SALE OF ESB STAKE WOULD MEAN 'NET LOSS' TO STATE

28 Sep 2011

A partial sale of the ESB would make a minimal impact on the national debt and represent a financial loss to the state balance sheet, according to Congress Chief Economist Paul Sweeney said.

Addressing a major conference on the Future of State Assets - organised by Eolas - Mr Sweeney said that any stake in the ESB would be "priced to sell" and would raise between €1-2 billion, but even that figure might be ambitious in the current climate.

"When set against the huge level of debt at €157 billion and the potential liabilities arising from the banks (€279.3 billion), it is clear that the impact on our debt burden would be negligible. And when all costs are taken into account, the sale would represent a net loss to the state's balance sheet," Mr Sweeney said.

He told the conference that a far better alternative would be for Government to sell shares in the New Era state holding company, which would facilitate private investment while ensuring the taxpayer retained control of key strategic assets.

He said both Labour and Fine Gael had committed only to the sale of non-strategic assets, a commitment that had also been included in the Programme for Government.

"What has happened to change their minds? The ESB has not become a less strategic asset - quite the opposite - so Government needs to explain the rationale behind this decision. I look forward to reading the economic case for this decision, but I strongly suspect that no such case has been made."

"It is ironic that a sale of state assets is 'required' in order to pay for the collapse of Ireland's biggest private companies - the banks - and doubly ironic that the partial privatisation of the ESB is being floated when we have just undergone the biggest nationalisation programme in our history," Mr Sweeney said.

He explained that while customers, consumers ESB workers and the wider economy would lose out in any sale, stockbrokers, top managers and legal personnel would "make a killing from the sale."

He said it would be far better to see the skills, resources and expertise of the ESB harnessed to the task of job creation and recovery.