I move that the Bill be now read a Second Time.
The purpose of this Bill is to give Bord na Móna temporary relief from their obligation to pay interest on State advanced capital and to defer repayments of capital to the State.
Under the Turf Development Acts, Bord na Móna are obliged to pay interest at fixed rates on advances of capital from the Minister for Finance. The board are also required to commence repayment of capital as soon as the bogs in which the capital is invested have been developed and come into production. It should be noted, therefore, that all the board's Stateadvanced capital is subject to a fixed annual interest and is repayable on a 25-year basis. The board has no share or equity capital. The board is required, therefore, to meet a definite financial target each year. Since the establishment of the board, capital repayments have totalled nearly £4 million while, in the same period, interest paid on capital totalled about £8½ million. The board have met in full their obligations for interest and capital repayments in the normal way up to the payment made on 1st April, 1965. Since then, however, they have been unable to meet from normal revenues the payments due to the State and have been compelled to use capital funds for this purpose as far as they would go. A total of £2,235,000 was so used. The last remittance for interest and repayment of capital was that due and paid on 1st October, 1966. Payments totalling almost £2,600,000 are still outstanding in respect of the amounts due on 1st April, 1967, 1st October, 1967, and 1st April, 1968. In the case of advances to the board from sources other than the State, the board's obligations have continued to be met in full.
Bord na Móna's difficulty is that all their production operations depend fundamentally on natural drying conditions. This is particularly so in the case of milled peat production, which is very vulnerable to adverse weather. Heavy rain can cause substantial losses. In addition, briquette production is dependent on the availability of adequate supplies of milled peat. A measure of the suitability of weather for peat harvesting is given by an index known as Poulter's Index. This is a figure derived from three of the main weather factors which affect drying— temperature, duration of sunshine and rainfall. In the period from 1880 to 1960 the index for central Ireland did not fall below average on more than four successive years. Unfortunately since 1960 there has been a deterioration. The summer of 1967 was the eighth successive summer in which the index was below average so that, since 1880, the worst peat harvesting period has been the period from 1960 to 1967.
To Bord na Móna the succession of poor peat harvesting seasons has meant men and machines lying idle and work partly done but written off because of the interruption of work schedules by bad weather. The board have been unable to meet their production targets —in the last five years, for example, the overall percentages of targets reached have been only 77 per cent, 81 per cent, 57 per cent, 75 per cent and 89 per cent respectively. The overall result has been the development of a financial situation such that, at the end of 1967-68, the board's accumulated debit balance is in the region of £5 million.
I should point out at this stage that Bord na Móna have made many efforts to counteract the effects of the unsuitable harvesting weather. In an attempt to maintain the scheduled deliveries on which the capacity of the milled peat fired generating stations was based, they increased the area of bog under production by developing tracts on the fringes of the bogs, thereby accepting a reduced annual target of 70 tons of milled peat per acre compared with the original target of 100 tons. The board have carried out experiments in the milling and harrowing of milled peat for the purpose of establishing methods which would ensure the most efficient use of available natural drying. The size of the particle milled has proved to be crucial in this context and further work is being carried out by the board to determine the optimum particle size for the climatic conditions.
The board have also carried out investigations into drainage of milled peat areas and milled peat pile compaction and protection. These investigations have led to a standard procedure for the protection of turf stock piles during the winter, involving the introduction of polythene covering for milled peat piles in an effort to defeat both high winds and heavy rains. Without this covering, losses would have been much heavier.
Finally, Bord na Móna have embarked on a new experimental method of milled peat production—the Fóidin method. This involved the designing of new machines to produce, on milled peat bogs, turf in the form of small sods which, in the process of drying, would develop a surface resistant to weather like ordinary sod turf. The small sods so produced are subsequently crushed to form milled peat. This harvesting technique has been developed to supplement normal milled peat production in poor harvesting conditions; 85,000 tons were harvested by this method in 1967 at the board's works in county Mayo and at Boora and Derrygreenagh works in County Offaly. Of course, the Fóidin method is more expensive than direct harvesting of milled peat, but it should ensure a minimum harvest irrespective of weather conditions. The board are pleased with the results obtained so far and this year they are extending the application of the new method to their works at Blackwater, County Offaly and Mountdillon, County Longford. All these efforts to overcome adverse weather conditions naturally increase the board's costs and are reflected in the present debit balance position.
In view of the heavy and continuing losses suffered by Bord na Móna in recent years, I think it is very necessary to have a new and searching look at the overall operations of the board. To this end, I am arranging for the appointment of a firm of consultants to examine the turf production programme both from the engineering and financial standpoints, and to assess the likely results of future operations. I should make it clear that, over the years, Bord na Móna have themselves employed consultants on various occasions to examine and report on different facets of their operations. The new investigation will be concerned with the totality of the board's operations. When this investigation has been completed and reported on, it should be possible to decide on the most appropriate financial structure of the board for future years and so ensure the continuation of the board's activities on a sound basis and preserve employment and other benefits in areas which otherwise provide very little opportunities. The purpose of the present Bill is to afford some immediate relief to the board in their financial difficulties pending the outcome of the report.
The Bill proposes that Bord na Móna be given full or partial relief during a period of four years, from 1st April, 1967, from their obligation to pay interest—now about £1.2 million a year—on State advances. In addition, the board would, if necessary, be permitted to defer all or part of the repayments of State advances, about £400,000 a year, due during the same period. The Minister for Finance would take a decision on the extent of the relief in respect of each year on examination of the board's financial position and after consultation with me. The relief would not apply to capital advanced to the board by the State for the provision of houses for their workers as it is separate from the board's main function of turf production, on which the losses have occurred, and the board would continue to make the small annual payments involved.
The relief would be given by means of orders—which may include conditions suggested by the circumstances at the time—which would be made by the Minister for Finance and laid before the House in the usual way. The annual accounts of the board would also bring any waiver or deferment to attention.
In 1965, on the occasion of the last Turf Development Bill, the House was given particulars of the projected development of the board's activities. The moss peat factory at Coolnamona near Portlaoise has since been completed and is now in production. Further development of the board's programme has, however, been somewhat disrupted by the succession of bad summers. As a consequence, the erection of an additional briquette factory has not been proceeded with. In any event, because of supply difficulties resulting from bad harvesting weather and also perhaps because of the fall in popularity of solid fuel generally, demand for peat briquettes has not increased as much as was expected. It is necessary, therefore, to make a careful re-examination of the prospects for sales of peat briquettes before substantial capital investment is made in a new briquette factory. This is one of the matters that, I hope, will be reported upon by the consultants.
Now, despite the setback which is the reason for the submission of this Bill to the House, there is ample evidence of the success which has attended the endeavours of Bord na Móna in carrying out the duties assigned to them in 1946. They have now about 100,000 acres of bog in production, and they pay over £4 million a year in wages to 7,000 workers of whom over 4,000 are permanent employees. Their contribution to the national fuel requirements, both for direct consumption and for electricity generation, is substantial. The board naturally expected to have bad years among the good years, but the recent succession of bad years has involved them in losses which demand that there be a thorough examination of their prospects.
In the meantime, it is essential that the board be afforded some provisional financial relief.
I hope that the recommendations of the consultants, coupled with the measures already taken by the board, will provide a basis for the avoidance of losses in the future and enable the board to meet their financial obligations.
I recommend the Bill to the House.
