BORD GAIS & ESB:THE GOVERNMENT is planing to sell Bord Gáis's retail business and some of the ESB's "non-strategic assets".
In 2009, Bord Gáis was valued at €1.4 billion, and the ESB at €4 billion.
Minister for Public Expenditure and Reform Brendan Howlin said the Government has decided against selling a minority stake in ESB, following an analysis which identified a “range of complex regulatory and legislative issues”.
Given that the Minister has expressly ruled out a “fire sale” of State assets, the sale process is not expected to commence until 2013.
Bord Gáis Energy, the retail arm of the gas operator, employs about 485 staff in Dublin, Cork and Belfast, and includes Bord Gáis Trading and Bord Gáis Assets. It provides gas and electricity to residential and business customers in the Republic, and in Northern Ireland through its subsidiary Firmus Energy, and has about 1 million customers. The company said the sale would have “no impact” on customers.
While the gas market was deregulated in 2007, Bord Gáis dominates the retail market, with a market share of almost 80 per cent. It is under pressure from Airtricity and the ESB to hold on to customers. In 2009, it entered the retail electricity market.
Bord Gáis Trading is responsible for the procurement of gas, electricity and carbon on wholesale markets, while Bord Gáis Assets is responsible for the operation and maintenance of existing power generation assets, and the development of new assets such as the company’s wind portfolio.
Bord Gáis Networks, which develops, operates and maintains the natural gas transmission network in Ireland, will remain in State ownership. Similarly, it is only ESB’s non-strategic power generation capacity that will be sold.
“The Government reaffirms its commitment to the retention of ESB as a vertically integrated utility in State ownership as at present, notwithstanding the decision to dispose of some of its non-strategic power generation capacity,” Mr Howlin said.
The Department of Communications, Energy and Natural Resources has now been charged with identifying which assets will be sold. Bord Gáis had revenues of €1.5 billion in 2010, an increase of 11.8 per cent over 2009. It paid the State a dividend of €30 million in 2010, down from €39 million in 2009. The ESB reported revenues of €1.4 billion in the first six months of 2011, and contributed €77 million in a State dividend in 2010, down from €82 million in 2009, bringing its contribution over the preceding nine years to €1.2 billion.
Nat O’Connor, director with Tasc, the independent think-tank, said selling these assets might risk doing “long-term damage to the economy”. “The Government is taking the short-term option of selling assets, rather than using them as strategic tools to drive our economic recovery,” he said.
