December 12, 2013 / 7:40 PM / 4 years ago

UPDATE 2-Ireland picks Centrica consortium for major gas utility sale

* Selects preferred bidder for 1.1 billion euro deal

* Pushes Ireland towards ambitious privatisation target

* Opposition says sale is too cheap

* Dublin leaves bailout this weekend

By Sam Cage

DUBLIN, Dec 12 (Reuters) - Ireland picked a consortium led by Britain’s Centrica for a 1.12 billion euro ($1.5 billion) acquisition of the retail unit of its gas utility Bord Gais, a major milestone as it prepares to complete its international bailout programme.

The progress towards the flagship privatisation adds to a string of positive economic data, with unemployment falling and the economy returning to slow growth. Ireland is being hailed as an austerity success as it has met the terms of the loans and will leave the bailout scheme this weekend.

But opposition politicians and trade unions criticised the sale, saying the price was too low and there was no pressure to conclude a deal now the economy is starting to look healthier.

Ireland would have completed the bailout regardless of the deal, but the cash is important to bring down state debt of 126 percent of gross domestic product, a legacy of its need to rescue a crashing banking system in 2008 during the global financial crisis.

The sale had appeared stalled last month when Dublin failed to secure acceptable bids, which had raised doubts about its ability to hit a 3 billion euro asset sale target under the European Union and International Monetary Fund aid arrangements.

The energy ministry said on Thursday it has now picked a consortium of British energy supplier Centrica plc, Brookfield Renewable Power Inc and investment firm iCON Infrastructure, whose bid has an enterprise value of up to 1.12 billion euros.

Sources said last month the government had aimed to secure up to half of its 3 billion euro target through the sale of Bord Gais Energy, a goal the Centrica deal would fall short of.

“Now that the state is meeting its financial targets without having to sell the company, there is no reason to proceed,” said Michael Moynihan, the main opposition party Fianna Fail’s spokesperson for communications, energy and natural resources.

“This sale is a mistake and is being made under absolutely no pressure. There is no justification for dumping a well-run and valuable state asset at fire sale prices and it is something I fear that we quickly come to regret.”

AMBITIOUS TARGET

The ministry said revised bids for the Bord Gais unit had been received after its announcement that initial offers were not acceptable. There will now be talks on finalising the sale agreement, expected to be signed in early 2014.

Bord Gais Energy handles marketing, call-centres, billing, and appliance servicing to over 600,000 gas customers and 300,000 electricity customers, and also has a stock of assets, particularly focused in the renewable sector.

Dublin last year raised its target for the sale of state assets from 2 billion euros after reaching an agreement with its bailout lenders to use some of the proceeds to invest in the economy as well as pay down debt.

But the government has since withdrawn plans to sell its 25 percent stake in airline Aer Lingus and state forestry firm Coillte.

It secured 400 million euros though the sale of a lottery licence and is looking for a further 400 million from the Irish Electricity Supply Board (ESB), which sold the first of its non-strategic assets put on the block in November.

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