The Government has been told by the European Commission that it has until April to either sell Bord Gáis Energy (BGE), the company's retail arm, or hive it off into another State entity separate from Bord Gáis Networks.
Following a decision by the Government yesterday to suspend the sale of BGE, the State company will now proceed to separate its retail and networks arms to comply with European law.
The decision not to proceed with the BGE disposal suggeststhat the Government’s ambitious NewEra plan to sell €3 billion in State assets is unlikely to be realised.
Five key assets in State ownership were identified for selling off under the plan but after yesterday’s decision only two of the sales remain on track, with the proceeds unlikely to realise more than €1 billion.
The Department of Energy, together with the NewEra State agency, the Department of Public Expenditure and Bord Gáis group, will now undertake a "review process" to determine the future of BGE.
'All options'
The Department of Energy said "all options", including a flotation, a renewed sale or a break-up of Bord Gáis, were back on the table. It also confirmed that it would not seek a derogation from Europe over the April deadline to either sell or hive off BGE.
“Significant work has already been undertaken on the separation of the networks business from the energy business and this work will now continue.
“We will not be seeking a derogation. We will now complete the implementation of unbundling, continuing to maintain our ongoing engagement with the EU Commission on this process and the timetable for completion.”
Pat Rabbitte, the Minister in charge of energy, announced yesterday that the bids for BGE received by Monday's 9am deadline "were not at an acceptable value" according to advice from NewEra and its advisers Barclays, and Royal Bank of Canada, which was advising Bord Gáis group.
He added that the Government would not sell BGE “for a bargain basement” value.
Three bids were received for BG: from UK trade player Centrica; Viridian, a Northern Ireland energy company; and Blackstone, a private equity giant that is the biggest shareholder in Eircom. It is understood all three were about €1 billion, a figure Mr Rabbitte said was "not a way off the mark".
The two other State sell-offs that were jettisoned before yesterday were the State's remaining quarter stake in Aer Lingus and the proposed disposal of Coillte's harvesting rights.
'Fire sale' prices
The Aer Lingus sale may have netted the State €140 million but the Government was reluctant to sell any of its assets at "fire sale" prices. The sale of the National Lottery was agreed at €440 million, of which over €200 million has been ring-fenced for the new national children's hospital.The ESB has also been told to raise some €400 million through the disposal of not-strategic assets.
