McCarthy report outlines sale of state-owned assets
A raft of state-owned companies face being broken up or sold off under radical plans to raise €5bn and pull Ireland out of the red.
But the Government insists there will not be a 'fire-sale' of semi-states and that valuable energy, transport and industry interests will only be floated on the market when the time is right.
An independent review of state-run commerce recommends stripping ESB and Bord Gáis of fuel burning power stations, selling ESB’s foreign business, privatising Aer Lingus in full and selling off the National Stud.
Author and economist Colm McCarthy has also called for a pay review of top brass in the semi-state.
Brendan Howlin, Minister for Public Sector Reform and Expenditure, said no decision on sales have been made and warned the Government would only go to market when conditions are right.
“I think there will be things that will not be acceptable to Government but I’ll let the Government debate that and we will be presenting our comprehensive response in due course,” he said.
The McCarthy review of state assets – the economist’s second investigation into trimming public costs and raising finance – looked at companies which have a total book value of €8bn.
Mr Howlin said if all the sales recommended in the review went through it could realise up to €5bn.
But he warned against jumping into a so-called “fire sale”, claiming it was a matter of timing to secure the right market conditions.
“It’s not practical to think about disposing of many of these companies in a big hurry,” he said.
“There’s also the question of what the market is like for commercial assets right now.
“There are always issues of timing.”
The dramatic money-making plan affects 16 semi-states across several sectors.
The Energy Sector
ESB would stay semi-state even though all its foreign interests would be sold - including Northern Ireland Electricity. Overseas expansion would be banned. Other services, including power plants, supply and distribution, consulting and engineering should be sold as a single entity.
The transmission grid, including the high-voltage system in the north, should be transferred to EirGrid and kept in public ownership along with all hydro-electric units.
The Bord Gáis gas and electricity generation and supply should be sold. The high-pressure gas transmission network and interconnectors should be retained by the state. Mr McCarthy suggested these should be merged into EirGrid.
Bord na Mona should be sold off, including peat extraction rights, but not ownership of the peat lands.
Likewise, Coillte should dispose of forests and associated assets but not the land they grow on.
The Transport Sector
The State’s quarter stake in Aer Lingus should be sold. The Government should consider privatising the airports after the Dublin Airport Authority sells non-core assets, mainly overseas, to slash its debts.
Ports, including Rosslare, should be restructured into several multi-port companies built around Dublin, Cork and Shannon-Foynes. Privatisation of some or all of the ports should be considered, ideally after restructuring.
Mr McCarthy warned that selling off the main CIE companies – Irish Rail, Bus Eireann and Dublin Bus – is unrealistic in the short term. He warned of unavoidable losses inherent in maintaining a nationwide railway and uneconomic urban and rural bus services.
The report warned that Dublin Airport – with its new €600m Terminal 2 – has twice as much capacity as needed.
But CIE Tours, Rosslare port, Expressway and other bus businesses competing directly with private operators should be sold off – Dublin Bus for example.
Air traffic control and aviation regulation could be merged into the British National Air Traffic Services (Nats) or other north-west European services.
Sporting and Gaming Interests
The National Stud should be sold and Horse Racing Ireland should put racecourse interests up for sale. The greyhound racing body, Bord na gCon, should also get rid of its stakes in dog tracks.
Both sporting bodies should also look at selling their gambling interests in the Tote.
Mr McCarthy called for an open competition for the next seven year licence to run the National Lottery.
The report said the Health Insurance Authority should be absorbed by the Financial Regulator and a single regulator should be created for the broadcasting and telecoms industries.