asked the Minister for Industry and Commerce whether his attention has been drawn to a report of an interview with Mr. John O'Brien, Chairman of the Shannon Estuary Company, Limited, stressing the need for Government encouragement and support of the Shannon development project; if he will make a statement indicating his attitude on this project hitherto, and his attitude in the future; and what positive steps have been taken by him in regard to this project.
Ceisteanna — Questions. Oral Answers. - Shannon Development Project.
21.
The reply runs to several pages and I am prepared, in accordance with Standing Orders, and with the permission of the Ceann Comhairle to circulate it in the Official Report, but if it suits the convenience of the House I shall read it now.
I think the reading of a long document of this kind would be a gross abuse of Question Time. A better way to deal with it would be to circulate it with the Official Report.
That will suit me.
Following is the reply:
I have seen the Press report of the interview referred to by the Deputy. Normally, I would regard myself as precluded from divulging in reply to a Dáil Question any information about the private affairs of a commercial concern. In view of inaccuracies contained in the statement by the Chairman of the Company as published, however, I feel obliged in the public interest to put the matter in its proper perspective.
The Company's ideas as mooted to the Department of Industry and Commerce in 1958 related to—
(i) the development of a free port in the Shannon estuary;
(ii) the transhipment of ores and oil, using vessels of 100,000 tons and over;
(iii) the provision of a terminal for giant ocean passenger liners, and
(iv) the development of an industrial hinterland.
It transpired that the Company had made no detailed examination of the practicability or economic prospects of their ideas. Nevertheless, they indicated that they would require from the Government such far-reaching concessions as (a) power to acquire land compulsorily; (b) exemption from Customs and Excise duties for 99 years; (c) exemption from Irish taxation for 66 years and (d) exemption of the proposed port area from the provisions of the Control of Manufactures Acts.
It was suggested to the company that they should, as a first step, examine the economic merits of their ideas and that for this purpose they should consider engaging the services of an economic consultant or research organisation. At the same time, however, it was pointed out to them that the question of establishing a Free Port in this country had been considered by the Port and Harbours Tribunal, 1930 and again by an inter-Departmental Committee in 1945. It had emerged from these investigations that the cost would be very substantial and enquiries made both at home and abroad had suggested that the extent to which Free Port facilities here would be utilised was highly problematical. The Government had no reason to believe that the situation had altered in any respect and that still remains the position.
The Company subsequently commissioned a London research organisation to carry out a survey. The relevant report indicated that none of the commerical interests approached in the course of the survey was prepared to say that it would use a port on the estuary.
However, some months afterwards, in February, 1960, the Company claimed at a meeting in the Department of Transport and Power that they had now established the feasibility of:—
(a) the transhipment of ore using very large vessels to Shannon and smaller vessels from there to Europe;
(b) the transhipment of grain by the Company themselves;
(c) the establishment of an oil refinery at Shannon and transhipment from the suggested refinery.
They also had in mind:—
(d) a dry dock for vessels up to 150,000 tons;
(e) the possible development of steel works; and
(f) the development of industries in the hinterland.
The cost alone of the pier and associated facilities and the dry dock would, I understand, be of the order of £14 — £15 million. No estimate was mentioned of the cost of the other items — the oil refinery, the steel works and the miscellaneous hinterland industries.
In a formal written statement to the Minister for Industry and Commerce, the Chairman of the Company claimed that a number of industrial and commercial concerns, mainly in the oil and iron ore and steel industries, had expressed interest in the Company's proposals. Enquiries made at my direction to the oil and iron ore concerns named in this statement elicited the information that they had expressed no interest whatsoever in the estuary ideas.
Although no firm proposals for industrial or other development at the Shannon estuary had been received from the Company or any evidence of outside support for the Company's ideas, the Government, before taking a final decision on the Company's representations, appointed an inter-Departmental Committee to meet representatives of the Company for the purpose of obtaining, in a precise way, such information concerning the Company's proposals and such evidence of support for those proposals as, in the opinion of the Committee, the Government would require before considering the question of signifying their approval of the proposals generally and before deciding on any concessions or facilities that might be extended to the Company by the State.
The Committee met representatives of the Company on 29th April, 1960 and submitted an interim report to me on 13th May, 1960 to the effect that:—
(i) the Shannon Estuary Company Ltd. had formulated no proposals designed to give practical effect to their various ideas for the development of the Estuary and the establishment there of major industries;
(ii) the company had produced no evidence that their ideas for the development of the Estuary were practicable;
(iii) the Company stated that all their plans were now subject to modification — they now attached considerable importance to general cargo and no longer regarded the transhipment of either ore or oil as essential to the viability of the project;
(iv) the Company accepted the need for the formulation of firm and precise proposals and for the production of positive evidence of support by external commercial and financial interests;
(v) the Company had agreed, in effect, that no acceptable evidence had been adduced in support of their repeated claims that the project had attracted the interest and support of external commercial interests; and
(vi) the Company had accepted the position that, pending the submission of formal proposals, the Committee could make no progress.
On 5th July, 1960 Mr. O'Brien was interviewed in the Department of Industry and Commerce. He mentioned that he had discussed the estuary scheme in Geneva with the Venezuelan Minister for Labour (Dr. Solis) who expressed interest in the project and that the suggestion was being pursued through the Venezuelan Embassy in London. I would have been ready to examine on their merits any sound proposals put forward by the Shannon Estuary Co. Ltd. for the handling of Venezuelan ore at Shannon but no such proposals have since been put to me.
Mr. O'Brien also intimated at the interview of 5th July, 1960 that because of internal organisation difficulties the Company were making a fresh start with their proposals. They had engaged a firm of consultants and a panel of experts in London to prepare a detailed assessment of the whole estuary project. Mr. O'Brien said that the consultants' report would be in the nature of a blue print and that the Company would get in touch with the Committee when the report was available.
The consultants' report was made available to the Committee on 7th November, 1960. It contained preliminary proposals, expressed as such, for a provisional layout of portal facilities in the Shannon estuary, roughly estimated to cost £8,500,000. The report examined very briefly the following considerations which, it stated, favoured development:—
(i) the natural physical advantages of the Estuary as a site for a harbour;
(ii) the availability of labour in Ireland;
(iii) the availability of suitable riverside sites in the Estuary;
(iv) existing Government assistance by way of grants and tax concessions for the development of industry.
From these considerations, the cossultants compiled a list of potential industries which, the report stated, "could with advantage be located in the estuary". The report did not deal with costing, marketing or financial aspects nor was it suggested by whom the industries might be financed and established. No examination was made of the merits of the basic general ideas for the development of the estuary or of the crucial question of the economics of transhipment.
At Mr. O'Brien's request, the Committee met the Shannon Estuary Company on 9th November, 1960. The Company claimed that the consultants' report made it clear that Shannon had advantages which made it worth developing as a major port and that, with the report, they were now in a position to go out and "sell" Shannon if they could be given an indication of the support of the Government for the project. They indicated that they were now concerned not so much with transhipment as with a terminal port having a large steel industry and all ancillary activities. They said that they were satisfied from their discussions with potential users that their ideas were fully justified. They were not in a position, however, they said, to produce evidence of definite interest by anybody or of the preparedness of organisations to finance the proposal, without a prior indication of Government approval, guarantees or concessions.
The difficulties in the way of granting exceptional tax and other concessions in the estuary area to the exclusion of other industry-seeking areas in the country were explained again to the Company, who were, of course, aware of the grants and tax concessions available in the normal way for industrial promotion in the estuary area and elsewhere throughout the country.
It was explained to the Company with regard to their request for treatment on the same basis as the Shannon Free Airport Development Company that this Company was established for the specific purpose of absorbing possible unemployment at Shannon Airport due to the advent of jet aircraft and developing the Airport's air freight potential to the full by exploiting the advantages of the existing free airport as a site for industries using air transport and on the basis of precise industrial projects.
The Committee intimated to the Company that an early report would be made to the Government if the Company would furnish a statement setting out (i) their observations on the consultants' report; (ii) a statement of their proposals arising out of their consideration of the report; (iii) the nature of the interest displayed by third parties; and (iv) an indication of the minimum by way of a statement of Government approval or encouragement they required at this stage to help them to develop interest in their ideas. The Company agreed to do so.
No such statement was furnished by the Company but on 15th December, 1960, the Chairman sent a letter to the Committee stated to be the Company's appreciation of the estuary project at that stage. They acknowledged the position (i) that the port idea would be justifiable only if an industry could be established in the estuary to make use of the facilities; (ii) that there was no immediate prospect of the establishment of an oil refinery, and (iii) that the Company's proposals depended entirely on their ability to produce even one substantial user capable of justifying the establishment of the proposed port; they had in mind ore smelting and steel making and the transhipment of ore or processed ore.
The letter asked that, in the event of the Company producing an industrial project for location at the estuary and of the Government being satisfied that it was an economic project, they should be granted the following concessions:
(i) that the Company be appointed the Port Authority (for the Shannon estuary area including Foynes but not including Limerick);
(ii) that the tax concession given to Port Authorities be extended to the Port Authority to be set up at the Shannon Estuary;
(iii) that a Customs free area, to be defined, be established; and
(iv) that concessions similar to those offered by the Shannon Free Airport Development Company should be made available to industries establishing themselves in the Shannon Estuary area.
The Committee, having considered this request, made their final report to me. On consideration of the report and the recommendations made in it, which the Government accepted, the Company were informed by letter dated 9th March, 1961:
(i) that the Government, in pursuance of their declared policy to support to the maximum extent any worthwhile proposals for industrial development, have given careful and sympathetic consideration to the request by the Company for the grant of exceptional facilities and concessions to enable them to pursue their ideas for the establishment of a harbour in the Estuary as the basis for the possible creation there of an industrial estate;
(ii) that in the absence of any evidence
(a) that the creation of such a harbour would be a viable undertaking,
(b) of specific proposals for financing the developments from organisations which are satisfied of the soundness of the project, and
(c) that any external interests would be prepared to use the harbour facilities which might be provided in the Estuary, or would undertake the development of industrial projects in the Estuary area in association with such harbour facilities, or otherwise,
the Government would not be prepared to consider the grant to the Company in the Shannon Estuary of facilities and concessions of a character not available (save in the exceptional circumstances of Shannon Airport) for any other area in the country, or to any other commercial Company, under the existing provisions for the promotion of industrial development; and
(iii) that, nevertheless, the Government regard as commendable the desire of the Company to promote industrial development in the Shannon Estuary and that, if any of the industrial developments envisaged by the Company emerge as practicable projects, they would be given the most sympathetic consideration under the existing provisions for encouraging new industries; and furthermore in such event, that the Government would also be prepared, in principle, to sponsor measures to authorise any special harbour arrangements which could be shown to be necessary and justified.
I should like to emphasise, therefore, that the Company have been informed that if they put forward practicable proposals for industrial development in the Shannon estuary area, these proposals would be given the most sympathetic consideration under the existing provisions for encouraging new industries and that any harbour arrangements that were necessary would be sponsored.
I should now like to deal with some of the statements in the report in the Irish Times. The Chairman of the Shannon Estuary Company Ltd. is quoted as saying that the Government adopted an attitude to their proposal very different from that adopted to many projects sponsored by foreigners. It is alleged that the foreigners were not compelled to the “proof” stage to the same extent. I am not aware of any other case where the promoters have asked the Government to declare their support, even provisionally, and to promise quite exceptional facilities for industrial proposals until these proposals had, at least, been defined. It is a normal requirement in connection with the presentation of any proposal that facts and figures and convincing evidence of the practicability of the project and precise information as to the sources of and the amount of capital available be furnished. Until such is done no consideration can be given to the grant of any facilities. In this case I have been given no indication as to where the very large amount of capital which would be needed for the establishment of a harbour, dry dock, etc. is to come from, no indication as to who, if anybody, would use the port for transhipment purposes, no evidence of the economics of transhipment at Shannon, and no indication as to who would sponsor and finance the heavy industries which the Company consider would be necessary to justify a port of the order visualised.
Mr. O'Brien complains particularly that the Government's failure to openly support the Company's ideas is preventing the development of the interest and sympathy of many British and U.S. concerns. The fact is that the policy of the Irish Government to welcome and, through grants, tax concessions, etc., to encourage in every possible way the development of industrial proposals has been widely publicised in Britain, the Continent and America. Even against this background of Government encouragement, I must repeat that Mr. O'Brien has not so far produced evidence of interest by anybody or of the readiness of any industrial or commercial organisation to be associated with his Company's ideas.
It is true that the Company were cautioned against premature and injudicious press publicity and in the light of the facts given in my foregoing review of the whole case the reason for sounding this note of caution will be obvious to Deputies.