Independent reports that families can expect to be hit with water bills
averaging €370 a year when charging is introduced next year.
The Government plans to raise €500m by charging for domestic water, which will
hit 1.35 million homeowners with hefty bills.
Details of the expected charge are revealed for the first time in official IMF
They say the Coalition has told the European Commission that it expects to
collect €500m in 2015 after metered water charges are introduced.
This will result in average monthly bills of more than €30 per household --
totalling €370 a year.
But it is not yet clear when homeowners can expect to receive their first bill,
as a final decision has yet to be taken.
In a statement to the Irish Independent, the IMF said it expected charges to be
introduced by the end of the bailout programme this year.
"The latest memorandum of understanding envisages the introduction of water
metering, with a view to start charging by the end of the EU/IMF programme," it
"Although the exact amount of budgetary savings will depend on the parameters of
the charging regime -- for example the free water allowance provided to users --
the working estimate of the potential annual savings that could arise is €500m."
The EU/IMF agreement says charging must begin from 2014 but the Government may
decide to delay the inevitable until after the local elections that year. This
is because there are concerns that homeowners – hit with a full year of the
property tax that was introduced last month, plus water charges – will then vote
against the coalition government parties of Fine Gael and Labour in the June
Informed sources said the ending of the bailout programme at the end of this
year could give the Government room to delay the introduction of charges.
"Supposing the IMF is gone, that can change a lot," said one. "If they're not
making you implement it, it could be (delayed until) after the summer."
Ireland is one of the few countries in the OECD not to charge for water usage,
with average bills among member states ranging from €100 to €450 a year. In the
UK, bills are about €400 per household.
The Government intends to give each household a 'free' annual allowance of
water, which would cover basic needs such as sanitation, after which charges
The company charged with collecting water bills, Irish Water, expects 90pc of
domestic customers to pay up.
However, meters which measure the amount of water used will not be installed in
all homes across the State for another three years, meaning that some homeowners
will have to pay a flat-rate 'assessed' charge based on average usage.
The metering programme, which is expected to cost €500m, is not due to be
completed before summer 2016, with work on installing meters set to begin next
summer. Some 300,000 households with a private water supply will not be billed.
Two government departments – Finance and Environment – could not say how the
figure of €500m had been arrived at.
"This department is not in a position to comment on what is essentially a
budgetary matter," a spokesman for the Department of the Environment said,
adding: "The departments of Finance and Public Expenditure and Reform would be
more aware of discussions that have taken place with the IMF and the other
programme partners about national budgetary projections."
The Department of Finance said it could not comment.
The charges will be set by an independent regulator, the Commission for Energy
Regulation (CER), which will decide how much free water will be given to
households before charges take affect.
It currently costs some €1.2bn a year to supply water to homes and businesses
across the State.
It costs €500m to maintain and upgrade the network and businesses pay another
€200m in charges.
The shortfall will be made up of charges from domestic customers, which will be
used to cover operational costs. Households that refuse to pay are unlikely to
be cut off, but they will face the prospect of having the unpaid bill registered
as a charge against their property or experience a loss of water pressure,
meaning that washing machines and dishwashers cannot be used.
Irish Water will write to 1.35 million households from next summer to ask for
confirmation of their address so they can be billed.
Independent also reports that two European chiefs have lent their support to a
deal to reduce our €64bn banking debt burden.
Both European Commission president Jose Manuel Barroso and European Council
President Herman Van Rompuy made comments in support of a deal for Ireland.
The boost came as Finance Minister Michael Noonan said he still believed that a
deal would be done on the €31bn cost of bailing out Anglo Irish Bank before the
Mr Barroso said he was supportive of Ireland finding a solution to the promisory
notes issue. He said the commission was generally in favour of a deal, but he
declined to comment on specific proposals.
Mr Barroso said Ireland's presidency of the EU offered a great opportunity for
the Government to "make its case better known".
Meanwhile, Council President Van Rompuy gave his views after his Irish EU
presidency meeting with Taoiseach Enda Kenny and Tanaiste Eamon Gilmore.
He highlighted the need to tackle the issue of Ireland's banking debt – as
agreed by European leaders last June.
"One of the key objectives is to break the vicious circle between banks and
sovereigns, especially for Ireland," he said.
Mr Van Rompuy has consistently been one of the strongest voices at EU level
arguing for a reduction in the huge banking debt burden which resulted from the
disastrous state banking guarantee in 2008.
He is president of the European Council, which is made up of all 27 EU leaders
as well as European Commission President Jose Manuel Barroso. It sets the
priorities for the EU.
At Dublin Castle, Mr Van Rompuy said he was not involved in the discussions
about reducing the bank debt. But he said he understood that the Irish
Government was working hard with the European Central Bank (ECB) to find a
mutually acceptable agreement on the Anglo Irish Bank debt.
"I really hope for a positive outcome," he said.
His comments were welcomed by Mr Kenny, who said that the Government's immediate
focus would be to agree a deal on the €31bn Anglo Irish Bank debt – with another
€3.1bn instalment due for payment at the end of March.
Mr Gilmore said the Irish EU presidency would also be working to tackle the
"scandal" of youth employment, which is averaging 25pc across the EU.
Members of the foreign press wanted to know what the Irish Government would do
if British Prime Minister David Cameron demanded changes to EU treaties as a
result of pressure from eurosceptic Conservative MPs.
Mr Kenny said he did not believe that there would be treaty changes in the near
future, and emphasised that it would be "disastrous" if Britain left the EU.
"Britain is an essential part of the EU and has played a fundamentally important
role in developing the single market," he said.
In a light-hearted moment, Mr Kenny referred to how Mr Cameron wanted to stay on
in Downing Street until 2020, leading Mr Van Rompuy to ask: "You too?" Mr Kenny
responded by saying "Yes, of course".
The Irish Times reports that the
State sold a €1 billion investment in Bank of Ireland yesterday, having
initially aimed to sell a minimum of half that.
The proceeds of the sale, which was heavily
oversubscribed, will be used to pay down the national debt. This is the first
time the State has recovered any of the €64 billion in public funds invested in
the banks since the economy failed.
The holding in Bank of Ireland was by way of
Contingent Capital Notes (Cocos), a form of investment that is converted into
equity under certain conditions.
The sale received bids totalling €4.8 billion and
the notes were sold at a slight premium, netting the State a profit of €10
The notes were created in July 2011 and carry an
annual interest rate of 10 per cent, or €100 million, which the State has
They were bought by a number of international
institutional investors and the sale was organised following an approach by
investment banks to the Department of Finance late last year which indicated
that there was sizeable investor interest in the State’s “Coco” instruments, and
in particular the holding in Bank of Ireland.
In a press briefing after the sale Minister for
Finance Michael Noonan said it would make people look differently at Ireland and
at the Irish banks.
He said the State had a further €6.9 billion in
Bank of Ireland, AIB and Permanent TSB by way of investments over and above
ordinary shareholdings, and these would be sold at the appropriate time.
He said the sale marked a “fairly significant
day” and noted that it came a day after the National Treasury Management Agency
sold 2017 Government bonds worth €2.5 billion in a process that was also heavily
oversubscribed and involved an interest rate below that being paid to the
The NTMA sale on Tuesday involved a rate of 3.316
per cent, he said, which was 0.2 per cent below what Ireland is paying on its
US billionaire Wilbur Ross, the chairman and
co-founder of WL Ross and a significant shareholder in Bank of Ireland, said the
notes sale was a “major step toward the complete privatisation” of Bank of
Ireland. The State owns 15 per cent of the bank’s ordinary shares, and
preference shares with a value of €1.8 billion.
Mr Noonan said he welcomed the positive statement
from such a significant investor as Mr Ross and said the State had no interest
in owning banks indefinitely.
Philip O’Sullivan, chief economist with NCB
Stockbrokers, said the sale of the notes was further evidence that the
relationship between the State and its banks was moving from being a vicious
circle to a virtuous circle.
The Irish Times also reports
that a benchmark 10-year bond is next on the agenda for the National Treasury
Management Agency (NTMA), following the successful sale of €2.5 billion in a
syndicated tap deal on Tuesday.
Noting that Ireland doesn’t currently have a
10-year bond, John Corrigan, chief executive of the NTMA, said yesterday that it
could be a possibility in 2013.
“It would be nice to have a 10-year bond . . .
it’s on our wish list,” he said, speaking at the annual review of the agency,
adding that the NTMA plans to raise €10 billion from the markets this year.
A syndicated dollar deal is also a consideration.
Commenting on Tuesday’s sale, Mr Corrigan said
the agency was very happy with the spread of investors achieved in the deal,
with “all but 1 per cent” going to “real money investors” such as pension funds,
insurance companies and banks.
He also said the NTMA was very happy with the
yield, or cost of borrowing, attained, when compared with pre-crisis funding.
Rating still an issue
“We would have been challenged to borrow at that
rate even with a Triple-A rating,” he said. However, he added that the country’s
rating was still an issue.
“There is still a lot of work to do there,” he
said, adding that the rating Moody’s had on Ireland was “depressingly low”.
Noting that the proceeds of yesterday’s deal
would be kept on deposit earning a low yield, Mr Corrigan said it would be “hard
to match” the cost of borrowing, but that the NTMA was seeking to strike a
balance between funding while conditions were good, and building up a buffer.
“If the cost of carrying is important, then the
cost of not carrying it is equally important,” he said, adding that, “the world
is in a very uncertain place and we’re in a sweet spot at the moment”.
The NTMA will recommence its monthly treasury
bill auctions on January 17th, raising €500 million.
Viewpoints The NTMA on . . .
The disposal of Bord Gáis: “We’re
very much on track, said Eileen Fitzpatrick, director of NewERA, which is
managing the Bord Gáis divestment.
She said that NewERA, which also has
responsibility for representing the Government’s interest in its asset disposal
programme, has also started preliminary work on a disposal of Coillte’s assets,
and noted that the agency has seen a “healthy degree of interest” in State
assets from potential buyers.
The State Claims Agency : According
to the NTMA, the estimated liability of active claims stood at €1.1 billion as
of the end of December 2012, 86 per cent of which are in relation to clinical
The remainder are accounted for by employer,
public and property damage liability claims.
It expects the State Legal Costs Unit within the
agency to be operational next month.
Public private partnerships: The
National Development Finance Agency has started an “intensive market engagement”
to attract interest from investors and contractors in PPPs in the education,
health and justice sectors under the Government’s €2.25 billion stimulus
The NII/Newlands Cross PPP project is expected to
reach a financial close early this year.
National Pension Reserve Fund: The
NPRF’s portfolio, excluding its investments in Bank of Ireland and AIB, returned
7.3 per cent in 2012, or 3.7 per cent a year since 2001.
The fund’s portfolio of bank shares increased by
10.4 per cent.
The total value of the fund was €14.7 billion as
of the end of last year.
The Irish Examiner reports
that the Government, via the National Pension Reserve Fund, is making available
€850m to small businesses through three new funds in an effort to fill the gap
in the market by banks exiting the country.
The SME Equity Fund will have €300m-€350m at its
disposal, with the NPRF putting in €125m of the total amount. Other third party
investors will also stump up capital.
The fund will be managed by Carlyle Cardinal, which is a joint venture between
the international private equity firm the Carlyle Group and Dublin- based
Cardinal Asset Management, founded by Nigel McDermott and Nick Corcoran.
The fund will be aimed at “healthy businesses seeking to grow, including those
with over-leveraged balance sheets”.
The SME Turnaround Fund will have a total of €100m in its coffers with €50m
coming from the NPRF. The fund “will invest in underperforming businesses which
are at or close to the point of insolvency but have the potential for financial
and operational restructuring.
“Typically 40% of the capital invested by the fund will be used to buy the
business and 60% will be used to finance the turnaround in order to place it on
a sustainable long-term footing.”
The Turnaround Fund will be managed by London-based Better Capital. The
legendary investor, Jon Moulton, is the chairman of Better Capital.
The SME Credit Fund will have an initial fund size of €450m with the NPRF
committing €175m of the overall amount.
This fund will lend to larger SMEs and mid-sized corporates and will be managed
by BlueBay Asset Management.
This London-based fund is a wholly-owned subsidiary of Royal Bank of Canada.
“The SME Credit Fund may also acquire and refinance loans close to maturity
where existing lenders are not willing to provide new lines of credit.
“Lending by the fund will be at competitive market rates with loan sizes ranging
from €€5m to €50m with an estimated average size of €€15m. Returns to investors
in the fund will vary according to their position in the fund’s capital
structure,” the NPRF said in a statement.
NPRF chairman Paul Carty said all of these funds will be run on strictly
commercial terms as otherwise it would be a contravention of state aid rules.
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