COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 13 Oct 2022

2021 Report of the Comptroller and Auditor General - Chapter 9: Implementation of the National Broadband Plan

Mr. Mark Griffin (Secretary General, Department of Environment, Climate and Communications) called and examined.

Chairman

I welcome everyone to this morning's meeting. We have received apologies from Deputies Carroll MacNeill and Verona Murphy. If attending in the committee room, members are asked to exercise personal responsibility and protect themselves and others against the risk of contracting Covid-19. Members of the committee attending remotely must do so from within the precincts of the Parliament due to the constitutional requirement that in order to participate in public meetings, members must be physically present within the confines of the Parliament.

The Comptroller and Auditor General, Mr. McCarthy, is a permanent witness to the committee. He is accompanied this morning by Ms Orla Duane, deputy director of audit at the Office of the Comptroller and Auditor General.

This morning we will engage with officials from the Department of the Environment, Climate and Communications to examine both the 2021 Appropriation Account for Vote 29 and the Comptroller and Auditor General's 2021 Report on the Accounts of the Public Services, Chapter 9: Implementation of the National Broadband Plan. We are joined in the committee room by the following officials from the Department: Mr. Mark Griffin, Secretary General and Accounting Officer; Mr. Philip Nugent, assistant secretary of environment protection, circular economy and governance; Mr. Fergal Mulligan, assistant secretary of communications; and principal officers, Mr. Robert Deegan and Ms Louise Carrigan. We are also joined in the committee room by Mr. Ken Cleary, principal officer in the relevant Vote section at the Department of Public Expenditure and Reform. You are all very welcome. I remind all those in attendance to ensure that your mobile phones are on silent mode or switched off.

Before we start, I wish to explain some limitations to parliamentary privilege, and the practice of the Houses as regards reference witnesses may make to other persons in their evidence. As the witnesses are within the precincts of Leinster House, they are protected by absolute privilege in respect of the presentation they make to the committee. This means that they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure that this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with any such direction.

Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise, or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I now call on the Comptroller and Auditor General, Mr. Seamus McCarthy, for his opening statement.

Mr. Seamus McCarthy

The appropriation account for Vote 29, Environment, Climate and Communications, records total expenditure of €664 million in 2021. This was 55% more than the €428 million spent in 2020, but fell almost €105 million short of the total expenditure provided for in the Vote for 2021. Receipts into the Vote during the year amounted to €12.3 million, slightly ahead of what was budgeted for and the result was a net surplus at the year end of just over €106 million.

The standard requirement is for any voted funds remaining unspent at the year end to be surrendered to the Exchequer. However, the Minister for Public Expenditure and Reform may allow up to 10% of unspent capital funding in a Vote to be carried over for use in the following year. The Department of the Environment, Climate and Communications was allowed to carry over the maximum amount from 2021, around €58 million, and the balance of €48 million was duly surrendered.

Expenditure in 2021 on the communications programme amounted to €164 million. This was €85 million less than budgeted for, mainly because of lower-than-expected spending on implementation of the National Broadband Plan, NBP. Anticipating the spending shortfall, €52.5 million was moved from this programme to two others, using the Supplementary Estimate process. The largest block of spending under the Vote was on the energy programme, with €327 million charged for 2021. The bulk of this, €291 million, was charged to the B.4 sustainable energy programme subhead. However, the charges included the transfer of €160 million to the Department’s energy efficiency national fund in December 2021. As note 7.2 to the account explains, this transfer remained unspent at the year end. The result was that actual expenditure under the sustainable energy programme in 2021 was, in fact, only around 3% up on the 2020 level.

The Department spent just under €128 million on the environment and waste management programme in 2021. Of this, €49 million went to support the operations of the Environmental Protection Agency, EPA. The continuing costs associated with landfill remediation are also funded under this programme and amounted to €21 million in the year.

Members may wish to note that the Department is responsible for oversight of a broad range of public sector bodies, including the communications and utilities regulators and major commercial State bodies such as the ESB, EirGrid and the National Oil Reserves Agency, NORA. The bodies are listed in an appendix to the appropriation account.

Turning to the report, the objective of the national broadband plan, NBP, as members will be aware, is to ensure that access to a high-speed broadband service is available to all residences and businesses in the State. Roll-out of the service is focused on those parts of the territory of the State where commercial providers of broadband do not provide a service or do not have plans to invest, collectively referred to as the intervention area. National Broadband Ireland, often referred to as NBI, was contracted by the Department in late 2019 to deliver on the broadband plan objectives.

Contractual arrangements between public and private entities to provide infrastructure and operate services typically focus on the identification of project and operating risks and on who bears responsibility for them. The agreed risk allocation is reflected in the financial costs or rewards factored into the contract. In the case of the broadband plan, the overall Government subsidy is capped at €2.7 billion, with most of this payable over the initial infrastructure build phase. This is currently expected to conclude by January 2028.

At the time the examination was being completed, the infrastructure build plan was running about 12 months behind schedule. The target for the number of premises to be passed by end January 2022 was originally 115,000. As permitted under the contract terms, NBI proposed in March 2021 that this target be reduced to 60,000 premises passed. The actual number of premises passed at end January 2022 was 34,456, just 30% of the original target and 58% of the revised target. However, it is good to note that the take-up rate for the broadband service by the occupiers of the premises passed is higher than originally projected.

The delays in the plan roll-out have resulted in total subsidy payments to end 2021 amounting to just over €177 million. This represented less than half of the subsidy payment originally provided for in the Vote for 2020 and 2021. In addition, under the contract terms, certain financial sanctions apply to underachievement of the revised delivery targets. The Department has accepted that approximately two thirds of the delay to date was due to the impacts of Covid-19 restrictions but has imposed sanctions for delays it considers relate to issues within NBI’s control. By end August 2022, build delay sanctions totalling almost €135,000 had been imposed. Separately, a performance sanction of €22,500 has been applied based on performance reports up to end April 2021. As the examination report was being finalised, the Department was carrying out a review of performance reports more recently received from NBI, and further financial sanctions may arise from these. The Accounting Officer will be able to update the committee on the current status of this work.

Chairman

I thank Mr. McCarthy and invite Mr. Griffin to make his opening statement.

Mr. Mark Griffin

The total gross expenditure under the Vote in 2021 amounted to €664 million, 14% or €105 million below the budgetary allocation of €769 million, which included capital carryover. The extensive Covid-19-related restrictions on construction activity between January and mid-April 2021 had a significant impact on activity on the NBP, the sustainable energy programmes and the landfill remediation programme, and this is the main driver of the underspend last year.

On the national broadband plan, I outlined to the committee when I was last before it in February, and in subsequent correspondence, the unprecedented challenges faced in delivering the plan arising primarily from the Covid-19 pandemic. We are, however, seeing significant evidence this year that the network build has gained momentum and that this will continue into 2023 and subsequent years. As of 1 October this year, more than 337,000 premises are design complete and 210,000 premises are under construction, with 108,000 through the make-ready programme. A total of 94,500 premises can order or preorder a connection, while more than 85,000 premises are passed and available for immediate connection. In excess of 20,500 premises, or 24% of the premises passed, are connected, which is exceeding expectations for this stage of the project. Connections are running at approximately 2,000 per month. By the end of next January, the revised target of 102,000 premises to be passed will be achieved. In fact, we are advised this target of 102,000 premises will be achieved by end December, with a further 80,000 to 85,000 premises to be passed in 2023. There are now more than 300 staff employed directly by NBI, along with 1,100 indirect employees working with build and design contractors. A total of 271 public broadband connection points are live on the NBP network. Some 470 national schools within the intervention area have been provided with a high-speed broadband connection under the plan and are either live or are ready to go live. In 2022, roll-out to the islands commenced, with premises on four islands off County Donegal currently able to order or preorder high-speed broadband. NBI is progressing fibre design and build actives on a further six islands off counties Galway, Mayo and Cork while progressing service and designs for additional islands off counties Donegal, Galway, Mayo and Cork.

In 2021, the Department provided €327 million under its energy programme, up 60% on 2020. The figure €101.3 million was spent on the Sustainable Energy Authority of Ireland, SEAI, retrofitting schemes, with 15,500 home upgrades completed. This included nearly 4,100 solar photovoltaic, PV, installations, 4,600 homes upgraded to a B2 standard, 2,000 heat pump installations and almost 2,300 free upgrades to energy-poor households under the warmer homes and warmth and well-being scheme. In addition, approval was obtained to transfer €160 million from the Vote to the energy efficiency national fund to fund the establishment of a new residential retrofit loan guarantee scheme, as well as to support additional energy upgrades under the warmer homes scheme and other SEAI residential and community retrofit schemes.

Other key achievements in the energy area in 2021 include the continued roll-out of the renewable electricity support scheme, RESS, with the first onshore RESS projects energised in quarter 4 of last year. Approximately 530 MW of renewable energy is expected to have been energised by year end 2022 under the RESS, with a further 300 MW in 2023. RESS 1 is expected to deliver an approximate 15% increase in Ireland's current renewable energy generation capacity by the end of 2023. Auctions were completed for onshore RESS 2 in June 2022, which is expected to deliver a further 20% increase in renewable energy capacity and the design of a RESS 3 is under development, as is the design of the first offshore renewable energy scheme.

Spending under the environment and waste management programme was €128 million, slightly ahead of its original allocation. More than €20 million of the €128 million was spent by 21 local authorities to support landfill risk assessment and remediation work on more than 70 sites around the country, most of them old municipal landfills that operated prior to regulation and require engineering measures to ensure the protection of the environment, air and water quality for local communities. In excess of €13 million was spent on other waste management initiatives. The majority of the spend was on enforcement-related activities. Funding was also provided for once-off litter initiatives in 2021 to support an outdoor summer and prevent littering in public areas. By the end of 2021, 52 just transition fund projects had entered into grant agreements and were commencing the roll-out of their projects. The total value of projects in the delivery phase is €28 million, with €19 million in grant funding. These projects will bring €12 million in additional funding to the midlands and support approximately 150 direct jobs in the grantee organisations and approximately 890 indirect jobs, as self-reported by the project.

The year 2021 was significant for the National Cyber Security Centre, NCSC. Following completion of a capacity review early in the year, the Government accepted the capacity review's recommendations and agreed a number of actions, including the sanction of an additional 20 staff to be appointed by the end of 2022. In addition, in May 2021, the HSE was subjected to a serious criminal cyberattack through the infiltration of IT systems using Conti ransomware. The NCSC provided support to the HSE in identifying the systems affected by the cyberattack and to bring all systems back online. The Comptroller and Auditor General covered this comprehensively in the appropriation accounts this year.

The Department is tasked with delivering significant policy programmes to achieve a climate neutral, sustainable and digitally connected Ireland. The Appropriation Account 2021 sets out where the Department has invested its resources in 2021 to progress the achievement of this outcome in the context of significant challenges.

I look forward to assisting committee members with their questions today.

Chairman

Thank you Mr. Griffin. Deputy Devlin is first, with 15 minutes. He will be followed by Deputy Dillon.

Deputy Cormac Devlin

I welcome all of our witnesses. I will start with cybersecurity and the NCSC. Mr. Griffin said that the ambition was that 20 new staff would be recruited by the end of this year. Given that we are close to that point now, how successful has that been? What is the status of the recruitment programme?

Mr. Mark Griffin

It has gone pretty well. When the Government approved the capacity review in the middle of last year, we had 25 staff in the NCSC and the ambition was to recruit 20 this year to bring the total to 45 and to have 70 staff recruited within a five-year period. At this stage we have moved from 25 to 37. There was quite a lot of interest, from both the public and private sectors, in the jobs that were advertised and the process is under way to recruit the additional staff. We are satisfied that the target of 45 will be achieved by the end of the year. We have also made provision in the Vote in 2023 that will allow us to bring forward some of the recruitment that we had intended for years four and five of the recruitment programme. When the Government made its decision in mid-2021, it would have been mid-2026 when we expected to hit the target of 70 staff but we now expect to achieve that by the end of 2024. It is encouraging to see the quality and calibre of people who are applying for these jobs, both from the public and private sectors. It has been quite reassuring for us.

Deputy Cormac Devlin

It is good that the Department is potentially ahead of where it wanted to be. Renovations were carried out on the interim facility being used for the centre. What was the extent of those renovations, what did they cost and why were they done on an interim facility when there was a plan to move to a new facility?

Mr. Mark Griffin

A key component of the work of the NCSC is dealing with other international cybersecurity organisations, as well as dealing with confidential information provided by An Garda Síochána and the Defence Forces and, therefore, there is a need to have a secure facility in place in whatever accommodation the NCSC operates from. We will have a permanent headquarters soon. We are moving out of our building on Adelaide Road at the end of 2023 because the lease is up. We are repurposing the Department's offices in Beggars Bush, the Geological Survey of Ireland, GSI, offices, as the headquarters of the Department and that is where the NCSC will ultimately reside. That building will be fully fitted out to make sure it complies with the international standards required. We had to make sure in the interim period that the premises that the NCSC operates from will comply with those international standards and that is why the fit-out had to be such. It had to comply with the relevant international standards. Those standards are set out in regulations so a significant investment had to be made in the temporary facility. As I understand it, parts of that can be lifted and shifted to the final premises in Beggar's Bush. I also gather from conversations the NCSC has had with the Office of Public Works, OPW, that other State agencies would be interested in using the interim facility as a secure facility once the NCSC moves out. I am satisfied-----

Deputy Cormac Devlin

That lease can be renewed again and the property used for another-----

Mr. Mark Griffin

The premises is in the ownership of the OPW and is being fitted out by the OPW. As I understand it, other State entities are interested in using that as a secure facility, so from a value-for-money perspective we are reasonably well protected in that regard.

Deputy Cormac Devlin

Does Mr. Griffin have an idea of the costs to date? How much has been spent on those interim works?

Mr. Mark Griffin

So far we have spent approximately €75,000, excluding VAT. We estimate that the cost to our Department will be €215,000 but there is also the cost to the OPW, which I do not have. I am happy to follow up with the committee secretariat afterwards on the OPW costs.

Deputy Cormac Devlin

Is the newer building in Beggars Bush that the NCSC will move in to also owned by the OPW or is that leased?

Mr. Mark Griffin

It is State-owned.

Deputy Cormac Devlin

Okay, that is fine. If Mr. Griffin could provide a note on that, it would be much appreciated.

I will now turn to the NBP, which we have discussed previously at the committee. I understand the deployment plan is 12 months behind schedule. Delving into that further, fines of €135,000 were issued in respect of build delays. I gather from what Mr. Griffin said in his opening statement, some of that is related to Covid-19 and other issues. A performance sanction of €22,500 was also issued. Performance reports for subsequent periods indicate that further sanctions may arise. Have the sanctions that were levied been paid? How many others have arisen since this report?

Mr. Mark Griffin

The Deputy has raised a number of issues there and I will ask Mr. Mulligan to respond to some of them.

I will start with the good news, as it were. When we spoke in February the position as outlined by the Comptroller and Auditor General in his opening remarks and as set out in the chapter was not where we wanted to be, in terms of the number of premises passed and connected. The committee would have heard that from NBI as well and about the mitigations that were put in place. We are seeing a significant shift in activity in terms of designs completed, the number of premises that are make-ready commenced and the numbers that are coming through the make-ready programme. We have 158,000 that are through the make-ready programme and have gone into the NBI hopper to complete the premises-passed programme and be made available for connection for householders. A good pipeline of activity is happening and there is a lot more confidence on our part in terms of the line of sight we have on the direction of travel of the project-----

Deputy Cormac Devlin

Are they not revised targets?

Mr. Mark Griffin

Those targets would have been provided to us. They would have been discussed between the Department's NBP team and NBI in terms of the updated interim remedial plan.

Deputy Cormac Devlin

Are we not behind on the revised targets?

Mr. Mark Griffin

We are not behind on the revised targets, no, but if one looks at where we had intended to be at the outset of this programme, with a fair wind, pre-Covid we would have expected that by the end of contract year three we would have 204,000 premises passed. We will have 102,000 premises passed so we are roughly a year behind. We have allowed eight and a half months of that to NBI as part of the review process and there are three and half months that will be part of a sanction process. I will ask Mr. Mulligan to set out the work that has been done on that and how that adjudication was arrived at in terms of what is leviable and the level of due diligence that goes in between the NBP senior manager's team and NBI in settling on an appropriate figure.

Deputy Cormac Devlin

Just before Mr. Mulligan comes in I would like to ask another question because my time is limited. From 1 February to August of this year, sanctions totalling €134,800 were imposed but I understand there is a refundable option if other build milestones are achieved.

I ask Mr. Mulligan to touch on this in his response.

Mr. Fergal Mulligan

The simple way to put this is that, based on analysis we carried out in 2021 and 2022, NBI approached us to say Covid caused a lot of difficulties. Had Covid not happened, the programme would be approximately 3.5 months behind. We have determined that 8.5 months of the delay was related to Covid, for which the company gets relief because things happened beyond its control that it could do nothing about. In net terms, the programme is approximately 3.5 months behind and this is where the sanctions kick in. They have kicked for milestones over the past six or eight months that were missed. This is happening every week. There are 227 deployment areas in the programme. Each has a sanction per day associated with it. For every day it is late there is a financial sanction. So far there is a total of €150,000, of which €135,000 is related to the build. Next week we will impose more sanctions, as we will in the following weeks as there are delays. We have notified the company of a further €100,000 that will be sanctioned in the coming weeks. Again this will be credited against any subsidy that is paid out.

Deputy Cormac Devlin

When does the refundable option kick in? How is it traded off against the milestones that are missed?

Mr. Fergal Mulligan

If a milestone scheduled for June is reached in March, the company would be ahead of schedule. We will hit the company if it is late but we give it an incentive to be early. It will get a credit if it is early. This is how it works.

On the operations front, we have a number of reports on our desks that we are still reviewing. Sanctions of approximately €20,000 have been applied. A number of sanctions will be applied in due course. There are approximately seven reports for seven quarters on our desks. They will conclude in the coming weeks. I will not say what the sanctions are but they will be applied. They are not fully imposed yet. Until this is done, we will not say what the number is. This will continue for 25 years. If the company breaches key performance indicators, we will impose sanctions. For example, if the company is supposed to connect premises within a certain timeframe and misses the target, we will impose a sanction. If the network is down in somebody's house for a number of hours beyond what it should be, we will impose a sanction. This will continue for 25 years. While it is approximately €20,000 now, this time next year it will be a different amount if the company breaches key performance indicators. Every quarter we will report on sanctions.

Deputy Cormac Devlin

I thank Mr. Mulligan. With regard to blackspots, we focus a lot on rural Ireland but there are obviously blackspots in urban Ireland also. There are some glaring ones where there is fibre in the ground but houses cannot connect to it. I know the Department is aware of certain situations. I brought some to its attention. It is galling for people in an estate of 700 houses where it would seem financially lucrative for them to be able to connect but service providers are not willing to take up the mantle. This is a real problem for us. It goes beyond the national broadband plan because the fibre is there. How do we get around this problem?

Mr. Ciarán Ó hÓbáin

This issue is being brought to our attention regularly. Part of it is because people are aware that, under the national broadband plan, the level of connectivity is well in excess of what was flagged in the plan. The plan was based on a 30 Mb download target. This was the bar in the mapping exercise to determine what areas were covered by commercial operators. The minimum service now is 500 Mb. People sitting in the middle of Dublin city wondering whether they are 30 Mb are quite envious of this. There are two answers to this. The first is a difficult answer that takes quite a lot of time. We have spent a lot of time working with operators flagging issues and working through them. It may be down to their own network and work they have to do. Sometimes it is down to a piece of infrastructure that is needed and the operators might need to engage with local authorities on it.

I will give an overview of the broader picture of the three big providers of fixed networks outside the national broadband plan. Eir has said it will build its full fibre network to 1.9 million premises. Virgin Media has said it will reach 1 million premises. SIRO has said it will reach 750,000 premises. Obviously, there is overlap in these but they will deal with many of the problems. The problem is that fibre brings broadband to a cabinet from which people may be a long distance on a copper line. The build out will bring the fibre the whole way to the premises and it will resolve the vast majority of these issues.

Last week when the Minister of State, Deputy Smyth, spoke on Second Stage of the Communications Regulation Bill, he made a very strong statement on the build of such infrastructure. There is an expectation that, as commercial operators roll out and design the deployments, they do not leave small pockets of premises behind and they do not leave households and businesses stranded. The critical point is users can connect. This is the core point we have seen in some of the instances mentioned by Deputy Devlin. The network is there but users cannot connect. The commercial operators really need to look at the deployments. It is the case in the national broadband plan that people will always be able to connect. This is the messaging we are getting back on the connections to date. The message the Minister of State, Deputy Smyth, conveyed to the commercial operators is that they need to design their networks so they do not leave pockets behind and people are able to connect.

Deputy Cormac Devlin

I thank Mr. Ó hÓbáin. The Department needs a carrot and stick approach with certain operators. While they have plans, the public have been waiting years for them to be able to connect to cabinets or whatever other infrastructure is required. In urban areas there is an expectation, and rightly so. Not being able to connect when fibre is right outside the house is illogical.

Deputy Alan Dillon

I welcome our guests joining us this morning. I will begin with Vote 29 and the appropriation accounts for 2021. I will direct my questioning on Inland Fisheries Ireland to the Secretary General. Expenditure of €28 million was accounted for by IFI to support the protection, conservation and development of Ireland inland fishing resources in 2021. The provisional Estimate for IFI was €34 million. Will Mr. Griffin give the committee an insight into the reason for the €6 million underspend in IFI?

Mr. Mark Griffin

One of the biggest problems an Accounting Officer has at a meeting of the Committee of Public Accounts is trying to find the right note. This came up in the accounts the Comptroller and Auditor General previously produced. It is an issue he raised regarding the extent of cash holdings by Inland Fisheries Ireland. We withheld €4.5 million from IFI because it already had a significant cash holding in its accounts. We have been trying to run this down in recent years to keep it in line with what we considered normal for a State agency of this nature. What the Vote spend does not show is the spend from own resources. The bulk of the €5.9 million underspend was withholding €4.5 million due to cash in hand. I do not believe it greatly affected the activities of IFI during 2021. Like many other organisations it was affected by Covid. It had a significant programme of activities it delivered during the course of the year.

Deputy Alan Dillon

IFI has not yet presented its 2021 financial statement to the Oireachtas. Is there a reason for this?

Mr. Mark Griffin

I am not aware of a specific reason for this.

Mr. Seamus McCarthy

The audit is under way. Being one of the smaller agencies, we will get around to the audit later in the year.

Deputy Alan Dillon

I thank Mr. McCarthy.

In the context of the recent issues arising with regard to the resignation earlier this year of two board members of IFI in the aftermath of concerns being flagged during an internal audit, as the chief Accounting Officer, Mr. Griffin's internal audit system and risk committee are very important. I am sure he and his colleagues in the Department are familiar with the issues that arose. What steps has his Department taken to investigate concerns relating to financial or other irregularities in bodies or agencies under his remit?

Mr. Mark Griffin

On the IFI issue, the Deputy will be aware that the Minister commissioned a review under section 18 of the Inland Fisheries Act. He appointed Conleth Bradley, senior counsel, to examine the functioning of the board in accordance with that provision. That work is now complete. A copy of the report-----

Deputy Alan Dillon

As regards the irregularities the board found within its internal audit of IFI's activities, there was an investigation into the board. What procedures does Mr. Griffin have in place to deal with that type of incident in bodies under his remit? Did the Department ensure that an investigation was conducted independently of the staff within IFI? I did not mention the board. Mr. Griffin mentioned the report of Mr. Bradley into the board-----

Mr. Mark Griffin

Yes.

Deputy Alan Dillon

-----but I am talking about issues that were found in an internal audit and that were raised by senior board members. What did the Department do as a result of those issues being raised?

Mr. Mark Griffin

I might ask Mr. Nugent to come in on this because he has been closely involved in it. As I understand it, a number of issues were raised. They were examined by the board. They had been addressed previously in audit reviews and in the statement of internal financial control that was signed off on behalf of the board by the then chair earlier this year. The report of the chair on behalf of the board confirmed that the issues identified were addressed and that issues such as the use of IFI assets were being appropriately managed.

Deputy Alan Dillon

A separate investigation was conducted by an external consultant brought in by IFI.

Mr. Mark Griffin

Yes.

Deputy Alan Dillon

The issue that arises, therefore, is where was the independence to conduct an investigation into the agency itself?

Mr. Mark Griffin

When one considers the Inland Fisheries Act and the authority that is vested in the board by the Oireachtas under the Act, the examination of internal governance issues is, in the first instance, a matter for the board. The board brought in an internal expert, as the Deputy stated------

Deputy Alan Dillon

The agency brought in an external consultant to investigate allegations raised by the board. There is a separation here.

Mr. Mark Griffin

The agency and the board are one and the same, however.

Deputy Alan Dillon

They work in------

Mr. Mark Griffin

The agency and the board are one and the same. Under the Act, the board is the corporate representation of the agency.

Deputy Alan Dillon

The question I am asking is what did the Department do to investigate the issues raised by the board in respect of staff members within IFI?

Mr. Mark Griffin

Where matters are brought to the attention of the Department, by whatever means, we will examine them.

Deputy Alan Dillon

Has the Department examined these issues?

Mr. Mark Griffin

I do not want to get into specific allegations and what may or may not be ongoing, but where allegations are brought to the attention of the Department, we will do a scoping exercise to see what may fall within the ambit of the Department-----

Deputy Alan Dillon

Has the Department done that in this instance?

Mr. Mark Griffin

Again, without getting into specific allegations-----

Deputy Alan Dillon

It is a straightforward question. Has the Department done it in this instance?

Mr. Mark Griffin

I probably want the Deputy to clarify what the instance is because, to make a general point, where issues are brought to the attention of the Department, we would consider whether they are matters for the Department and the Minister to deal with. We did that in the case of the review of the board that was undertaken by Conleth Bradley. Where we are in receipt of other information, we would undertake the exact same process of considering whether these are matters that are appropriate to the Department or that fall directly within the governance and management functions of IFI, and we would make the call at that point. If things need to be investigated further by the Department under whatever pieces of legislation are available to us, we will do that.

Deputy Alan Dillon

Let us look at the issues that have arisen as a result of the board's concern regarding ongoing issues within IFI. I refer to fleet management, for instance. Mr. Griffin might be aware that on 10 August 2021 an IFI vehicle was involved in a car crash in Manorhamilton. The IFI vehicle was rear-ended. Was the Department informed of this issue, which involved an uninsured vehicle?

Mr. Mark Griffin

I am not aware of that. I do not know whether Mr. Nugent wants to comment on the specific or-----

Deputy Alan Dillon

There will certainly be a financial impact on IFI as a result of this incident, so I am sure the Department will want to know what the liability to the taxpayer could be.

Chairman

I ask Mr. Nugent to respond briefly.

Mr. Mark Griffin

Again, I want to keep this to the general point because where there are ongoing issues that may be subject to investigations by the board or to work that we are doing in the Department, I would be extremely reluctant to get into a lot of detail.

Deputy Alan Dillon

These are important issues that need to be addressed by Mr. Griffin, as Accounting Officer.

Mr. Mark Griffin

I entirely accept that and the Deputy can rest assured that whatever role is assigned to me as Accounting Officer, I will discharge fully.

Chairman

I ask Mr. Nugent to respond but to do so in such a way as not to prejudice any matters that may arise.

Mr. Philip Nugent

I do not have much to add to the comments of the Secretary General, other than to say that fleet management is one of the issues that was flagged to the board but considered in the statement of internal control, which is now part of the annual report that is under consideration by the Comptroller and Auditor General, and it has been signed off by the board as being addressed-----

Deputy Alan Dillon

Has the Department assessed the financial impact of that uninsured car being involved in a car crash in Donegal in 2021?

Mr. Philip Nugent

I do not have a figure for it but it is-----

Mr. Mark Griffin

The Comptroller and Auditor General might be able to help on this issue. These are matters for the IFI accounts. In the first instance, where there is a loss to the IFI, those are matters that, whatever way they should be disclosed within the IFI accounts, should be disclosed. That is why there is separation between-----

Deputy Alan Dillon

Responsibility lies with both the Minister and the Department.

Mr. Mark Griffin

I would say that responsibility for the management of the IFI organisation, including the moneys within that organisation, are in the first instance a matter for the board. If there are things that fall then for us to consider and examine, we will absolutely do that.

Deputy Alan Dillon

It is concerning that this matter has not been examined. There are several issues.

Mr. Mark Griffin

The Deputy is making an assumption that certain things have not been examined. What I am saying is that I am quite limited in what I am prepared to say in a public session. We take our duties very seriously in the context of every agency under our remit if issues of concern of a financial or other nature are raised.

Deputy Paul McAuliffe

I thank the witnesses for being with us. On 26 August, Mr. Griffin wrote to the committee regarding the retrofitting programme, the targets and some of the changes in the funding of those. I ask him to help us untangle the carbon revenue levy account, the energy efficiency national account, the climate action account and the movement of funds between those accounts.

Mr. Mark Griffin

The carbon revenue levy account is used for the acquisition of carbon credits where such acquisition is needed to comply with the State’s EU emissions reduction targets for 2020. That is the carbon fund.

The climate action fund is a statutory fund that was set up under the National Oil Reserves Agency (Amendment) and Provision of Treasury Services Act 2020. There was a commitment in the programme for Government for €500 million to be committed over a ten-year period to fund projects primarily in the renewable energy and energy-efficiency area. It is funded through the NORA levy.

The energy-efficiency national fund, EENF, was set up originally in 2014 by way of regulation. I will get Mr. Deegan to explain this a bit better if needed. We have an energy-efficiency obligation scheme which is in place for certain energy companies that have to provide a level of energy retrofit to meet their obligations under the scheme. If they do not comply with that by the delivery of the works, a compensatory financial amount can be paid and allocated to the fund. As set out by the Comptroller and Attorney General in the appropriation account and in his opening statement, in 2021 we transferred €160 million of an underspend from the Vote to the EENF to be used for two things.

Deputy Paul McAuliffe

On what date was that approved?

Mr. Mark Griffin

Approval was given in November 2021 to transfer €160 million from the Vote to the EENF. That was to be used for two things: first, to fund retrofit works in 2022, particularly to support those in energy poverty through the warmer homes scheme; and second, €60 million to fund the loan guarantee scheme to provide low-cost loans to local authorities.

Deputy Paul McAuliffe

I wish to confirm that was moved into the EENF.

Mr. Mark Griffin

It was moved into the EENF.

Deputy Paul McAuliffe

Okay. Mr. Griffin mentioned the better energy warmer homes schemes, which is incredibly popular. It is so popular that in Mr. Griffin’s correspondence he alluded to the fact that there is a delay of over 27 months in people being able to access that scheme. To get to the bottom of that, has Mr. Griffin given consideration to why those waiting times are there?

Mr. Mark Griffin

We made changes to the warmer homes scheme at the start of this year. We increased the eligibility of the scheme. As a consequence, there has been a significant ramp up of applicants to the scheme, which is a good thing to see. We want to support those who need support from the State to heat their homes. At that time, there was a waiting list of approximately 7,000 applicants and the waiting time was approximately 24 months. We have seen that halved for that group to ten or 12 months, so we are making progress on that. In fact, we want to-----

Deputy Paul McAuliffe

Mr. Griffin believes the waiting time for the better energy warmer homes scheme is now ten months.

Mr. Mark Griffin

Yes, for the cohort that was already on the list before we widened the terms of applicability. We want to see that full list cleared down by the end of 2023. Since we widened the terms-----

Deputy Paul McAuliffe

Which full list is Mr. Griffin referring to?

Mr. Mark Griffin

The list in question comprises the pre-change cohort.

Deputy Paul McAuliffe

Yes. Okay.

Mr. Mark Griffin

Approximately 9,000 additional applicants came onto the programme since we widened the eligibility. We are still working our way through that. It is a challenge.

Deputy Paul McAuliffe

What is the waiting time for those people?

Mr. Mark Griffin

Mr. Deegan might have that information.

Mr. Robert Deegan

It is approximately 28 months at this stage. Much of the delay was caused-----

Deputy Paul McAuliffe

It would be between ten and 12 months for the first 7,000 and approximately 28 months for the following 9,000. Are those figures compatible with each other?

Mr. Robert Deegan

The commitment that was made at the time of the changes to the scheme in February was that the people who were on the list at the time would be cleared out by the middle of next year. We are still on track to deliver that. What has happened since, obviously, is more people have come onto the list. Much of the delay in the 28-month group was built up because of the Covid-related restrictions, which put very severe-----

Deputy Paul McAuliffe

There had been issues in advance of Covid.

Mr. Robert Deegan

There were issues as a result of the move towards deeper measures. In the past, people would have gotten attic insulation, lagging jackets, LED light bulbs and that kind of thing. Now they are getting much deeper retrofits that can sometimes involve heating systems-----

Deputy Paul McAuliffe

Can the Department predict future demand?

Mr. Robert Deegan

We can see it in applications. We have received more applications so far this year than we did for the whole of last year and we expect that to continue. We are looking to improve output under the scheme and we have already seen significant progress on that. We have gone from 177 houses a month-----

Deputy Paul McAuliffe

Has the Department given consideration to the budgetary changes, such as the expansion of the eligibility for the fuel allowance?

Mr. Robert Deegan

We have indeed. We welcome the fact that more people will be eligible for what is a very important scheme. What we need to do is improve the output and throughput of it.

Deputy Paul McAuliffe

I saw one figure that showed that up to 80,000 people will benefit from additional fuel allowance payments, which are much needed at the moment. Why would any of those 80,000 people not apply for a scheme that allows them to have their home almost entirely insulated for free? The Department would have to expect that the decision to increase the fuel allowance will blow its figures out of the water in terms of delivery.

Mr. Robert Deegan

It significantly enhances the number of people who are eligible, which means that-----

Deputy Paul McAuliffe

Only if they can get the service.

Mr. Robert Deegan

That is true, but we have already moved from 177 houses a month last year to 400 a month this year. We are looking to find new ways of significantly ramping up that work for-----

Deputy Paul McAuliffe

I will be doing my very best to register as many people from my constituency as possible for the scheme, as I am sure others will be as well. Even if half of those 80,000 additional people make an application in January, that is an additional 40,000 people, which is four times the additional amount that happened at the previous expansion.

Mr. Robert Deegan

The 80,000 figure relates to the estimated number of people who are eligible for the fuel allowance. Not every one of those people will be eligible for the warmer homes scheme, so that will reduce it. Not everyone needs it and there is a new prioritisation-----

Deputy Paul McAuliffe

Not everyone owns their home and so on.

Mr. Robert Deegan

Yes, exactly.

Deputy Paul McAuliffe

There is the five-year rule to consider. I accept all of that. Either way, it is a significant expansion beyond the previous one.

Mr. Mark Griffin

The Deputy is right that it is.

Deputy Paul McAuliffe

Has the Department made a budgetary allowance for that?

Mr. Mark Griffin

We are kind of unique as a Department in that our budgetary provision for retrofit between now and the end of 2030 has been set out in the national development plan. We know we have at least €8 billion to spend. We know precisely what we will have for the next five years. I think we are one of only two Departments have that set out in such precise terms.

This could be looked at in a couple of ways. It could be said that it is a bad thing that people now have access to this. However, it is not. These are the people who need access to the greatest extent possible. The challenge for the Department and the SEAI now is how to manage that. Mr. Deegan rightly set out that we did an average of 177 units a month in 2021, but for the past three months the SEAI contractors have delivered 400 units per month, which is a significant increase. Mr. Deegan and the assistant secretary in this area met the suppliers in the past couple of weeks and they are absolutely up for this. The fact that the Government and the Oireachtas have given such certainty on the level of the funding means they can plan accordingly.

Deputy Paul McAuliffe

I was going to turn to that. Mr. Griffin is right that the national development plan provides the funding base. We now have established the clear pipeline of the demand. The delivery bit is the bit in the middle. I have two questions around that. Does Mr. Griffin believe the SEAI has the capacity to deliver that extra demand? What is the Department doing for Irish contractors, and by going outside of Ireland, to try to secure an additional supply of people who would be able to carry out the retrofitting? I have one last question that is unfair to ask, so I will let Mr. Griffin answer. I will come back in the second round and be unfair to him then.

Mr. Mark Griffin

We have increased staffing in the SEAI by at least double, if not more, over the past couple of years. We have further sanction for further additional staff in the SEAI for 2023. It has geared up very significantly and we can see that in terms of its approach and the delivery.

We have also beefed up the staff in the energy area in the Department. We had one assistant secretary in this area at the end of 2021, but we have three now. That recognises a number of things, such as the war in Ukraine and what we have to do there, as well as the impact that is having on energy prices and energy security. There is also a dedicated assistant secretary area within which Mr. Deegan works that is absolutely focused on delivering the retrofit programme. It has free rein to do whatever it needs to do and be as-----

Deputy Paul McAuliffe

I am conscious of time. What about the capacity?

Mr. Mark Griffin

The capacity is being dealt with in two ways. First, the Expert Group on Future Skills Needs completed its work at the end of last year on the skills required for the green economy. We are doing much more around apprenticeships and we have five centres of excellence operational now that are geared towards delivering the skills required to support the retrofit programme through upskilling, reskilling and bringing in apprenticeships. With regard to the engagement with contractors, Mr. Deegan’s sense is that they themselves are now scaling up very significantly because of the certainty around the funding. I do not know if he wants me to add anything to that.

Deputy Paul McAuliffe

I am not sure the Chair will give me the discretion.

Chairman

I call Deputy Catherine Murphy.

Deputy Catherine Murphy

I welcome the witnesses. I want to focus on two things. I will try to keep my questions focused and try to keep a bit of time to ask a second round of questions.

Will Mr. Griffin give us the background on how much the national broadband backers have put in so far out of the €223 million that they committed to over the lifetime of this? What is the status of the Department’s evaluation of Asterion, the Spanish investor that is seeking to purchase an 80% stake? When is it likely to be approved or blocked? What role does the Minister have to play? Can Mr. Griffin tell us the value of the clawback to the State and the value of the returns to Oak Hill and Twin Point if the deal goes ahead? Do Granahan McCourt and the senior management earn a payout from the deal under the existing shareholder agreement?

Mr. Mark Griffin

I will deal with one of the questions and I will ask Mr. Mulligan to come in on the other two. The work on the evaluation of the proposed buy-in by Asterion is well advanced. We would expect that a decision could be made on that in the next number of weeks. We have used our external legal advisers, William Fry and EY, to support that work and we have done our own due diligence on it. That is a decision for the Minister under the contract, so the Minister would be the one who decides whether to proceed or not to proceed. I would expect that, in the next couple of weeks, that decision could be taken.

On the amount that has been contributed from the €223 million, I will ask Mr. Mulligan to deal with that. Any uncommitted amounts, as well as the obligations under the contract if the Asterion deal is approved, would fall to the new structure to deliver, so there is no loss there.

Deputy Catherine Murphy

What have the original investors put in?

Mr. Mark Griffin

Of the €223 million, I think it is about €120 million.

Mr. Fergal Mulligan

Yes, €120 million.

Mr. Mark Griffin

On the value of the return to Oak Hill, I do not know whether we can make any comment on that yet or that we are even in possession of any figures.

Mr. Fergal Mulligan

I might comment. The Minister has to give consent or not give consent before the actual sales process is concluded, so as that sales process would not be concluded yet, it would be inappropriate for anyone to comment on clawbacks, who made what or what contributions were made out of any deal.

Deputy Catherine Murphy

For example, would there be a payout to Granahan McCourt under the shareholder agreement? The witnesses do not have to tell me the amount but would that apply?

Mr. Fergal Mulligan

Again, that depends on the close-out of the deal, which has not happened yet, and who gets paid what and where. They cannot close out a deal until the Minister makes a decision.

Deputy Catherine Murphy

Is the Department concerned that there is an 80% stake on this heavily subsidised national broadband plan and that it is being flipped so early on? It is only three years since it was signed.

Mr. Fergal Mulligan

Without commenting too much on the deal, no, there would not be concern. The new investors coming in are very experienced telecoms investors, long-term investors. The fact that the exiting shareholders have sought to sell their shareholding of 80%, for us, just shows that the project is in a very good place in that people in the market - other investors - were willing to buy the company. To buy the company means the company has a very good future, a bright future. It is like selling a car, where, unless the car is in good condition, you will not sell it.

Deputy Catherine Murphy

To go back to the original position, I have a memory of several engagements that we had here. There was only one bidder for this contract and when it came down to it, people were put off from bidding. This is not the kind of scenario that some of them would have expected. There would have been people who were embedded in, and had expertise in, the market here but who then did not tender. This all seems very different from what the expectation was at the beginning.

Mr. Fergal Mulligan

In the context of what was delivered in 2019, for us, there is no change in the senior management team. There will be a change in the board. There are nine members on the board and Twin Point Capital and Oak Hill would have three members on the board, so those three members will leave and three members from Asterion will come in, which means six members, including the Minister's appointee, remain. As to the experience of the senior management level, the CEO, Peter Hendrick, and David McCourt as chair of the board, nothing changes there and does not for the foreseeable future, so all the experience of the actual build programme remains.

Deputy Catherine Murphy

I suspect we will be coming back to this. I have some other questions.

Mr. Mark Griffin

There are a couple of important points that Mr. Ó hÓbáin might add.

Mr. Ciarán Ó hÓbáin

There is a key point. The Deputy has been around this project through the procurement and she would have seen how it developed. A lot of entities looked at the project and considered getting involved but the risk profile did not suit the risk profile for their investment model.

Deputy Catherine Murphy

I want to move to other questions.

Mr. Ciarán Ó hÓbáin

I will conclude shortly. What the Deputy has to take from the current proposal is that we are three years into a contract and it is now a very different place from a project that did not have the start-up, did not have the designs, did not have any mobilisation and did not have 80,000 premises passed. We are seeing a difference there in terms of the nature of the investor that will look at a project like this. It is a vote of confidence in the project that an investment fund of that nature - a European investment fund - is interested in investing in the project. A key last point, just to finish-----

Deputy Catherine Murphy

I insist that I have to move on.

Mr. Ciarán Ó hÓbáin

If I may, it is a very important point.

Chairman

Mr. Ó hÓbáin should be brief.

Mr. Ciarán Ó hÓbáin

I will be brief. Unlike the sale of a commercial telecoms company that is not delivering on a contract like this, what that company, NBI, does in this case is set out in the contract, so whoever the owners of NBI are, they have the same obligations under the contract.

Deputy Catherine Murphy

I want to move to another topic. Ireland failed to apply for European funding on securing energy continuity. It looked like there was three days’ notice to make an application. Why did we not apply for REPowerEU for biomethane, for example, which from the point of view of the agriculture sector would be a natural asset? Have we applied for any other funding under this programme in regard to biomass, solar or wind? It seems extraordinary that there are only two countries that did not apply and we are one of them.

Mr. Mark Griffin

I will need to check that for the Deputy. In my long experience in the Civil Service, I have never known Ireland not to put the hand out looking for EU money and we have been extraordinarily successful in that regard.

Deputy Catherine Murphy

We know that. We did not apply, and only two countries did not apply.

Mr. Mark Griffin

I will need to check that because I do not know the reason for it. I was aware of two large projects that were being mooted for the funding from REPowerEU.

Deputy Catherine Murphy

Is Mr. Griffin aware of this is at all? It has been in the newspapers and it has been raised in the Dáil. I would be astonished if Mr. Griffin is not aware of even the newspaper items around this and that he would not have checked it out.

Mr. Mark Griffin

I am not aware of the specifics that the Deputy is referring to. I will follow up on that.

Deputy Catherine Murphy

I find this absolutely extraordinary. Have we applied for any other funding under this programme?

Mr. Mark Griffin

We have applied for and received funding under the European Regional Development Fund, ERDF, for retrofit and we have applied for and received funding from the national recovery and resilience plan for the bog rehabilitation scheme, but in regard to REPowerEU, I do not have the detail with me.

Deputy Catherine Murphy

We need to have a comprehensive response on that. I am astonished that it is not something that would be on Mr. Griffin's radar.

Mr. Mark Griffin

I am relieved that I can still astonish the Deputy after nine years of coming before the Committee on Public Accounts.

Deputy Catherine Murphy

It was raised in the past two weeks.

On cybersecurity, we were told by the HSE last week that up to 10,000 Windows 7 licences were still in use. Obviously, the licences for the Windows 7 programme are out, and other things are running, about which explanations were provided. In the context of the capacity review of the National Cyber Security Strategy 2019-2024, was a weakness or vulnerability identified in the HSE?

Mr. Mark Griffin

I am pretty certain the 2019-2024 strategy would not have made specific reference to the HSE itself.

Deputy Catherine Murphy

Was the public service audited for IT shortcomings?

Mr. Mark Griffin

The role of the National Cyber Security Centre, NCSC, is to monitor operators of essential services in the health, transport, water, and financial services, with the area of financial services delegated to the Central Bank. NCSC regulations set out what the roles are in terms of the entities maintaining their cyber posture at a sufficient standard and making sure controls and necessary cyber protections are in place.

I had a quick glance at chapter 12 of the Comptroller and Auditor General's report. The HSE acknowledged there were still a substantial number of pieces of IT infrastructure that were out of warranty, but that special arrangements were put in place to patch them and make them fit for purpose and that the necessary cybersecurity controls were in place to identify whether there were any incidents or vulnerabilities so that effective action could be taken.

Deputy Catherine Murphy

That is after the event, is it not?

Mr. Mark Griffin

To be fair, if one were to look at the international literature, every piece would say that you cannot prevent every cyberattack.

Deputy Catherine Murphy

No, but it is the case if a system is running on a programme that is not licensed and the numbers have been reduced-----

Mr. Mark Griffin

Which the HSE is doing.

Deputy Catherine Murphy

-----and corrective or temporary action has been taken. HSE representatives said last week that it was on the risk register. I do not know what being on the risk register means because if there is a risk, one has to mitigate it or say how it will be mitigated.

Mr. Mark Griffin

Absolutely.

Deputy Catherine Murphy

I would have thought the audit should have shown that up.

Mr. Mark Griffin

Those are matters I am sure the Deputy took up with the HSE. The reality is, as I understand it from the operation of the HSE systems, from which I am at arm's-length, certain vital pieces of equipment are being operated using technology and legacy systems that are a bit dated, but the HSE plans to invest several hundred million euro and it has already invested significant sums to upgrade that infrastructure. The NCSC has worked closely with the HSE since the cyberattack, in terms of remediation and addressing the horrible criminal attack that was effected on the HSE, and in supporting it with its ongoing work.

Deputy Imelda Munster

On the national broadband plan, how many premises have been passed to date?

Mr. Mark Griffin

We have passed about 85,000 premises to date.

Deputy Imelda Munster

Between 26 July and 20 September - roughly an eight-week period - some 11,900 premises were passed. In the latter three weeks, at the end of September, 10,000 premises were passed. Therefore, 10,000 premises were passed in a three-week period in comparison with 11,900 premises over an eight-week period. What is the reason for such discrepancies in pace?

Mr. Mark Griffin

A part of this is what comes through the make-ready programme and the availability of ribbons and so on. I will ask Mr. Mulligan to give a far better explanation than that.

Mr. Fergal Mulligan

It is not straightforward; there are peaks and troughs. The first main exercise that happens in any deployment area is design activity, which is handed to Eir who would upgrade all the poles and ducts. Eir would pick an area, be it in Donegal or Cork, large or small, and have crews all over the country. Depending on the number of poles or ducts that need to be remediated, they are handed over to National Broadband Ireland, NBI. That figure could be 5,000 in one week and 2,000 in the next week, and so on and so forth. There are peaks and troughs based on the project management function.

On average, 7,000 to 10,000 premises are being done a month. The figure could be 12,000 one month and 6,000 the next month. We review that internally in the Department with our build team when we review those plans. They are all based on concrete plans. It is not that staff were on holidays in July and August. It was a matter of the way the project was managed in terms of the build. It is a normal exercise in the building programme.

Deputy Imelda Munster

Going by an average of 10,000 per month, could it be said that an additional 30,000 premises would be passed, or possibly more, by end of year?

Mr. Fergal Mulligan

No. We have actual targets. The target for the end of January 2023 is 102,000. NBI has said this week that this target will be achieved by the end of December. We are at a figure of 85,000 now, therefore, an additional 15,000 premises will be passed by the end of December. The NBI expects to get through 80,000 to 85,000 additional premises in 2023, which would be 7,000 on average per month.

Deputy Imelda Munster

The target for 2023 is an additional 85,000.

Mr. Fergal Mulligan

Yes. There will be a total of 185,000 premises passed by the end of 2023.

Deputy Imelda Munster

I refer to the fact that NBI has been sanctioned for its failure to meet targets. The contract is worth €2.7 billion and the sanction of €150,000 is quite minimal relative to the size of the contract. On what basis was that sanction calculated?

Mr. Fergal Mulligan

We are in year three of the build programme, and for the first two years no sanctions were applicable under the contract. We are in the early stages of applying sanctions. The Comptroller and Auditor General reported upward of €30,000 per build, with another €100,000 being notified to NBI, so that amounts to €230,000. This process of build sanctions will continue for the next five to six years as the build programme progresses. The other sanctions apply for 25 years. It is early days to be looking at it through the lens of how big or small a sanction is. The daily sanction is quite significant when-----

Deputy Imelda Munster

Does Mr. Mulligan expect sanctions to increase?

Mr. Fergal Mulligan

If targets are missed. NBI got eight and a half months relief due to the Covid pandemic. As I said earlier, NBI is about three and a half months behind schedule and is catching up with that already. We have been told that for the target month of January, NBI will be a month ahead of schedule and targets for December will be met. In overall terms, it is early days to talk about the level of sanctions. I will not comment on future sanctions because NBI has not missed the targets yet and it is doing everything possible to achieve them.

Deputy Imelda Munster

If the Department had not carried out a review of the sanctions, what would have been the total amount fined over the first or seconds quarters?

Mr. Fergal Mulligan

Is the Deputy referring to the secondary sanctions?

Deputy Imelda Munster

Yes.

Mr. Fergal Mulligan

The build sanctions have not been reviewed. They are as they should be, which is 130,000 premises, or whatever the figure will be going forward. The review mentioned in the Comptroller and Auditor General's report refers to key performance indicators once the network is built, and so far that is €22,000.

Deputy Imelda Munster

What was that?

Mr. Fergal Mulligan

The Comptroller and Auditor General's report referred to a sanction amounting to about €22,000 that we have applied, which has been deducted from subsidy payments. There are seven reports currently on our desk that will be concluded-----

Deputy Imelda Munster

That figure is hardly a sanction.

Mr. Fergal Mulligan

That is in relation to last year; we have not yet reported on the sanctions for this year, which will amount to more. We have not concluded those reports and the review, and we have not deducted them from the subsidy. I am not at liberty to say exactly what that figure will be. It is likely to be substantially more than €22,000 for this year.

Deputy Imelda Munster

I would hope so.

Mr. Fergal Mulligan

The main point is that those sanctions apply for 25 years.

Therefore, we could be sitting here next year, the year after and the year after that. Obviously, NBI’s main objective is to have no sanctions regarding those key performance indicators. It is to connect everybody on time and fix the network within a period of time. It is actually getting much better at that. I am quite optimistic, therefore, that it will have very few sanctions in the coming years regarding homes connected.

Deputy Imelda Munster

In December of last year, the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, announced that 679 schools would be connected by the end of 2022. Where are we today with that figure?

Mr. Fergal Mulligan

As of today, 470 schools are connected by NBI. That, again-----

Deputy Imelda Munster

Connected or passed?

Mr. Fergal Mulligan

Connected. Some of the schools have not gone live. The Department of Education has to award a contract to what we call the retail service providers, such as Eircom, Vodafone or Sky, to deliver the internal wiring and Wi-Fi for each school, but NBI has made the physical connections to the walls of 470 schools. It is on target to have all 679 schools done by next June. That is way ahead-----

Deputy Imelda Munster

Not by the end of the year, as promised.

Mr. Fergal Mulligan

They were never promised for the end of the year. The schools were in the programme for the period up to 2026.

Deputy Imelda Munster

The Minister said that, by the end of 2022, 670 schools would be connected.

Mr. Mark Griffin

Part of the reason is that while it was possible to connect the 670 schools by the end of this year, a decision was taken to leave some of them until 2023 because they would get a fibre connection then. We could have gone with a wireless connection for a number of the schools by the end of 2022, but the prudent thing was to hold over some of them until 2023, when they will be guaranteed a fibre connection.

Deputy Imelda Munster

Some schools will have a fibre connection and others will have the wireless connection.

Mr. Fergal Mulligan

To clarify, the schools programme was accelerated. The 679 schools were in the original 2019 plan, which envisaged delivery by 2026. A decision was made last year, because it is critical to have broadband in schools, to bring forward the deadline. In order to do that, we had to deploy a wireless network in the first instance to many of the schools. As the Secretary General said, this will be delivered by December, as promised. Some schools will get fibre because they are part of a deployment area that is to get fibre by next June, so it would have made no sense to supply a wireless network in parallel. That would have cost extra money.

Deputy Imelda Munster

There would be no sanctions there either because a decision was taken to-----

Mr. Fergal Mulligan

It is ahead of schedule.

Deputy Imelda Munster

There is an extra six months.

It has been reported that a Spanish investor has an 80% stake in NBI. The State is entitled to 25% of any gain in excess of 25% of the value of the business at the time of a sale. Is that expected to come into play? How much this the State stand to gain?

Mr. Fergal Mulligan

As I said to Deputy Catherine Murphy, the sales process has not concluded and the Minister has not yet made a decision on the consent to allow a change of ownership. Therefore, it would be premature to speculate on any clawbacks that might be coming in.

Deputy Imelda Munster

Given the significant proportion of 80% and the fact that the sale is in process, how does Mr. Mulligan foresee the current ownership structure changing? Has he any idea as to how it would work if 80% is-----

Mr. Fergal Mulligan

A change of ownership is always allowed for in the contract. It is a commercial agreement between shareholders to buy and sell shares of the company. NBI is a stand-alone commercial entity owned by private investors. Those private investors have decided to sell 80% of their shares. That is allowed for under the contract subject to the Minister’s consent, which entails a process that we are going through at the moment. The Minister has not yet made a decision.

Deputy Imelda Munster

The voting rights on the board would change as well.

Mr. Fergal Mulligan

Exactly. The Department had a significant due diligence review of every aspect of the proposed change of ownership.

Deputy Imelda Munster

I presume the new investor, with 80%, would have a majority of seats on the board.

Mr. Fergal Mulligan

The board is made up of nine members. Two of those are independent non-executive directors and one is a Minister’s appointee. Therefore, three of the nine directors are independent of the shareholders. The remaining six are the shareholders’ representatives.

Deputy Imelda Munster

I thank Mr. Mulligan.

Chairman

To tease out the question fully, how many new-investor representatives will there be on the board if 80% is bought?

Mr. Fergal Mulligan

We understand there would be three representing the new investors.

Chairman

That leaves three representing 20%.

Mr. Fergal Mulligan

We understand that is the case. Again, it is a matter for the investors to appoint the board members. The Department or Minister would not have a say, except with regard to the three independent directors.

Chairman

They would not have a say?

Mr. Fergal Mulligan

The six are appointed by the investors.

Chairman

Does that not mean vulnerability in terms of the control of the board?

Mr. Fergal Mulligan

Again, the board is subject to best-practice corporate governance, and it has fiduciary duties to the public.

Chairman

The Minister is a big investor. The Minister is putting in taxpayers’ money.

Mr. Fergal Mulligan

Again, the contract, as written-----

Chairman

He is putting in 87% or 88% of the cash.

Mr. Fergal Mulligan

Again, the contract, as written in 2019, provided for two independent directors and a Minister’s appointee.

Chairman

Who are the two independent directors?

Mr. Fergal Mulligan

One is Mr. Paul Haran, a former Secretary General, and the other is Mr. Aidan McCullen.

Chairman

Were they appointed by the Minister?

Mr. Fergal Mulligan

The two independent directors are appointed through an independent process run by NBI. The Minister appointed the-----

Chairman

NBI, where the private investors have a majority of eight to one, appoints the two independent investors.

Mr. Mark Griffin

Independent directors.

Chairman

That would question their independence.

Mr. Mark Griffin

Independent directors have to perform in accordance with a set of rules, so I would not read anything into that. Mr. Bernie Gray, the Minister’s appointee, has vast experience of public-----

Chairman

I am not doubting that. I am referring to the fact that the board of NBI makes the decision. That is the only point I am making. I am not calling into question the integrity of the two people. I am just saying I would have concerns about the arrangement.

Deputy Colm Burke

I thank all our guests this morning for their presentations. I was recently at an event celebrating Deputy Bruton’s 40 years in the Dáil. The first parliamentary question he ever submitted was on whether a particular constituent of his was going to get a telephone connection. The constituent had been waiting for more than three years for a connection. It looks like we are now facing the same scenario with broadband.

I want to raise a number of issues. Reference was made to the fast-tracking of the connection of schools around the country. This is very welcome. I very much welcome the progress made in this area. Since there is now a substantial delay in the rolling out of broadband, especially in rural areas, is it not time to consider also the roll-out of additional community hubs? Has this possibility been examined? A large number of people who are now trying to work from home do not have access to broadband. If we rolled out many more community hubs, would it not be beneficial, especially if there is going to be a delay of three to four years in providing access in certain areas? Has this issue been looked at?

Mr. Ciarán Ó hÓbáin

I thank the Deputy. He is correct in saying the roll-out was delayed, but he is also correct in saying that people will be waiting for a number of years. This is a seven-year infrastructure build programme. It is guaranteeing that people will have access to a high-speed broadband network when it reaches them, and that will be for the 25 years, and really the 35 years, that the contract provides for. It is a long-term strategy to ensure the future for people.

The broadband connection points comprised an element of the programme to recognise that, right across the country, the network roll-out would take seven years. Every county will see activity and have homes passed this year, but the majority of the network is yet to be built. The map of Ireland on which you can see where the broadband connection points are was an attempt to ensure that, throughout every county in Ireland, there would be somewhere, not too distant from where people are living, that they could access community-----

Deputy Colm Burke

Sorry, but I know of places where the nearest access point is 20 miles away. I raised this with Cork County Council and it said there was no more funding and that it was not going to get involved any further, meaning the issue was written off. I am saying we have a substantial delay. A large number of people who now want to work from home are prevented from doing so and have to travel 20 to 25 miles to and from work every day.

We have many people now who wish to work from home, are prevented from doing so and must travel 20 to 25 miles to and from work daily. Having more community hubs or access points might help. We have done this fast-tracking of connections in the case of schools, why can we not do this in a community setting? We are talking about 679 schools where this facility will have been rolled out by the end of June. Why can we not also increase the number of hubs in local communities so people can work in them? People might only be only two or three miles away from a community facility they could drive to and work from.

Mr. Ciarán Ó hÓbáin

There is an openness to examining additional broadband connection points and hubs in general. Regarding earlier engagements and examples the Deputy raised, including that of Inishcarra, there has been action in this regard. The Deputy also said something that is key to this context and that is these facilities must be close to where people are living. A significant investment has been made in hubs outside of the NBP by the Department of the Minister, Deputy Humphreys. This recognises that high-speed broadband is available in every village and town in Ireland from commercial operators and there has been significant growth in the number of hubs developed and receiving investment. In the context of the NBP, there is still an openness to taking an action if it can ensure a community can access high-speed broadband sooner.

Deputy Colm Burke

I ask that this aspect be reviewed. I congratulate everybody involved in rolling out fast-tracked connections for schools. Now is the time to do the same for community hubs. Due to the impact of Covid-19 and of having to work from home, some people have been greatly frustrated and experienced many difficulties. Many people with young children now also want to work from home more so they have the associated flexibility. Therefore, I ask that this approach to fast-tracking connections be examined.

Mr. Mark Griffin

If the secretariat could record that request as an action to be followed up by the Department, we can get the full list after this meeting. We will then respond specifically on this point, because it is one the Deputy has raised with us before.

Deputy Colm Burke

My second issue is also one I have raised before. I refer to the frustration in those areas which are borderline amber and blue. The blue areas are those where commercial entities are doing the connections. I have been told about several such situations in the last week alone. There is one area where the box that Eir has put in place is at the end of an avenue leading to a farm. That farmer is milking more than 350 cows. It is a major commercial operation. This farmer will not get connected because he is in the amber area. The likely connection date is the end of 2025. Likewise, a great many people have said similar things to me. One was a case where the pole where the box is based is halfway up an avenue to a farmyard, but because the farmyard itself is in the amber area it will not be connected, despite the pole sitting in the blue area. It does not make sense that there has not been engagement with the commercial companies in these instances where places are borderline. Can we do something to fast-track connections in those areas on the borderline between the amber and blue areas and where a premises might not be connected because it is on the wrong side of the road?

Mr. Ciarán Ó hÓbáin

In some instances, the Deputy is talking about a situation where a network simply ends. There will always be a next house where the network ends. If a commercial operator wishes to extend its operations, it can. If it does not, however, we cannot compel it to do so. The other instance, then, is one where a home is trapped within an area where there is a network. NBI has gone to and engaged with the market, and it is running a process that is due to conclude before the end of this year. It has asked commercial operators to come forward with proposed solutions for those infill premises in areas where there is existing infrastructure. Therefore, NBI is specifically actioning this aspect.

Deputy Colm Burke

When are we likely to have a decision on this aspect? It has been stated it will be by the end of the year, but when can the process of implementing the connections then start? Are we talking about February and March, or later?

Mr. Ciarán Ó hÓbáin

We will have to wait for NBI to conclude that process and report on the proposals it received and the related practical usage in that regard. It will become clear before the end of this year where this process is going.

Deputy Colm Burke

The commercial operators' argument would be that NBI is getting so many thousands of euro per connection, whereas if those operators do the connections they will not. If those commercial operators have any additional costs, they will not get any more remuneration. I think this is their big argument for not doing these connections. It is extremely important that we try to expedite this process, especially because of the number of people now running their businesses from home. I ask that this endeavour be expedited and perhaps it might be possible for the representatives of the Department to come back to the committee by the end of February to let us know what progress has been made on this issue.

Mr. Ciarán Ó hÓbáin

We will certainly be happy to come back once the process has concluded.

Deputy Colm Burke

Regarding the figures we have for the number of premises to be connected, there are 537,000 premises, 1.1 million people, 54,000 farms, 44,000 non-farm businesses and 700 schools. We have dealt with the schools issue. In the next month or two, can we get a breakdown of the numbers of premises connected? There is a difference between premises connected and the availability of services to those premises. Therefore, the committee needs to be provided with both those sets of figures. Perhaps sometimes people are not taking on offers, but we need to know the number of premises where the service is available and the number connected. We also need to see the number of people who have benefited, or an estimate, and a breakdown of the figures for farming and non-farming businesses. Can we get those figures as well? I ask because I think it is important that we get a breakdown of the connections in place. Can we also set out the targets for between now and January 2024? We had 34,000 premises connected in January 2022. Talking about January 2024, which will be two years on, what is the target for connections then? Perhaps it might be possible to get figures in this regard.

Chairman

I think a figure is provided in that regard.

Mr. Mark Griffin

We will come back with that information. Relative to the picture when we were here last, however, the present situation is that 85,400 premises have been passed and 20,500 have been connected. We also have a target for the end of the year of 102,000, which will be the increase from the current 85,500. We also have a target for the end of 2023, which will be a cumulative 185,000 premises passed. As I said, the figure for premises connected is 20,500, and we are seeing connections now happening at 2,000 per month. Therefore, we can give the Deputy that information and we will aim to get to the statistics for the farm and non-farm businesses, etc.

Chairman

I thank Mr. Griffin. The figure for next year is about 80,000 to 85,000, to answer the specific question for the Deputy.

Mr. Mark Griffin

Yes.

Chairman

We will now break for ten minutes.

Deputy Matt Carthy

If the Chair might indulge me, and if it is agreeable to our guests, I would like to come in before the break because I have an oral parliamentary question in the House.

Chairman

If everyone is happy to wait for the caffeine, the Deputy can go ahead.

Deputy Matt Carthy

I appreciate the indulgence and I thank the witnesses for being here. To touch briefly on the REPowerEU plan, am I correct in saying that in response to Deputy Catherine Murphy it is essentially the evidence from the Department that no one here knows precisely why Ireland did not apply for this funding?

Mr. Mark Griffin

Well, if we had taken the break now, I would have come back with an answer in ten minutes. I will, however, find out exactly what the position is.

Deputy Matt Carthy

I assume Mr. Griffin will accept that this is concerning. The biomethane section of the REPowerEU budget alone has funding of €35 billion.

Mr. Mark Griffin

There was a proposal there and I know this for a fact. I just need to check it out and see what happened. If I cannot provide a coherent answer-----

Deputy Matt Carthy

I think Mr. Cleary might be able to answer.

Mr. Ken Cleary

I can give a bit of information and I am sure Mr. Griffin can provide more in ten minutes. Obviously, we in the Department of Public Expenditure and Reform have been involved with this project as well. It is not that we have lost out on anything here. The media piece that was referred to was correspondence the Department was seeking. There was no invitation to apply for funding on that. However, on 4 October, the Commission agreed that €20 billion worth of grants would be available for REPowerEU. Ireland’s allocation from that is expected to be around €89 million but that still needs to go to the Parliament and then to the Council, so the legislative proposal will not merge until next year and we will not have certainty on it until then. In the interim period, we will work with the Department of the Environment, Climate and Communications to come up with funding proposals to meet that €89 million, and I would expect that biomethane will be part of that conversation.

Deputy Matt Carthy

In respect of the current opening, Mr. Cleary stated there is a budget of €20 billion.

Mr. Ken Cleary

Yes, European-wide. That is the proposal from the Commission.

Deputy Matt Carthy

He went on to state that Ireland's potential take from that will be €89 million.

Mr. Ken Cleary

Yes, it will be 0.45% or €89 million.

Deputy Matt Carthy

The reports we have on the biomethane portion of REPowerEU suggest there was a budget of €35 billion and that Ireland had a potential funding stream of €800 million in capital funding. There is a discrepancy in that regard.

Mr. Ken Cleary

I am not aware of that specific report but those are certainly not numbers that have been discussed with us. As I said-----

Deputy Matt Carthy

Was the Department of Public Expenditure and Reform aware of a proposal prior to the April stream, which 25 of 27 states applied for? I appreciate we might get further information from Mr. Griffin later in the meeting. Was the Department aware of that proposal?

Mr. Ken Cleary

This is not my area so I cannot say specifically, but my understanding is the April funding proposal was related to loanable funds as opposed to any grant funding, and often those loanable funds from the EU present little additionality in terms of their application in Ireland. As I said, my understanding is that what the Council agreed on 4 October is that there will be €20 billion worth of grants available, subject to the agreement of the Parliament and the Council, and Ireland's entitlement to that for grants will be 0.45%, or €89.6 million. We will then have to develop funding proposals-----

Deputy Matt Carthy

Why will it be so low?

Mr. Ken Cleary

It is 0.45% of the total figure, so there is-----

Deputy Matt Carthy

We accounted for a little over 1% of the EU’s population before Brexit, so I assume we are higher than that now. Pro rata, that would seem to be a much lower proportion.

Mr. Ken Cleary

It is because of the funding source of the €20 billion. The proposed funding source for the €20 billion is emissions trading system, ETS, revenues and these are going to be split so that 75% will come from the innovation fund and 25% from front-loading ETS allowances. With the innovation fund – bear in mind this is complex - a certain portion of ETS revenues, about 1% to 2%, are earmarked for innovation in what we might say are less developed EU member states. A chunk of the funding for this €20 billion is coming from a funding package that would previously have been available only to non-Ireland or other, mainly eastern European, member states. The entitlement to the €20 billion is not strictly pro rata with our population because of that funding source.

Deputy Matt Carthy

I fear we might be able to qualify, at least by some definitions, as less developed when it comes to renewable energy unless we get our act together very quickly.

Mr. Mark Griffin

In fairness to Deputies Murphy and Carthy, they need a comprehensive response from us, notwithstanding the very valuable input from Mr. Cleary, and we will provide that.

Deputy Matt Carthy

I appreciate that. Turning back to the national broadband plan, it is a huge level of investment. How many farms have been passed to date? Is that figure available?

Mr. Mark Griffin

I do not think we have it. We said in response to Deputy Burke we would provide it in our response following this meeting.

Deputy Matt Carthy

The target for seven years is 54,000 farm premises.

Mr. Mark Griffin

Yes. We will try to provide the split between farm, domestic and business.

Deputy Matt Carthy

Am I correct in stating there are no annual milestones in respect of farm premises associated with the contract?

Mr. Mark Griffin

Yes.

Deputy Matt Carthy

Apart from the fact that farms have a particular need, because they are operational businesses, to be able to source high-speed broadband, such a target would be indicative because one of the fears this committee and others have expressed is that NBI is, perhaps, moving ahead with the low-hanging fruit, so to speak, such as clusters of dwellings and other areas where there might be large numbers of homes in relatively close proximity. Perhaps that figure in respect of farms would give us a sense as to whether we are getting to the more peripheral areas.

Mr. Mark Griffin

That is not the way of working and, as Mr. Mulligan can attest, the way of working is defined more by deployment area, whereby we hit rural, suburban and semi-rural homes. It is dictated more by the roll-out from the Eir and the Enet hubs.

Mr. Fergal Mulligan

Yes. NBI is not doing a commercial roll-out, so it is not doing what another company would do whereby it would connect, say, 40,000 houses in one area and 4,000 houses in another area. Its build is dictated by where the local exchange is, and it is not addressing any villages. Everything it is doing is non-commercial, so there is no low-hanging fruit per se. As the Deputy knows, farms in all those areas outside villages are among all the other houses that are on the farm and around it, so it would be virtually impossible to identify an Eircode postcode for a farm and to bring fibre down the road specifically to connect that farm. It would make no sense to do that.

Deputy Matt Carthy

I am not suggesting we would do that. The contract and the associated publicity clearly outlined a target of 54,000 farms, so I presume there is a way of measuring whether that is being done. I am not suggesting NBI is bypassing the neighbours of farms, but this would be useful information to have.

Mr. Fergal Mulligan

We do have it and we will get back to the committee on that-----

Mr. Ciarán Ó hÓbáin

My recall is not always great but NBI had publicity material at the ploughing championships and I think the figure was 7,000, but we will confirm that. It is a high number.

Deputy Matt Carthy

That is 7,000 of 54,000 premises, so it is not very high.

Mr. Fergal Mulligan

It is spread over the seven years of the build and, obviously, farms are in every county. It will be 2026 before some farms are connected but that figure of 7,000, as I recall, is around where it is at the moment. Ordnance Survey Ireland and its postcode database has the Eircode postcodes associated with farms, so every month, as farms are connected, we are able to know how many are connected.

Deputy Matt Carthy

That information is available and it could be shared. An answer to my next question might also need to be included in the note from our guests. Mr. Griffin referred to rural, semi-rural and suburban premises. Of the premises that have been passed to date, is there a breakdown of the numbers within each of those three categories?

Mr. Mark Griffin

I would not have it but we can try to get it from NBI.

Mr. Fergal Mulligan

Yes. We do not internally report on this because the vast majority of those 25,000 connected premises are rural, so that is all the information we have. We can get back to the committee with some more information on their categorisation.

Mr. Mark Griffin

I think the figure that stands out in my head is that 80% of the premises connected under the national broadband plan are at least 1 km from the nearest village, whether that qualifies as rural, semi-rural or suburban.

Mr. Fergal Mulligan

There are very few urban or suburban. The majority are absolutely rural and are well outside any village.

Deputy Matt Carthy

What is the current connectivity rate of premises that have been passed?

Mr. Mark Griffin

The connectivity rate varies but what we are seeing is a 24% uptake, which is ahead of where we would have expected to be at this stage. On average, about 200 homes are being connected each month. The Deputy will be pleased to see his constituency is the highest in terms of take-up, with 35% in Cavan and 30% in Monaghan. Once people get it and are able to exit their existing contract, this is being taken up at a very considerable rate, which is really positive from our perspective. Overall, when we look at the numbers of premises nationally that are connected, the percentage take-up is 24%.

Deputy Matt Carthy

I am not surprised there is a high uptake in Cavan-Monaghan, but a lot of people who have high-speed broadband passing by their homes have still not been connected. Has the Department or NBI carried out an assessment, whether through surveys or other methods, to identify why well over half of those premises that are being passed have not been connected?

Mr. Mark Griffin

I do not know whether any services have been taken out.

One of the issues is that people can be tied into existing contracts and cannot shift immediately without breaking the contracts and suffering a financial penalty.

Mr. Fergal Mulligan

NBI has 40 plus retailers selling the service. What we are seeing on the ground is that some retailers are selling aggressively and customers do not automatically know that fibre is available. Sometimes, fibre is passing them on their roads but they are not aware that they can order or buy it even though there is a great deal of advertising.

Deputy Matt Carthy

Is that not a failure on the part of NBI?

Mr. Fergal Mulligan

We are constantly working on what are called demand stimulation plans and determining what the best means of communicating the service are, for example, feet on the street, sending a van up a road to every house, door drops, local publicity in local newspapers, etc. All of these activities are under way in order to ensure that there is not a lack of awareness, but it still happens in a small number of cases, which means that people do not get connected until much later when they suddenly realise that they can get fibre. I was speaking on a pitch with a farmer in my local area where fibre had been available for three months. I told him that he could get fibre the next day if he wanted to. He had it the following week, but he had not known. There had been three or four door drops to his house. For whatever reason, people sometimes just do not realise it is available.

As Mr. Griffin mentioned, people might be signed up for two-year contracts with Imagine, Eircom or another provider and have to wait until next year to get out of those contracts. If they move early, they will have to pay twice - once to NBI and once to the other operator. This causes a lag in getting from 30% to 60%, but there is an optimistic scenario of at least 80% to 85% of people in the areas in question being connected by 2026 or 2027. It is incremental. According to NBI, 25,000 will be connected by December. It expects at least another 25,000 connections by the end of next year. It is connecting 2,000 per month at the moment. That will soon increase to 3,000 per month. The connections are going well and the connection process for the end user is also going well. There have been no complaints about engineers doing a bad job, not arriving, walking away or anything like that. Someone gets an appointment and has 500 Mbps on the day the connection is made.

Chairman

We will break for ten minutes.

Sitting suspended at 11.22 a.m. and resumed at 11.35 a.m.

Chairman

I have some questions on the targets in the broadband plan. The original targets were 115,000 premises by January 2022 and 204,000 by January 2023. It has been confirmed that 85,000 premises should be passed by then. There were remedial targets. The targets were then changed and reduced to 60,000 by January 2022 but NBI had only passed 34,000 premises at that stage, which was 30% of the original target. NBI set the targets. If the targets are not to the satisfaction of the Department, it can raise that with NBI. What power has the Department to force NBI to revise its targets upwards if the Department is not happy with them? I ask the officials to keep their answers brief because I have a number of questions on this matter.

Mr. Fergal Mulligan

On the targets, it is not necessarily that NBI can independently set a target and whatever it is, it is. It set a target in 2019 of seven years to complete the build. The contract, as of 2019, is still in place. If NBI misses that target, it is sanctioned. That is an important point to make.

Chairman

Is the target set by the NBI board?

Mr. Fergal Mulligan

The target of seven years was set in the bid process in 2019. That was contractualised following a bid process-----

Chairman

Are the revised targets set by NBI?

Mr. Fergal Mulligan

The revised targets are subject to NBI making an application to us for relief so that we will allow it to amend the contract. We did that in 2021.

Chairman

I understand that. I am asking a very direct question. In the case of the Department not being happy, what leverage does it have to hold the board of this private company to account, considering the fact the taxpayer is ponying up between 85% and 90% of the money for the roll-out of this programme?

Mr. Fergal Mulligan

The Minister has the right to reject any revised target from NBI.

Chairman

Has the Minister, the Secretary General, or the Department in conjunction with the Minister, considered rejecting any of NBI's targeted revisions downwards when it looks for such revisions?

Mr. Fergal Mulligan

The revised targets follow detailed due diligence by a big team of engineers and commercial people I have on my team, where we would have gone through a couple of months of back and forth on NBI's suggested revised targets. Certain amendments would have been made before we accepted them to ensure they were credible and robust, that they would be met, and that NBI had done everything possible to go as fast as it can.

Chairman

In reality, the Department or the Minister has very little leverage here.

Mr. Fergal Mulligan

If the Department were to reject, for example, the relief it applied for, NBI would face much higher sanctions than would otherwise apply. The Minister has significant weight in monitoring NBI's compliance with the contract.

Chairman

That has not yet been used.

Mr. Fergal Mulligan

We have sanctioned NBI €130,000 so far.

Chairman

I know that. That had to do with reset targets that were missed. Eight and a half months were allowed to NBI due to Covid delays. It came in at the start of this year at 30% of where it should have been in January 2022, but it was allowed eight and a half months. I do not recall telecommunications being closed down for eight and a half months.

Mr. Fergal Mulligan

While-----

Chairman

If my recall is correct, telecommunications was closed down for three to four months.

Mr. Fergal Mulligan

On whether it was closed down, all contractors were allowed to work through Covid. However, Covid did not respect that because people who were contractors in vans got Covid and people were close contacts of those who got Covid. That had an absolutely unbelievable effect on the value chain. These were not only NBI people but all the people working for Eir on the make-ready who were all similar contractors, like KN Circet, Actavo, Gaeltec, TLI Group and all the contractors throughout the country. There are about 1,500 men and women working on this across every county. No county was left outside the Covid box.

Chairman

Does the sanction relate specifically to those periods of disruption caused by Covid?

Mr. Fergal Mulligan

It relates to 2020 and 2021.

Chairman

Are any sanctions pending from April 2021 onwards with regard to the roll-out?

Mr. Fergal Mulligan

The sanctions for build kicked in in February 2022, two years into the contract.

Chairman

I have a question about Eir. It owns much of the ducting and poles. The original intervention area included 750,000 premises. The Minister and Government decided to pick about 220,000, as I recall.

Mr. Fergal Mulligan

It was 300,000.

Chairman

Sorry, 300,000. I would call them lower-hanging fruit. I can identify blue areas on the map where the roll-out happened. That presents a significant difficulty. It mainly picked up the fringes of towns and villages and heavily-populated clusters of ribbon development on the outskirts of towns, maybe a mile up the road. Through this scheme, the taxpayer was going to have to pay for that and also for ducting. Mr. Mulligan confirmed at previous meetings that there are many problems with ducts being blocked. Many photographs have been taken and there are extensive dossiers of information about this. Eir essentially controls the speed at which this will be rolled out.

Mr. Fergal Mulligan

There is no doubt about that. It has to remediate all the poles and ducting. Approximately 40,000 poles have been remediated by Eircom over the past two or three years under the national broadband plan. I would like to note an important point about the 300,000 that Eircom provided for, to its credit. The commitment agreement was signed in 2017, as the Chair said. The Minister gave Eircom a detailed plan over two years to get more than 300,000 homes connected to high-speed broadband. That happened before Covid. In the end, it passed 340,000 premises. There is no doubt in our minds that it would probably not have happened without the national broadband plan. Before Covid, more than 340,000 premises in predominantly rural areas, in every village in Ireland, had access to fibre to the home.

Chairman

That was there commercially.

Mr. Fergal Mulligan

That was met commercially-----

Chairman

Let me just make this point.

Mr. Fergal Mulligan

-----with the pressure point of the national broadband plan.

Chairman

That was done commercially. Why were those areas ever included in a broadband plan to be funded by the taxpayer when they could be serviced commercially? It is obvious from looking at the maps. The easiest way to do it is to look at an area one is familiar with. One can then identify exactly where a commercial operator could have done it. In Clonkeen in Portlaoise, for example, there were easy pickings, with rows of houses in a rural area to be picked up commercially.

Mr. Fergal Mulligan

I completely agree.

Chairman

Why were they ever included in an intervention area to receive subvention from the taxpayer when they could have been picked up by a commercial operator in the first place?

Mr. Fergal Mulligan

We asked that question in 2015 when we were doing the original mapping and no operator came forward.

Chairman

Were they sitting back, waiting for the State to intervene and the taxpayer to cough up the cash?

Mr. Fergal Mulligan

The Chair would have to ask the commercial operators. In 2015, when we provided the data, no companies said they would do it.

Chairman

Mr. Mulligan knows my concerns about the make-up of NBI, the structure of its board and so on. We cannot undo that now. I have articulated some of that again today. It has been allowed to retrospectively reduce the original target from 8,000 to zero passed in January 2021. It missed its original targets, reaching half, at best, by the end of this year. It has negotiated remedial targets, which it has also missed. Mr. Mulligan says it will meet its negotiated remedial targets, but there is a question about that. It got the Department to review 39 performance indicators that were signed in 2019. We are less than three years into this, which is a short time. All the Department has done is impose a sanction of €134,000, which NBI might get back, in the context of a contract where the taxpayer will potentially stump up €2.7 billion. I am looking at this in the round. Mr. Mulligan confirmed that another €100,000 will be levied. I understand he cannot look into the future. When he looks at those five or six facts, it looks to me as if the taxpayer and State are being swung around.

Mr. Fergal Mulligan

To bring in the Chair's point-----

Chairman

Is Mr. Mulligan concerned by the five facts I have just outlined?

Mr. Fergal Mulligan

I would like to add another fact, which is that, as a commercial company, NBI has not received any public money when it has not built anything. The delays in the building have had a significant impact on its business because it does not get the subsidy from the State and because it is not connecting customers as quickly as it would like. Its investors are clearly worried about that and are putting significant pressure on the company to go faster. The company's primary concern would be that it is not building quickly enough, not that it is getting sanctioned. The sanction would be a secondary concern.

Chairman

I welcome the fact that there are some sanctions, however small. I take the point that it is only paid for what is rolled out. I said last year that a Minister told me in the Convention Centre Dublin that there were no sanctions.

Deputy Catherine Murphy

I want to come back to the question I asked about this fund. I am looking at an email from an assistant principal officer in the Department of the Environment, Climate and Communications who is responsible for gas networks. It is dated 1 April 2022. It is addressed to the competent authority for gas networks. The Department was notified about this programme on 8 March. The email was sent on 1 April, with a notification that a reply would be required by 5 April. It asked if there was a national plan to boost the deployment and connection to gas networks of biomethane. It goes on to specify that the extra volumes can be delivered by October 2022 or March 2023. This was to get a quick turnaround to replace gas that is no longer available from Russia because of the war. The email I am looking at dealt with that specifically. Mr. Cleary said in response that it would require legislation. The article in the Irish Examiner that dealt with this matter stated: "However, gas industry experts have told the Irish Examiner that no such legislation is required for either the biomethane or liquefied natural gas strands of REPowerEU."

We know there are different funding proposals from the EU as well as our domestic funding proposal. Mr. Griffin referred to two funding programmes that are being put forward for REPowerEU. Does the €81 million or €89 million cover both of these? I am not quite sure of the amount. Is that separate?

Mr. Mark Griffin

One of the funding projects related to biomethane and was to be funded by REPowerEU. I cannot recall precisely what the second project related to EU. I undertook, while the Deputy was still in the room, to come back with a comprehensive answer about where things are with this stream of funding, projects that have or have not been put forward and where we stand on the potential receipt of moneys from the EU to support projects such as the one the Deputy outlined. Biomethane is an important part of our climate action plan. It is referred to in the plan. We want to significantly increase the volume of biomethane being pumped into the national gas network. We want to increase the level of anaerobic digestion on farms. That was discussed when we were setting the sectoral emission ceilings at the end of July. This is an important issue.

We will follow up and we will provide the Deputy with a very comprehensive response.

Deputy Catherine Murphy

Will Mr. Griffin include in that whether legislation is required?

Mr. Mark Griffin

Of course.

Deputy Catherine Murphy

We are hearing from gas experts that it is not. We have to be sure whether we are talking about apples and oranges.

Mr. Ken Cleary

It was agreed at an ECOFIN meeting on 4 October that legislation is required and a Commission press release says that legislation is required. I am not sure about what these sources specifically refer to. I presume it is some sub-aspect of RePower but RePower, 100%, requires EU legislation.

Deputy Catherine Murphy

Will Mr. Griffin let us know in his response why something is notified on 8 March and does not go to the competent authority until 1 April, given such a short turnaround time?

Mr. Mark Griffin

In fairness to the staff in the Department, they have been flat out in the energy area, working night and day, since the start of the war in Ukraine. That may be an extenuating circumstance.

Deputy Catherine Murphy

We look forward to Mr. Griffin's reply. I have to say I still feel that this should have been on the Department's radar, given it has responded to news articles and there is a source from the Department.

I will ask Mr. Griffin about the deferred surrender. Obviously if the Department spends something, it does not get value for money, but not spending money that has been allocated to something that absolutely requires to be done is just as big an issue with regard to value for money. It looks as though the Department failed to utilised €266 million or 40% of its voted expenditure in 2021. Does Mr. Griffin regard that as value for money, when reaching the far end of the year? When did he notice this money would not be spent? How is it tracked? Will he elaborate further on the areas where it was underspent and why?

Mr. Mark Griffin

We track expenditure on an ongoing basis. It is tracked by Ms Carrigan, who is our finance officer, but it is also tracked by the Department's management board which I chair. It comprises the assistant secretaries of the Department. We have set a range of key strategic actions for the Department. One of them is delivery of the national retrofit plan to upgrade 500,000 homes by the end of 2030 and install 400,000 heat pumps. That is tracked on an ongoing basis. We are made aware when there is an indication of potential overspend or underspend. There are mechanisms within the accounting system to allow re-allocations, either internally in the Department-----

Deputy Catherine Murphy

Has Mr. Griffin discovered blockages that are an impediment to spending money on things such as retrofitting?

Mr. Mark Griffin

The obvious impediment in the course of 2021 was Covid when the programme was effectively suspended from January until mid-April.

Deputy Catherine Murphy

I completely accept that Covid has been a serious disrupter but there is an issue with delivery. We get many targets and then those targets are not met. It has almost become routine at this stage. Is there a paucity of ambition? Is there an impediment to the application process? What are the impediments?

Mr. Mark Griffin

I saw no impediment with regard to the ambition within the organisation nor with regard to staffing over the past couple of years because we have increased it very significantly. I saw no impediment in the Sustainable Energy Authority of Ireland, SEAI, because it has increased its ambition significantly. We have a clear line of sight on our spend out to 2030 and we know what the annual allocations will be. It is very difficult to manage the sort of stop-start situation that occurs when faced with Covid. Bear in mind that in some of the programmes, such as the warmer homes programme, one is dealing with a very vulnerable cohort, many of whom are elderly people. Even though it was halted from January to mid-April, it was probably some period after that before we could get back on track.

Deputy Catherine Murphy

How much of the money the Department failed to utilise falls within that? How much of the €266 million falls within that?

Mr. Mark Griffin

I will ask Mr. Deegan to deal with the figures in a moment. During the course of 2021, which was a difficult year, we delivered approximately 15,500 units. We will deliver between 26,000 and 27,000 units during the course of 2022. The target for 2023 is 37,000 units. One is seeing a very significant increase. Bear in mind that the depth of the interventions that have been made over the past number of years have increased significantly. We are moving far more from shallow retrofit to deeper retrofit.

I take the view that one is at risk of compromising value for money where one forces or seeks to force delivery at a point in time when one knows it will not represent value for money. We have seen, with regard to the retrofit programme, the ingredients of having a programme that will deliver much more with value for money, has been much improved in the latter half of 2021. We have the national development plan, NDP. We have the national retrofit plan which sets out how we will do our business. New scheme conditions were announced at the start of this year and we have the report of the expert group on future skills needs. All of that will play a very significant part in ensuring that, first, we can deliver and, second, we can deliver with a value-for-money focus.

Mr. Robert Deegan

The total budget allocation for last year was €221.5 million and the expenditure was €101 million. As the Secretary General outlined, the primary driver of the underspend was the Covid-related restrictions, which was not only affected by the shut-down of the construction sector and not being able to go into people's houses, but the knock-on impact on the supply chain and getting the sector back up to speed. The good news is that since the publication of the retrofit plan and the NDP, things have really picked up this year. We are implementing the plan and it is making a difference. We are seeing very strong interest and demand. Figures for the end of August show that more than 30,000 applications for support were made, which is up 140% year on year; 13,400 home energy upgrades were completed, which is up 70% year on year; 4,250 of the completions were B2s; and 2,800 homes were completed under the warmer homes scheme.

We are seeing real deliver now. The plan is in place, the money is behind it, the demand-generation campaigns are having effect and we are knocking down the blockers about which the Deputy spoke as much as possible. There will then be new initiatives. When we see new barriers coming up, we will introduce new initiatives for next year.

Deputy Colm Burke

With regard to the issue of contingent liabilities on page 19 of the published report, will the officials give an update on any ongoing legal proceedings which will add to the contingent liabilities that arise? What kind of moneys are we talking about? Where are we on that issue? The other issue is of liabilities that have arisen in 2022. Is there contention to those liabilities? What kind of moneys are we talking about in respect of making provision for those contingent liabilities?

Mr. Mark Griffin

My reading of that note is as a general statement in the accounts to the effect that, at any point in time, we have a number of cases before the court. That is a fact.

Some of them are judicial reviews while others are more substantive. We do not have any judgments of the European Court of Justice against us at this stage, so there is no------

Deputy Colm Burke

Is there any issue that has arisen in the past 12 months in respect of which we may end up before the European court? Are there any such issues of which Mr. Griffin is aware that should be brought to the attention of the committee?

Mr. Mark Griffin

There are a number of directives that we have not transposed within the timeline set out in the directive or regulation. We are working hard to remedy that. One that springs to mind is the transposition of the totality of the European electronic communications code. We currently have a Bill before the Oireachtas, however, which will do all of that.

Deputy Colm Burke

Is a fine likely to be imposed because of-----

Mr. Mark Griffin

I cannot say with absolute certainty but, in my experience of working with the European Commission, where it sees a member state making best efforts in terms of seeking to comply with a directive or regulation, it will take a benign approach in respect of the management of that.

Deputy Colm Burke

We have a 30-month period from the time the matter goes through the Commission, the Council and the Parliament for transposition.

Mr. Mark Griffin

Yes.

Deputy Colm Burke

The issue is that we are falling outside that timeline. Do we need to put mechanisms in place to make sure-----

Mr. Mark Griffin

What we have done in the Department to assign additional legal resources, including external drafting resources, to support us on that. We have a report that is presented to the management board which sets out precisely where we are at in respect of pilot infringements-----

Deputy Colm Burke

How many items have not been transposed?

Mr. Mark Griffin

I will get that figure for the Deputy.

Deputy Colm Burke

Are there two or three of them or------

Mr. Mark Griffin

It is a small number.

Deputy Colm Burke

Okay. Have timelines been set for the transposition of those items?

Mr. Mark Griffin

Absolutely. We have measures in place now to deal with all of those.

Deputy Colm Burke

As regards contingent liabilities in the context of claims, the HSE recently appeared before the committee and an issue relating to the State Claims Agency was discussed. If every case was settled tomorrow morning, it would work out at approximately €4.2 billion. A significant portion of that relates to medical negligence. In the context of Mr. Griffin's Department, what is the potential liability to the State of any claims that are pending?

Mr. Mark Griffin

I do not have a figure in that regard. It is far too tenuous to try to put a figure on it because where the Department is in court, we will vigorously pursue-----

Deputy Colm Burke

I accept that Mr. Griffin cannot give a figure.

Mr. Mark Griffin

-----the position of the State. I am not in the business of-----

Deputy Colm Burke

It might be helpful to the committee if we were provided a breakdown of where moneys were paid out in respect of claims up to 31 December 2021 so that we can have an idea of the extent to which the Department has had to make such payouts.

Mr. Mark Griffin

Sure. Some of that-----

Deputy Colm Burke

We get those figures all the time in the context of the health sector but we are not getting them from in respect of other Departments. As I stated, the rough estimate by the State Claims Agency of the overall figure is €4.2 billion, which is taxpayers' money. It is important that every Department keep us advised of the liabilities that are arising and when agreements are reached. We do not need the detail in respect of individual cases but should be made aware on an annual basis.

Mr. Mark Griffin

I will need to check the appropriation account but I think we provide some detail therein of any such payments made. As part of the follow-up to the meeting, I will revert to the committee and set out as clearly as possible, having regard to the constraints that are on us in the context of ongoing cases and so on, how we manage it, at least.

Deputy Colm Burke

I ask Mr. Griffin to also come back to us on the transposing of EU regulations and so on, the timelines for those and the numbers involved.

Mr. Mark Griffin

Absolutely.

Chairman

With regard to the contingency fund of €500 million in the context of the broadband plans, has any of that been paid out or used to date?

Mr. Fergal Mulligan

Some of it has been applied for but not paid out.

Chairman

How much has been applied for?

Mr. Fergal Mulligan

I do not have the exact number. It is in the small millions at the moment.

Chairman

Is it less than €10 million?

Mr. Fergal Mulligan

I do not have the exact number in front of me but, in terms of the €500 million, there are swings and roundabouts in that regard. Savings are part of it. Significant savings have been made on a lot of procurement-----

Chairman

I know that from the briefing note provided by the Department. I can see where that is in relation to excess profit, the sale of NBI, network deployment, etc. There is an ask for some of the fund at the moment and there is a potential draw on it.

On the encroachment fund, there is €130 million in that fund. My understanding of the fund is that there is the intervention area but if Eir encroaches on that, National Broadband Ireland, NBI, can then claim some of the encroachment fund from the Department and the Government. Does the Department expect the fund to be used in 2022 or 2023?

Mr. Fergal Mulligan

NBI has told us that it does not anticipate any claim to the Department for that fund.

Chairman

Is Mr. Mulligan confirming that no money, not even an amount in the thousands, has been paid out?

Mr. Fergal Mulligan

I will have to come back to the Chairman regarding what exactly has been paid under the-----

Chairman

Would a figure of €45,000 have been paid out?

Mr. Fergal Mulligan

That figure of €45,000 is in the report of the Comptroller and Auditor General, as I understand it.

Chairman

Specifically with regard to the encroachment fund------

Mr. Fergal Mulligan

No moneys have been paid out from the encroachment fund.

Chairman

My apologies; I should have asked that question in a different way. Is there an issue relating to 45,000 homes?

Mr. Fergal Mulligan

No. Again, NBI was before the Oireachtas joint committee on that-----

Chairman

No, I am asking about the fact that Eir has now serviced certain homes-----

Mr. Fergal Mulligan

Some of them.

Chairman

-----that are within the broadband area.

Mr. Fergal Mulligan

Prior to the intervention area being locked in, there was no encroachment. We understand that since then, approximately 25,000 to 30,000 premises in the intervention area may have access to the network of another commercial operator.

Chairman

Eir.

Mr. Fergal Mulligan

It may be Eir or it may be another operator. NBI recently confirmed to the Oireachtas joint committee that it is not going to claim any encroachment and is satisfied that it will build in the intervention area. Of course, it reserves the right to change the map, as do we, because the map is dynamic. Heretofore, however, no change to the map has been deemed necessary.

Chairman

The service could be duplicated in the intervention area, in that it is being served by fibre by Eir and now the broadband plan will service it as well.

Mr. Fergal Mulligan

The key point in that regard is that we are not too sure because saying premises have been passed is very different to saying premises will be connected. While a commercial operator may say a premises has been passed----

Chairman

I know that, but Mr. Mulligan and I are both aware that if the premises have been passed, the opportunity is there to connect them. Mr. Mulligan cannot flip over the selling point the Department has been putting forward in terms of talking about premises that have been passed. If it is passed, it is passed. There is the opportunity for the-----

Mr. Ciarán Ó hÓbáin

On that point, it is a live issue that the Department's team is considering all the time. There is no "Yes" or "No" answer as to whether NBI would continue and build in an area. There is no core principle one can apply to that. For example-----

Chairman

To pick up on that, is Mr. Ó hÓbáin saying that NBI may not build in some of the intervention area?

Mr. Ciarán Ó hÓbáin

I understand from where the Chairman is coming and I will do my best to provide a comprehensive response. When NBI gets to the detailed design for an area, that is at a point when there would be greater clarity as to whether another operator is now in the area. What we have to ensure in that regard, however, is that nobody in the intervention area is left without a high-speed broadband service. A critical point is that where other operators build and encroach on the area, they have given no commitment in that regard, whereas in the case of the 300,000 premises that were taken off the map, the operators had to commit to passing and connecting all of those addresses.

One could find infrastructure in an area where the majority of people - 100 out of 130 - in a hinterland could get access to it. NBI will still have to hit the remaining 30. What one has to look at there is whether NBI, in reaching the 30, will have to effectively get through where the other 100 are and incur that cost. If that is the case, the public interest is best served by them selling services to those 100 premises for which they will have to incur the cost of overbuild.

Practical solutions can be arrived at. For example, in the University of Limerick, HEAnet has rolled out a high-speed broadband network. NBI will now not go in there spending taxpayers' money to duplicate a network when there is 100% certainty that the need is being met.

Chairman

I hear what Mr. Ó hÓbáin is saying. I am asking him a specific question. Is Mr. Ó hÓbáin confirming that NBI may not build parts of the network in some of the intervention areas where it is now being serviced by a commercial operator?

Mr. Ciarán Ó hÓbáin

What I am confirming is that the contract allows for the map to be revised where it would be appropriate to do so. The Department has to agree to that.

Chairman

Let me cut to the chase. Was it not presented when this contract was being signed? The rules of the game were that that was the intervention area.

Mr. Ciarán Ó hÓbáin

That was not the rules of the game. The 500-----

Chairman

That was a selling point. The orange area is the intervention area and the taxpayer or the State is putting up 90% of the cash. The point I am making is we find ourselves in a situation where another operator, which has a dominant position by virtue of the fact that it controls the highways - the main arteries out through the national broadband network - as one can see from the maps, has now got there first. We will not build there but yet in part of that area the liability will still wind up with 90% of it being on the taxpayer to pay.

Mr. Ciarán Ó hÓbáin

That is not the case. The 537,000 premises, which is now 560,000 premises, is what NBI is contracted to deliver. What I am saying is that that map is dynamic. The contract allows for changes to that where the Department agrees to that. Clearly, we would only agree to that where it was in the public interest to do so.

Chairman

Eir not alone has substantial leverage and power in terms of the pace things move at, which Mr. Ó hÓbáin conceded earlier on to me, but, we now learn, also has a substantially stronger position in terms of being able to dip into the intervention areas where it suits it to do that. Tell me this: what power has the Department, God almighty or anybody else to stop it from doing that?

Mr. Ciarán Ó hÓbáin

Commercial operators are free to build where they build. I would make two quick points. First, NBI is not proposing to reduce the scale of its intervention on the basis of any encroachment that is seen but that is looked at on an deployment-area-by-deployment-area basis when one gets to the low-level design. Second, NBI has confirmed that where such encroachment has occurred, it does not intend to seek access to the €100 million pot that is there as part of the €2.7 billion. We are confidence that that €2.7 billion is effectively €2.6 billion because that €100 million will never be sought.

Chairman

We will have to wait and see that. In ten years' time, we will know more. I call Deputy Catherine Murphy.

Deputy Catherine Murphy

Can Mr. Griffin remind us - maybe I have missed it - of the number of premises that were connected rather than passed?

Mr. Mark Griffin

Twenty thousand odd.

Mr. Ciarán Ó hÓbáin

It is over 20,000.

Deputy Catherine Murphy

Does that include the estimated 7,000 that are farms?

Mr. Ciarán Ó hÓbáin

No. Of the 85,000 premises that are passed, 7,000 are farms. We have not confirmed the number of farm connections but we will attempt to do so.

Deputy Catherine Murphy

I took it that there were 7,000 farms connected.

Mr. Ciarán Ó hÓbáin

No. It is 7,000 farms passed, out of the 85,000.

Deputy Catherine Murphy

Just over 20,000 have been connected. Somebody asked Mr. Griffin if work has been done to understand why people are not connecting. If I remember rightly, the Analysys Mason indicated there was an issue in relation to transparency to do with the metropolitan area networks, MANs, the first broadband initiative. That report was on the Minister's desk for a year. When it was published, my recollection is that there was a proposal to cut in half the price of broadband to the suppliers. That, in turn, makes it cheaper for people to take up broadband or to have the direct connection. Obviously, the cost of living is a big issue. I remember there being a review recommended within that. What work is happening in that regard? Does that extend beyond the MANs, in the context of transparency, for example, to NBI, to the suppliers below that and what their costs are and to the cost to the individual?

Mr. Mark Griffin

I will ask Mr. Ó hÓbáin to come in on this. My recollection is that there was a review undertaken by Analysys Mason to look at pricing and a number of other issues in respect of the MANs, in particular how the pricing affected connected companies. That review was completed and 13 recommendations were made. The then Minister, Deputy Bruton, referred it to ComReg to review. ComReg got PwC to assist. The report was published. The 13 recommendations were implemented. As part of that, one of the issues that was found during the course of the review was it was hard to establish what a reasonable benchmark would be for the cost of dark fibre but in the heel of the hunt, Enet reduced the cost of dark fibre to €2.60 per metre. There was a substantial reduction in dark fibre.

The cost of fibre under the national broadband plan in the intervention area and all the other commercial areas that are being upgraded at present is a matter for the market. One of the advantages, from the perspective of the national broadband plan, I think I am right in saying, is that they have bought forward in very substantial terms the stock of fibre to be rolled out on the network.

I do not know if there is anything further on the MANs.

Mr. Ciarán Ó hÓbáin

There is really not a lot. The contracts that they have with NBI would be outside of that and for different services.

Deputy Catherine Murphy

The main thing I am interested in is whether it is value for money for people who are on marginal incomes and who might want broadband. Will they be able to afford it? We understand that they will be charged the same to bring it to a certain point. If, however, it is only outside their door, for example, and there is a minimum charge of approximately €100 to connect, the reason they are not connecting may well be because it will add to the cost.

Mr. Mark Griffin

Maybe Mr. Mulligan should address that. We have it at both - in terms of the connection but also in terms of the price being charged in rural areas relative to urban areas.

Mr. Fergal Mulligan

It was always envisaged from 2015, when the initial intervention strategy was published, that this rural intervention would ensure that there was parity of prices across the entire country. In Dublin, Cork and Donegal, the average broadband rental price is approximately €50. What we have seen on the NBP is that, with 45 retail providers, there is a lot of competition and the entry price is approximately €30 for broadband. Then, a year later, it might go up to €40 or €50. The entry price point is very affordable from that perspective and people are getting a great deal because there is lots of competition.

The entry connection charge is €100. We have ensured that under the contract that is affordable regardless of the cost of connecting. Back to the cost of connecting, where there is remedial work of someone's duct in the garden or they need a new pole in the garden, that is funded through the connection subsidy regime under this contract. This ensures that when anyone else makes an order, he or she will definitely get connected. That is a challenge for the commercial sector because in the commercial sector sometimes the business case is not there to connect that home or business where there is a lot of remedial work to be done inside the wall of the house. The national broadband plan area is making sure it is affordable.

Deputy Catherine Murphy

That would be the critical issue in terms of people connecting.

Has the Department retrospectively applied any performance credit sanctions to NBI since the publication of the Comptroller and Auditor General's report?

Mr. Fergal Mulligan

The reports mentioned in the Comptroller and Auditor General's report are still in their final stages of review. We expect to conclude that process in the coming weeks, at which point we will conclude the sanctions of those seven reports. Sanctions are applied retrospectively. We expect to conclude that by the end of the year and that will go back to those seven quarters.

Deputy Catherine Murphy

Does Mr. Mulligan foresee changes as a consequence?

Mr. Fergal Mulligan

There will be sanctions in those seven quarters.

Deputy Catherine Murphy

I thank Mr. Mulligan.

Chairman

I wish to revert to the Sustainable Energy Authority of Ireland, SEAI, grant schemes. I received a reply to a parliamentary question on 25 May from the Minister with regard to this. To be honest, I was a bit taken aback by the reply. It outlined the number of homes that were upgraded. These figures were for the first four months. I asked for the figures for 2022. The reply outlined to me the figures for 2021 and also the figures for January to the end of April 2022, which was helpful. A couple of things stood out. The better energy warmer homes scheme had 2,126 done in all of 2021. In the first four months of this year, 1,133 homes were done. The better energy warmth and well-being scheme just had 69 done in the first four months of this year. The figure that really jumped out at me was for the deep retrofits. Ten deep retrofits were done in 2021. In the first four months of this year, there were absolutely none. It is the same with the community energy grants. I understand that these can be bigger and there may be reasons for that due to it being a bigger piece of work. The national home retrofit scheme one-stop shop, which is for the really deep retrofits, had 805 completed in 2021 with 188 completed in the first four months of this year. There were ten deep retrofits done in the whole of last year and none completed in the first four months of this year. Will Mr. Deegan respond to that please?

Mr. Robert Deegan

I would point out that those schemes were closed for new applications. They are just closing out the existing applications that were carried over that were not able to be completed in previous years. That would apply to the warmth and well-being scheme, which was always a relatively small scheme.

Chairman

Was the deep retrofit scheme closed?

Mr. Robert Deegan

It was closed to new applications in 2019. It is just a matter of closing out what are very deep projects that were delayed as a result of Covid primarily.

Chairman

Was that captured in the new schemes that were announced?

Mr. Robert Deegan

No, that was one particular scheme called the deep retrofit pilot scheme. The community energy grant scheme, which the Chairman mentioned, was quite low in the first four months of the year. That has gone up and we expect it to go up quite significantly towards the end of the year because of the way the application process and delivery process is. One applies at the start of the year and it delivers by the end of the calendar year. The one-stop shop scheme was launched in February so we are now starting to see the houses coming through at the other end of that. They are significant project projects that take a number of months to deliver.

Mr. Mark Griffin

It is important to point out to the Chairman that a lot of the learnings from the better energy warmth and well-being scheme are now being built into the better energy warmer homes scheme.

Chairman

That was a pilot scheme.

Mr. Robert Deegan

Yes.

Chairman

It was mainly in the south Dublin area.

Mr. Robert Deegan

Yes.

Mr. Mark Griffin

Similarly, a lot of the deep retrofit pilot scheme is being built into the one-stop shop national home scheme. We are learning and doing and trying to scale up.

Chairman

I see some of the houses that were improved under that scheme in those areas when I am coming in in the mornings. On the shallow retrofits, I am looking at a table based on figures from 2010 up to the end of 2019, as supplied by the SEAI to my colleague, Deputy Darren O'Rourke. In 2011 there were 51,557 shallow retrofits done. The same corresponding figure decreases every year right the way down along to 2018 and 2019. In 2019 it went down to 7,562 for shallow retrofits. Cavity wall projects went from 41,000 in 2011 down to 636 last year. The 2021 figure is very concerning. In 2011 roof attic insulation went from 51,000 down to 4,700 in 2021. The very important cavity wall insulation went from 41,000 down to 3,726. What is happening behind those figures? I am looking across a decade when everyone was talking about retrofit and everyone saw the need to get this going to reduce energy consumption and meet our climate change targets. It was also to reduce energy bills and make homes more comfortable for people. What happened there? Why have we gone from 41,000 cavity wall insulation retrofits ten years ago to only doing 3,700 last year?

Mr. Robert Deegan

Again, when we look back that far, all of those schemes were focused on shallow retrofits but there is now an increasing focus on deeper retrofits in parallel to the shallow measures that are still supported. In February of this year these were enhanced. One can start seeing the impact of those enhanced grant rates for cavity and attic insulation in the activity so far. On both of those measures we are up 300% on what we were doing last year in actual delivery. We are seeing that the interventions we have made around the supports that are now available to homeowners-----

Chairman

Is it up by 23% this year?

Mr. Robert Deegan

It is 300% up on cavity and attic insulation.

Chairman

That is, however, from a very low base. It is a figure of 3,700 in one year on the cavity wall insulation, and only 4,700 for the attic insulation.

Mr. Robert Deegan

Again, it must be remembered that a lot of the market was closed for a significant part of last year, which affected the base of last year. The enhanced grant rates were only introduced in February. We are seeing that the market is really kicking into gear to be able to deliver those measures. More companies are getting on board in the context of contractors and-----

Chairman

There are some 500,000 of those shallow retrofits left to be done.

Mr. Mark Griffin

They are deep BER 2 retrofits too.

Mr. Robert Deegan

It is the equivalent of 500,000 B2 retrofits by the end of the decade, which is between 2019 and the end of 2030. We have done about 85,000 retrofits in total since 2019.

Chairman

I wish to ask specifically about double glazing. There are an awful lot of homes with single glazing. I am not clear on it but I looked at the grants quickly again on Monday. With the single glazing there are a number of homes still generally falling in this regard, and it seems to be older people, people who are on lower incomes, or maybe older people who are working but just cannot afford to take out the single-glazed windows. The heat and the energy is flying out through them. Which grant do they come under? Is it the 80% one? Can a person get double glazing under that?

Mr. Robert Deegan

If we were giving 80% grants for double glazing we would have a queue as long as the country. There are grants available for windows and doors under the one-stop shop scheme whereby it is part of an overall package. They are not supported under individual measures. On the most impact for those households the Chairman refers to, there is a reason cavity and attic insulation was chosen. These are the most impactful measures at very low cost in the context of cost effectiveness and value for money. These are the measures that people should be investing in. It is an average of 80% in some houses, but in smaller houses it is actually more on a percentage basis.

Mr. Mark Griffin

That is using the one-stop shop model.

Chairman

That is the only way of doing those. They were made available also under the "free", for want of a better word, scheme which is the warmer homes scheme. They were made available under that. Is that still the case? Could we advise constituents to apply for it under the warmer homes scheme if they still have single glazing? They do not have to have health problems or anything like that?

Mr. Robert Deegan

No. The warmth and well-being scheme assisted those who had health problems. That is being mainstreamed now into the warmer homes scheme.

Chairman

Can people can apply with a paper form? A lot of the applications are online.

Mr. Robert Deegan

Yes they can.

On energy security, I heard a former employee - I am not sure what his title was - from the ESB say on the public airwaves last week that we used to have ten- to 12-year energy planning and we have stopped doing it. Why is that?

Mr. Mark Griffin

We still have ten-year energy planning. We have a national energy and climate plan that we-----

Chairman

He said we do not.

Mr. Mark Griffin

I disagree with him. We have a long-term energy strategy that we have just published for public consultation that looks at gas and energy security of supply. That is out for public consultation to look at what we need to do on the gas and electricity fronts, having regard to the fact that we are an island nation and the UK is no longer a member of the EU. In fact, we did an energy White Paper in 2007 and another in 2015. Short-term, medium-term and long-term energy planning is, therefore, a constant issue for the Department and one we take very seriously.

Chairman

Over the last 12 years, it would appear that if we were doing it, we were not doing it very effectively because we finished up in a situation where demand has increased because population has increased. In addition, data centres, industry, employment increases, car charging and heat pumps in houses all place new demands on electricity.

Mr. Griffin would have heard me talk about some of these issues five or six years ago. I was trying to figure out in my head, and I am still trying to figure out, where the dispatchable power comes from. He will recall me telling the Minister, Deputy Eamon Ryan, that if the wind does not blow and the sun does not shine, that knocks out the solar panels and wind turbines, which I think are good.

I still have concerns about dispatchable power, however. The only way that I can see we can work with dispatchable power is through gas, which many people are not in favour of as a transition fuel, and biomass, which they were not in favour of up until recently, although they seem to be changing their minds. Biomass was completely ruled out but people are now in favour of it and can apparently talk about it for half an hour. This is all welcome. However, where is the dispatchable power over the next decade? Are there opportunities to drill for more gas in Corrib or other locations?

Mr. Mark Griffin

The way the system operates is that EirGrid produces a generation capacity statement every year that looks out ten years and sets out the expectation in terms of the demand ask and the expectation in terms of supply if, for example, some plant goes off the system or a new plant comes on through the auction process. It will identify a gap. Those studies are in the public domain.

For dispatchable generation, there is a capacity remuneration mechanism that provides for auctions to be undertaken and companies to bid in, whether they are State sector companies like ESB or Bord na Móna or private sector companies like Energia, SSE Airtricity or EPUK Investments. They will bid in. That mechanism is, therefore, in place.

Clearly, over the last couple of years we have seen the supply-demand gap not being reconciled for a variety of reasons. The Government has made it clear - a policy statement was produced last September, although I could have gotten the month wrong, which makes it crystal clear - that there is a need for 2,000 MW of dispatchable generation between now and 2030.

Chairman

I am trying to figure out the short answer. A constituent raised this issue with me and it is also going around inside my head. Where are we going to get that from? That is what I want to know, in short. I know it is the burden of policy but it can be very difficult for us to get answers to these questions. We are given something like one minute on the floor of the Dáil. I am trying to get information from Mr. Griffin, as Secretary General of the Department, because he is obviously in the know on this. My concern, in the first instance, is that the lights do not go out and there will be power for homes, industries, hospitals, schools and everything else over the coming few years. Where will it come from? Is there potential to use more gas?

Mr. Griffin knows my line with regard to biogas. We have an agricultural waste problem. We are playing catch-up with this. We should have been doing it ten years ago. I was told up to a few years ago that it was too expensive. Now, it can be produced more cheaply. Obviously, because electricity has gone up in price, it can be produced cost-effectively, which would solve our agricultural waste problem and also generate money for farmers. In short, can Mr. Griffin tell me where this extra demand will come from?

Mr. Mark Griffin

The gas generation capacity will be procured through capacity auctions that are run by the regulator. That is the mechanism by which it is done-----

Chairman

Is the potential there to fulfil that?

Mr. Mark Griffin

-----and companies bid into that. The regulator and EirGrid manage that process.

The issues raised by the Chairman regarding biomethane and hydrogen will all form part of the mix. The key part from our perspective is that the gas generation that will be brought onto the system over the next number of years should, ideally, be methane and hydrogen-ready so that when we get the biomethane on the system, it will be more economic. The Chairman is right about the costs of this. When we look at biomethane in terms of the climate action plan, and when we consider the way the price of natural gas, which is very expensive, has gone over the last year or two and what the expectations are for the future, we see that it has become far more economic. Deputies Catherine Murphy and Carthy raised anaerobic digestion as potentially a big-income generator for the farming community. Producing biomethane that can be injected into the national gas network needs to be part of the mix.

Chairman

What about biomass? I saw a figure in the briefing notes where it is projected that the availability of wood biomass will increase by 100% by 2030.

Mr. Mark Griffin

We need to look at biomass, on which there are different views. The EU directive on indirect land use change requires certain conditionality to be met in terms of the source of the biomass. It is potentially part of the solution, however. The Chairman is right that the canvas here is very complex and we find it moving every day, particularly over the course of the last year. I am quite happy to come back with a detailed note in an annex to our response to the committee subsequent to this meeting.

Chairman

Up to last year, we could not use construction wood waste in this State. We could be shipping some over the Border, however. It is allowed to be used in that jurisdiction. I ask the Department to look at that area. It does not make sense that we cannot use material from another jurisdiction, particularly when there is a large construction sector here at the moment. That should be used in terms of a supply of biomass. It does not make sense. Industry representatives - people who are trying to increase the use of biomass - have raised that issue with me.

I will make a point about Bord na Móna and the ESB. We are lucky to have them. I know people have a big issue with the profit made by the ESB in the first six months of the year. It is not going to disappear. It is there because we owned it. The profit will be reinvested or there will be a big dividend. That is for the Minister as it is a matter of policy on Government clawback, etc. That is in place. Bord na Móna is trying to get into, and is in, the process. It has gone from a company on which the gate was nearly closed to what it is today. It had to pay a dividend. Taxpayers need to hear that it paid a small dividend to the State last year. It has the potential to do an awful lot of this heavy lifting for us. All I will say - again, it will be a policy matter - is that from an official point of view, the Departments of the Environment, Climate and Communications and Public Expenditure and Reform, etc., should give Bord na Móna a wide berth. It took out a one-page advertisement for jobs recently in the local press in the midlands. That is some change from where it was a couple of years ago when the gate was nearly locked. I want to acknowledge that. I know that perhaps the Department's officials sometimes did not get credit for the work they did. We criticise them sometimes but I want to acknowledge that. That took a lot of work. Many pieces had to be moved around.

Mr. Mark Griffin

When I look at State companies right across the system, Bord na Móna is one of the jewels in the crown. The work that has been done by the company over the last few years with the support of the local politicians, and by the Government, is phenomenal. The shift from brown to green, and Bord na Móna's ambition around renewable energy and how it is delivering on the renewable energy front, is extraordinary. It is great to see.

Chairman

We are lucky to have that.

Mr. Mark Griffin

Absolutely.

Chairman

If we used those semi-State organisations more and brought them into the generation game, we would not be as vulnerable to the outworkings of Mr. Putin's illegal war. I just want to highlight that.

It is a question of policy but from an official point of view we should do anything that can be done to accelerate that. We will see jobs and power coming over the next few years as that starts to work itself out. We need to drive that on with gusto; do not mind the ideology or anything like that. Bord na Móna and the ESB can increase their share of it. I have made the same comment to the people in government as well. Whoever is in government needs to do that.

We require some information from the witnesses. We have covered wide areas such as the SEAI grants and broadband. These are the two biggest spending areas and they are going to increase. It is evident why there is intense interest from committee members in it. I thank the witnesses from the Departments of the Environment, Climate and Communications and Public Expenditure and Reform for attending today, and the committee's staff for preparing for the meeting. I also thank Mr. McCarthy, the Comptroller and Auditor General, and Ms Duane, deputy director of audit at the Office of the Comptroller and Auditor General, for attending, and also their staff for their background information and briefing notes. Is it agreed that the clerk to the committee can seek any follow-up information and carry out the agreed action? Agreed. Is it also agreed that we note and publish the opening statements and briefing provided for today's meeting? Agreed.

Sitting suspended at 12.41 p.m. and resumed at 2.05 p.m.