A spending watchdog in the U.K. claims that tens of millions have been missed out by ministers in the sale of Green Investment Bank (GIB) which took place in August.
The valuation of the GIB that was made by the Australian bank Macquarie was on the lower side of the valuation made by the U.K. government, claimed the National Audit Office. The deal was secured through the payment of cash of the Australian bank Macquarie £1.6 billion. The bank’s existing commitments would be settled by Macquarie for an additional £500 million.
If the government had waited for the completion of construction of some of the windfarms owned by the bank, the value of the company could have bene increased by £63 million. Another option that the watchdog said could have been adopted was that of a phased sale where the sale could have been averted till 2018 and the government remained the owner of the bank and by that time, most of the investments made by the bank would have become operational. The bank could have been profitably privatized thereafter by way of an initial public offering.
“It was likely that assets would have been worth more if it waited for a sale,” the spending watchdog said in a report on whether ministers achieved value for money on the sale. But construction risks were avoided by the ministers by selling away the bank when they were able to.
Caroline Lucas, the Green party co-leader, said: “It’s simply shocking that the government wasted millions of pounds by not going ahead with the phased sale option.”
The coalition government had planned to herald the green economy and the bank was at the center of the efforts. A number of windfarms, waste-to-energy plants and energy-saving projects were undertaken by the bank with investment of £12bn of public and private capital. However, announcement of its sale when the projects were just into their third year was announced by the minister on the pretext of debt repayment.
There has been negative impact on the bank as the sale process took more time than was expected even though the ministers’ decision to sell off the company was taken earlier than what many suggested – wait out 2018 for the sale.
While the industry had anticipated that the deal would take about 8 months, there were unnecessary delays in the process resulting from scrutiny by the legislature, discussions o the price offered and legal hurdles, resulted in the deal getting late by over double the time that was anticipated.
The day-to-day operations of the bank were impacted as many of key employees left the bank and led to increase in government legal fees.
“GIB told us the delay and uncertainty throughout the sale process led to the loss of key GIB staff, and affected GIB’s ability to continue investing in projects,” the NAO said.
(Adapted from The Guardian)