Irrespective of their political outlook, most Irish people agree that certain functions, such as management of our prisons and of strategic resources such as the electricity network and our main airports, should be left to government. We don’t debate the subject but there are many sectors that we generally agree are better left to the private sector. Even Ireland’s hard left does not run election campaigns calling for the privatisation of your local Spar; we don’t need a new government department to take up whiskey distilling and state’s foray into financial services was naught but a short-lived matter of economic necessity.
Why then is Ireland looking to invest €1.2 billion into solar power, biomass, smokeless coal plants and wind energy? Why do we want to buy a wood-pellet plant in Georgia in the United States?
These are all areas which are already more that adequately served by the private sector and yet Bord na Móna, without any public debate, has in the past week announced plans to strengthen the state’s hold in each area.
Announcing its results earlier this week, John Horgan, chairman of Bord na Móna, highlighted the company's need to diversify away from its traditional business. When the company was established in 1934, he said, it was set up to “deliver sustainable industry using Ireland’s indigenous, natural resources in the midlands and we continue to do so to this day”.
But is this proposed investment in solar, wind and biomass really in Ireland’s strategic interests? Or is it an attempt by a semi-state company whose income stems from the sunset industries of peat and coal to remain economically viable?
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You don’t have to be a cynic to favour the latter hypothesis.
In the 12 months to the end of last March, Bord na Móna saw its revenue fall by 6 per cent to €406 million, a drop which Mike Quinn, the outgoing chief executive, attributed to its Edenderry power station no longer getting state subsidies, a mild winter and low electricity prices. Consider though, that back in 2012-13 the company was taking in revenue of €426 million and you can see that the writing has been engraved on the walls of the 71-year-old semi-state for some time.
The company, which was formed to give us an alternative to coal in the post-war years, still makes its money mostly from peat and, ironically, from coal, where it is estimated to have well over 50 per cent of the Irish distribution market.
The burning of coal is not only bad for the environment but also for our health. Denis Naughten, the environment minister, has proposed to follow the example of his antecedent Mary Harney, who banned burning coal in the capital back in 1990, by instigating a nationwide ban, expected to come into force next year.
At the same time peat briquettes are slated to go the way of the fax machine and the overall political majority. Bord na Móna’s two briquette-producing plants, Derrinlough in County Offaly and Littleton in County Tipperary, have for some time been operating at less than half their 240,000 tonnes-a-year capacity. Earlier this year it was announced that Littleton would be shut with the loss of 69 jobs.
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Given that the peat and coal company has no future in peat and coal, it is not difficult to see why it wants to invest €1.3 billion in a variety of others projects. The question is: should it be allowed? Or put in another way, will the future of Bord na Móna be based on what is best for Bord na Móna or what is best for the state?
And even if the state does want to compete vigorously with the private sector to build wind and solar energy farms and smokeless coal factories, is Bord na Móna the best vehicle to do so?
Take wind. The state already goes toe-to-toe with the private sector in this market. In fact so enamoured is the state of this sector that it has not one but four semi-states all vying to do the job better than the private sector. ESB, Coillte, Bord Gáis and Bord na Móna are all active in the wind energy market and each of them is looking to increase their presence in the sector.
Surely if the government really wants to build a lot of wind farms, rather than allow the private sector do what it is good at, it should pick one horse for the race. Better still why not merge the wind interest of all four companies.
If the state really wants to be producer of wind energy does it need four different management and administrative teams to do so?
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While on the subject of mergers, why not revisit the recommendation of the 2010 government review group and merge Bord na Móna and Coillte? Both have sizeable land banks, both are interested in renewable energy and both have substantial biomass operations.
In the current market it is difficult to see any argument against a merger. Surely the government has better things to do with its money than forgo millions of euro annually on unnecessary management teams.
We could go one step further with the merged entity by combining Bord na Móna’s land bank of 80,000 acres of bogland across 12 counties with Coillte’s 445,000 hectares of forestry, keep that in state hands as a strategic natural resource and then privatise the merged commercial arms.
There a solution to the vestigial corporate body which is Bord na Móna which does not involve selling peat to British gardeners, one of Bord na Móna’s more recent and more ill-fated forays, or buying American wood pellet plants, which is one of the management wheezes for the immediate future. The Irish government has enough to do sorting out the health sector without propping up the residual mass of the heath sector.
@tommcenaney.com