Joint Venture to merge key businesses of two significant state companies
The Minister for Communications, Energy and Natural Resources today secured Government approval for a memorandum proposed jointly with Ministers Coveney and Howlin to streamline and refocus the commercial operations of Bord na Móna and Coillte, primarily in the bio energy and wind energy sectors.
The decision will see the establishment of a Joint Venture (JV) between the two companies, with subsidiaries or SPVs as necessary, to focus on the identified areas of greatest synergy between the two companies, which are:
o A Biomass business, to be called BioEnergy Ireland, which would procure biomass at market rates from both Coillte and private sources and use this to supply the entire market (including Coillte’s board companies and Bord na Móna’s power station) on a competitive, commercial basis.
o A wind business comprising initially of two Coillte windfarms, with further integration of the wind business over time.
o Shared Services to consolidate central support services and drive cost efficiencies,
o Recreation and Tourism to realise the green/agri-tourism potential inherent in the combined land banks of the two companies.
This approach has the potential to capture many of the efficiency gains and policy benefits of a full merger, while avoiding some of the short-term costs and risks associated with that strategy. After expert examination it has been decided to allow both companies concentrate on their core business while streamlining synergies between the companies where they exist.
For example, Minister Rabbitte added that within weeks he and Minister O’Dowd planned to publish a bio-energy strategy which would give further momentum to this important renewable energy.
The Government has agreed that overall responsibility for implementing the decision, at Ministerial level, is to be given to the Minister for Communications Energy and Natural Resources. An interdepartmental Steering Group has been charged with overseeing the project, with NewERA managing the detailed interaction with the companies and the JV on behalf of the Steering Group.
Officials will be meeting with both companies in the coming days to brief them fully on the Government’s decision and to begin the detailed implementation process for the partial merger of the businesses to proceed as quickly as is feasible.
sector.