Government urged not to sell semi-states to simply raise money

THE country’s advisory body for enterprise policy has warned the Government it should not look at the potential sale of valuable semi-state assets as simply a money-raising exercise.

Forfás said there had to be a strategic policy to see how infrastructure could best be developed and how to support businesses around the country.

In a report on the role of State-Owned Enterprises [SOE] it said the concerns of those who use the services of these companies should be most important.

“The sale of state-owned assets cannot solely be guided by how much revenue they will raise.

“It is important to develop clear criteria to select appropriate assets. It is essential that infrastructure users’ interests are protected, ie by not selling natural monopoly assets (eg electricity transmission lines, gas pipelines, broadband ducting, key airports etc) or assets to dominant competitors,” it said.

The report said there are arguments for selling off all of some companies to encourage competition and drive down prices but it was paramount the state retained control of the critical infrastructure.

This week Communications Minister Eamon Ryan suggested RTÉ could be broken up to separate its broadcasting transmission arm from the production company. He said he was agnostic about whether this should be done privately or publicly.

The end of 2008 SOEs, including ESB, Bord Gáis, the Dublin Airport Authority, Coillte and RTÉ had tangible assets worth €17.4 billion and combined debts of €3bn.

Together they employed 41,200 people and were responsible for 5.8% of the country’s GDP.

Finance Minister Brian Lenihan has asked economist Colm McCarthy to draw up a report on the potential sell-off of these assets.

Forfás said up to now it was difficult to pin down any national policy on the semi-state sector and everything was taken on a case-by-case basis.

And it said there was evidence the companies were, to their detriment, trying to be all things to all men.

“State-owned enterprises are often required to implement multiple and sometimes conflicting objectives ie to achieve loss-making public policy goals while operating commercially.

“While there is nothing inherently wrong with an SOE serving multiple goals, this can affect performance negatively.”