Sell, sell, sell: everything must go in great European fire sale

Sell, sell, sell: everything must go in great European fire sale
2011 07 03

Europe's most indebted countries – and Britain – have put prized assets up for grabs to bolster their creditworthiness. So what exactly is on offer?

Britain's decommissioned HMS Ark Royal, Madrid's Barajas airport, Ireland's National Stud and the air traffic control services of several countries are likely to be up for sale. Photograph: Montage

Greece

Europe's most ambitious sell-off is taking place in its most indebted nation: Athens plans to sell €50bn (£45bn) of state assets by 2015.

Looking at the sales list, it seems that very little has been left off the table. The government's stakes in the ports of Piraeus and Thessaloniki, 39 airports, a state lottery, a horse-racing concession, a casino, a national post office, two water companies, a nickel miner and smelter, hundreds of miles of roads, a telecoms operator, shares in two banks, electricity and gas monopolies and thousands of hectares of land, including coastal stretches, are among the host of assets on offer.

While a 50% stake in Athens international airport is probably the best-known asset on the block, when it comes to sheer beauty the Anavyssos saltworks could prove difficult to beat. The saltworks, an hour south of Athens, shut down in 1969, and is situated on a mile-and-a-half of beach.

However, while Greece's privatisation scheme apparently offers plenty of desirable assets, experts say the country will struggle to raise the hoped-for €50bn because investors are wary of the country's bureaucracy, strong unions, corruption and lack of transparency. Barely a year ago, Greece itself estimated that privatisation could raise, at best, €1bn to €2bn a year. Suzie Bird

Ireland

The national airline, ports, power stations and even the Irish National Stud, which hosted a visit by the Queen in May, face being broken up or sold off under plans to get Ireland out of the red. A government-commissioned review of state assets published in April said privatisation could raise about €5bn for the cash-strapped country.

Energy suppliers, transport and sporting assets were all earmarked for divestment. However, the plans could end up in the shredder. The Irish government is in no rush to sell off the family silver and the private equity company Terra Firma, which made an approach about the sale of Electricity Supply Board assets, was told that no talks could take place.

The economist Colm McCarthy, who chaired the Review Group that wrote the report, recommended the break-up of the electricity and the gas boards. Other assets he recommended putting on the block include Rosslare port, Dublin Bus and the government's 25% stake in Aer Lingus, which recently celebrated its 75th anniversary.

The Irish Aviation Authority, which regulates aviation and provides air traffic control services in Irish airspace and the north Atlantic, could be merged with the UK's National Air Traffic Services or other north-west European services, and the forestry commission should dispose of forests but the land they grow on should remain in state hands, McCarthy said.

On the sports front, the National Stud should be sold and Horse Racing Ireland should put racecourse interests up for sale. The greyhound racing body should also get rid of its stakes in dog tracks.

But the report was attacked in parliament and the government agreed there would be no "fire sale" of assets and certainly no sale until market conditions improve.

Joe Higgins, a Socialist member of parliament, branded the privatisation blueprint a "neoliberal huckster's deal which will involve pawning the assets of the people to pay off moneylenders".

So far little progress has been made and McCarthy has also said that he would be surprised if any assets could be sold this year. Top of the government's wish list is the sale of its stakes in the five bailed-out banks but until they emerge from the current wreckage there are unlikely to be buyers.

The country's biggest life insurance operation – Irish Life – is being prepared for a trade sale on government orders. It is expected to fetch about €1.6bn but this will be used to shore up losses at the bailed-out sister bank Permanent TSB, which will disappear from the high street. Lisa O'Carroll Dublin

Spain

The world's biggest annual lottery payout, Spain's famous Christmas El Gordo (Fat One), spreads joy to tens of thousands of winners – but the biggest winners of all may soon be investors who snap up part of the state company behind the lottery.

The country's State Betting and Lottery (LAE), which offers a series of prize draws, also brings a huge dose of Christmas cheer to the country's treasury. Of the €2.15bn Spaniards bet on the draw, almost a third is retained by the lottery administrator.

Spain is not as badly indebted as other European countries, but bond yields have soared as Greece, Ireland and Portugal have been forced into bailouts. Spain's socialist government, led by José Luis Rodríguez Zapatero, has set strict deficit targets to avoid the fate of its southern European neighbours. Sales of stakes in the state lottery and the country's airports authority form part of the plan for pulling safely back from the brink.

Some 30% of the state lottery will be sold as the organisation behind the 151-year-old El Gordo becomes what may be the world's biggest listed gambling company, valued at up to €25bn.

The company recorded €3bn net profit in 2009 on sales of €9.8bn – meaning the sell-off will reduce treasury income by about €1bn a year.

RBS recently won a contract to run the privatisation of up to 49% of Spain's airports authority, AENA, which has a book value of €2.6bn. The government also plans to auction off Madrid's Barajas airport and Barcelona's El Prat by the end of the year.

Reform of the country's savings banks means that many will also soon be seeking stock market listings. Giles Tremlett Madrid

Portugal

Neighbouring Portugal is in even starker need of money after accepting a €78bn bailout. On Thursday, the newly elected centre-right prime minister, Pedro Passos Coelho, announced a rush sale of state holdings in the utility company Energias de Portugal and the power-grid operator REN by October.

Passos Coelho recently told the Financial Times that he wanted to sell off up to 49% of water utilities as well as several state media interests, reportedly including television and radio channels, plus the national news agency Lusa.

The state airline TAP and the airport owner ANA – which runs airports in Lisbon, Faro, Oporto and the Azores – are also due to be sold along with the insurance business of the state-run bank CGD, although the government had not given a time frame. Portugal will also be selling off real estate belonging to its civil governors' offices, which are being scrapped. Giles Tremlett

Italy

There had been talk of Silvio Berlusconi's debt-laden government raising cash by means of privatisation. But a package of fiscal adjustment measures being finalised in cabinet this week appeared to include only one sell-off.

The government was expected to clear the way for radio frequencies to be auctioned off to telephone companies. The frequencies, made available by the shift to digital radio, were expected to bring in €2.4bn.

The package of cuts, which has yet to be approved by parliament, aims to trim €47bn from the projected budget deficit but the bulk of the squeeze – €40bn – has been deferred until after 2012. John Hooper Rome

Britain

The coalition government in Westminster is in the process of selling off the 49% state stake in the air traffic control service Nats, decommissioned naval ships and its own collection of fine wine.

In the March budget the chancellor, George Osborne, set a target of raising £2bn from asset sales to finance the Liberal Democrat's idea for a green investment bank. The bulk of that is coming from the sale of its remaining stake in Nats and the Tote, the government-owned bookmakers. The private bookmakers Betfred have been chosen to buy the Tote for a reported price of £200m.

Last week, the telecoms regulator Ofcom approved plans to sell spectrum for mobile broadband. Ministers will decide this summer whether to proceed with the sale of the student loan book and in the March budget, the Treasury indicated that plans for a new Public Data Corporation would involve selling public data to the private sector.

Plans in the budget to sell off government buildings have been stymied by the poor property market and many departments are opting to "sweat their assets" instead by squeezing more people into the buildings in order to get out of expensive leases elsewhere. The Treasury is renting desk space to the Cabinet Office to allow it to end an expensive lease.

Dozens of judicial buildings are due to go up for sale as the coalition pushes through its rationalisation of the courts service with a reduction in number by 142, including 93 magistrates courts.

The government is planning to sell off HMS Ark Royal, the aircraft carrier that was decommissioned in March after 25 years' service. The deadline for bids is next month, and among those bidding is someone hoping to sink it off the Devon coast and turn it into a wreck for divers.

The Commons has announced it will sell its wine cellar though the proceeds will not go to the Exchequer but to fund a larger stock of cheaper wine for official functions.

The British public's appetite for the sell-off of public assets has been sorely tested and other attempts have gone spectacularly wrong.

Plans to sell off as much as 150,000 hectares of forest and woodland in England in the biggest sale of public land for nearly 60 years were confirmed by MPs in October last year. The U-turn – after a huge groundswell of public opposition –came in February. Polly Curtis

Source: guardian.co.uk

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