Centrica-led consortium poised for Irish energy takeover

http://www.theguardian.com/business/2013/dec/12/centrica-consortium-irish-energy-takeover

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A consortium led by Centrica, the owner of British Gas, has been made preferred bidder by Irish ministers to take control of the state-owned energy group, Bord Gáis Energy, for around €1bn (£840m).

Centrica's foray into Ireland comes as power companies warn that the UK energy market is becomingly increasingly unattractive to investment.

The cash-strapped Irish government abandoned an auction late last month after bids came in well below the €1bn reserve price Dublin had demanded. But new talks with three buyers in a consortium have produced an agreement.

A Centrica spokesman confirmed that, if a deal can be finalised, the company would take direct control of gas and electricity delivery to domestic and business customers in the Republic of Ireland. Centrica will inherit 700,000 Bord Gáis customers in Ireland, to add to the 12m households served by British Gas.

Centrica would also buy a gas-fired power station in Cork, while a fellow member of the consortium, Brookfield Renewable Power, would take on a network of wind farms owned by Bord Gáis. A third member of the consortium, iCON Infrastructure of North America, is to take over Bord Gáis assets in Northern Ireland.

Energy companies operating in the UK have warned that attacks over rising bills and arguments over green levies are causing uncertainty over energy policy.

Centrica's chairman Sir Roger Carr has called for an end to "Punch and Judy" politics over household energy costs after Labour party leader Ed Miliband pledged to freeze prices if he becomes prime minister in 2015. Carr accused politicians of scaring away the investment needed to maintain the UK's power supplies.

A sale of Bord Gáis would be a major step forward for the Irish government. Privatisation of the company was the centrepiece of a planned €3bn programme of state asset sales agreed with the European Union and the IMF at the start of the country's bailout process three years ago.

The Irish government had hoped the sale would account for up to half the funds it needed to raise under the agreement if it could stir up an auction for the business.

Bord Gáis's network that carries gas across the country will not be sold because the government regards it as vital national infrastructure.

Ireland's energy and communications minister, Pat Rabbitte, told broadcaster RTE: "I said at the time that there wasn't any question of selling state assets at bargain basement prices, so we rejected the bids at that price. But all three bidders came back, and we selected our preferred bidder. I think it represents a vote of confidence in the Irish economy."

In a separate development, Centrica has become the latest energy supplier in Britain to dilute its interest in offshore wind assets amid concerns about the subsidy levels. It has sold its holding in the Race Bank scheme to Dong Energy of Denmark for £50m. The UK company is left with 50% stakes in four remaining wind farms.

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