to show it is willing. But it has rather cleverly killed the initiative at birth by declaring that it only wants a minority investor and then going on to expound on a wider plan for State companies which does not have maximising profit for shareholders at its heart, to put in mildly.

Presumably the Government is hoping that events will overtake the ESB sale process – which we can assume will be very dragged out – and that the idea is quietly shelved.

And that is not impossible. The euro zone debt crisis is entering a new and very dangerous phase with potentially disastrous consequences for the hoped for export-led recovery. But by the same token almost every measure being taken or postulated to deal with the crisis significantly reduces the pressure on the Irish exchequer – the various reductions in the interest rates on our bailout loans being a case in point.

The radical measures now being suggested to deal with Greece could potentially be a game-changer that would see the Republic’s debt burden significantly reduced.

Talk of the State returning to the bond market by 2013 – and thus throwing off the yoke of external partnership – no longer seems fantastical and merely very optimistic.

Which is more than you could say for the chances of finding a credible minority shareholder in the ESB.