Bord Gáis Energy to be sold in January 2014
Final terms of the sale of Bord Gáis Energy to Centrica is expected to be signed in early 2014
The long anticipated sale of Bord Gáis Energy took a major step closer to conclusion this week.
According to latest reports, a consortium of Centrica, Brookfield Renewables and Icon Infrastructure, emerged yesterday as the preferred bidder with an offer of €1.125 billion for the state owned company. Centrica, supplies gas and electricity to business and consumers in Britain, operating under the brand British Gas.
The company has around 13 million gas and electricity customers in the UK and British Gas is one the so called “Big Six” energy suppliers in Britain. It is understood the Government was originally expecting up to €1.4bn for Bord Gáis Energy when the sale of the state asset was formally announced in 2012. Although getting the best price possible was always primary consideration for the Government, other factors also played an important part in its objective to sell.
Reportedly, the government was more in favour of the bid from the Centrica-led consortium, due to the fact that it was already an established energy supplier with a firm track record. Previous bidders Viridian (owners of Energia) and Blackstone (US investment firm) as well as Centrica reportedly offered over €900 million in November, but these bids were still some way short of the Government’s target of over a billion euros for the company.
Pat Rabbitte, Minister for Communications, Energy and Natural Resources, said that both parties were hopeful of concluding the transaction in January 2014.
Currently, Bord Gáis Energy supplies gas and electricity to approximately 900,000 businesses and households. Its customer base comprises of an estimated 600,000 gas customers and around 300,000 electricity customers nationwide. The sale of the company will include the transfer of most of its retail and business gas and electricity divisions with the exception of the remaining state owned natural gas pipeline network, which the Government considers to be of high strategic importance.
As an energy supplier Centrica, certainly has the ability to challenge other major suppliers in Ireland, such as Airtricity, Electric Ireland and Energia, which can only be good news for Irish consumers.
Centrica’s purchase of Bord Gáis Energy should encourage competition in the Irish energy market, with consumers likely to benefit from more competitive gas and electricity prices in the short term at least. While Irish consumers will naturally be concerned that Bord Gåis Energy is being bought by a company that has a track record of implementing some pretty hefty price hikes in the UK, the fact is that gas prices are still regulated in Ireland. This will hopefully give consumers some reassurance and security.
The plus-side though is that Centrica also has a track-record for offering innovative and competitive deals through its British Gas brand in the UK. If Centrica brings these ideas to our shores then it could be the wake-up call needed to give competition a boost in our energy market. The Government is expected to use the proceeds of the sale of Bord Gáis Energy on two fronts - to pay down state debt and to fund an ambitious jobs creation programme.