No to privatisation of the ESB
By Dave Keating
George Lee wants to sell off Bord Gais and the lucrative parts of the ESB, supposedly to fund a jobs creation programme. The irony is that in order to sell the ESB, Fine Gael has supported Fianna Fail’s policy of cutting the staff of the semi state company in half to just 6,500, with further staff cuts planned. Fine Gael has also supported the government’s policy of introducing so called competition in the generation and selling of electricity. This they say is in order “to reduce the price for consumers”. However the very opposite has happened.
The Commision for Energy Regulation (CER) was set up in 1999. At that time the ESB produced nearly all of the electricity in the country and at the second most competitive rate in Europe. Because the price was too low competitors would not come into the market and so in 2001 the “break even” mandate of the ESB was ended, a mandate that had been in operation since 1927 when the ESB was founded. The result has seen a doubling of prices since then with the ESB now producing less than half of the country’s electricity. To ensure profits for the private producers the price is now one of the dearest in Europe.
In 2006 the profits of the ESB amounted to €327 million. The following year with an increase in revenue of just 5%, profits jumped to €523m and in the five-year period from 2002 to 2007 the ESB spent €4.7 billion on capital investments.
This is the resources that big business want to get their hands on. If this happens, what are the odds that they would abandon any investment programme? In years to come we would face calls for the re-nationalisation of the ESB as electricity prices soared and mega-profits are the order of the day. We have already seen what has happened to our telecoms industry and the lack of broadband provision. The Fine Gael minister, Michael Lowery handed Denis O Brien’s consortium the second mobile operator licence which saw O’ Brien’s personal wealth increase by over €317 million in a few short years. Eircom has been asset stripped and saddled with huge debts by its successive owners and thousands of jobs have been sacrificed, with another 1,200 to go in the next while. Fianna Fail and Fine Gael both have backers that want to get their hands on the profitable semi-state companies. They are not on their own. Shane Ross in an article in the Irish Independent on 8 February, suggested selling the ESB for between €6 billion and €8 billion and handing the money to the banks.
The handing over of semi-state companies like the ESB to the profiteers will see increased cost to the consumers and less or no investment in the future as has happened in Britain. It would also mean a worsening of conditions for the workforce.
Instead of pursuing the failed policy of privatisation the government should re-nationalise all electricity production and return the ESB to its previous not for profit condition. This would ensure a more affordable source of electricity with an immediate reduction of between 15% and 30%. It would also ensure that investment in production, transmission and distribution of electricity was carried out in a way that was best for the environment. A real drive to develop renewable sources of electricity production could take place that would benefit society at large and protect and create jobs rather than putting the profits of big business first.