ESB should not be sold, says chief

OUTGOING ESB chief executive Padraig McManus has labelled the McCarthy report into the future of state-owned assets disappointing, and has said the utility should not be sold.

Speaking after his address to the Leinster Society of Chartered Accountants lunch in Dublin’s Conrad Hotel, he said the ownership of the ESB (now called ESB Electric Ireland) “is a matter for Government; but if the Government takes the decision to sell in full, or in part, we’ll implement it and comply fully”.

He said that any break-up of the ESB — the McCarthy report suggested the break-up and partial sale of both the ESB and Bord Gáis — would create more uncertainty in the energy marketplace. However, he added that if the ESB was to be sold, it should be done so as a sole entity and not broken up beforehand.

He rejected the report’s claims that the ESB’s €1.4 billion takeover of Northern Ireland Electricity was a bad deal. He said it was “a very good deal” that would generate returns over the next few decades, and that the ESB’s balance sheet was “challenged”.

“The McCarthy report is just that: a report of suggestions. We’ll be conducting our own report in response and both will be on the record when it comes for decisions to be made. We were disappointed with the negative tone [of McCarthy] and felt it contained many errors relating to the ESB.”

In terms of the salaries awarded to the heads of semi-state companies, Mr McManus — who has taken a voluntary cut in his salary — said it was a matter for the Department of Finance, but that such positions deserved to be paid in line with similar posts in banks.

He added that reaching a settlement on the company’s €2bn pension deficit had been “a landmark deal” and a priority for the board, resulting in “a model pension scheme for the public service”, the implementation of which will be a personal priority before he leaves office either by the end of this year or early next year.

A reduction of the ESB’s cost base is “the next key thing to do”, with a target of €280 million per annum, including a 20% pay roll reduction.

He also said that in the times to come, wind energy will provide an ideal hedging option to the volatility of gas.

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