Ireland’s Electricity Supply Board’s (ESB) chief executive said on Thursday that the new government could raise up to €8 billion by privatizing the state owned company.
“It’s probably the state’s most valuable asset but it has also been a very secure source of employment and revenue and dividends and support for the market for the government as well”, said Padraig McManus in an interview to Reuters at the ESB’s headquarters in Dublin.
“We believe that ESB in its current structure is the best structure for ESB”, he added.
Ireland is scheduled to go to polls on February 25 and the centre-right Fine Gael party and the centre left Labour party are the favourites to form the next coalition government. Selling off state assets – of which the ESB is the crowning jewel, to support the struggling economy is one of the options before the new government.
McManus – A 38 year company veteran who took charge in 2002, said the company has paid around €800 million in dividends to the government in the last eight years. He valued the state owned company between €6 and €8 billion.
The ESB is a strategic asset for Ireland, given the country’s huge potential for generating renewable power by harnessing wind and marine energy and exporting them, after meeting domestic needs. Currently it generates around 40 percent of the Irish Republic’s energy requirements.
The group plans to raise €6.5 billion to replace its aging distribution network over the next five years and develop its own wind farms and electric vehicles.
However, given Ireland’s tottering economy and a badly hit banking sector on the verge of collapse, ESB has slim chance of raising money by tapping the euro bond market. The country, which once enjoyed the highest rating of AAA, has now been downgraded to a little above junk putting pressure on state assets.
McManus said he hoped the new government will bring in political stability essential to revive the debt stricken economy, although Standard and Poor’s and Moody’s have a negative outlook for the country’s economy. He had agreed in 2008 to stay on as chief executive of the company till 2012.
“There is going to be a new government. It could be that that will add stability as opposed to instability and certainly we are looking to that adding a bit of momentum to the economy”, he said.
He said ideally the ESB would like to tap the bond market after the new government takes charge.
“Let’s see how the new government settles in and let’s see how the market responds to the new government and how market sentiment is in the second quarter”, he said.
“Maybe something like €500 million in the first go”, he concluded, sounding cautiously optimistic.