Do I take it that sections 4, 5 and 6 are agreed to?
I inadvertently omitted to mention an amendment to section 4 in the name of the Minister.
Vol. 291 No. 11
Do I take it that sections 4, 5 and 6 are agreed to?
I inadvertently omitted to mention an amendment to section 4 in the name of the Minister.
I am afraid we are going too fast. The amendments which Deputy Barrett and I put down last night do not appear to have been circulated. I got a copy but I did not get it circulated in the normal way.
I understand they have been circulated.
It would be easier if all the amendments were printed together rather than giving us bits and pieces.
It would make it easier if all the amendments went in together.
I am aware of that but, unfortunately, we have not the resources of drafting which are available to the Minister. It is very hard work for us.
I understand they were submitted very late.
Could we go back on some of the sections when we get our amendments sorted out?
We are now dealing with section 4.
I move amendment No. 1:
In page 4, subsection (1), lines 39 to 41, to delete the words from ",provided" to the end of the subsection.
The parliamentary draftsman on re-examining the Bill advised that this provision was unnecessary because the only fee payable under the Bill was in respect of an acquisition order under section 32. Provision is made in article 5 of the Second Schedule for the payment of this fee and it does not therefore have to be made by regulation.
I move amendment No. 2:
In page 6, subsection (3) (g), to insert "provide, operate or maintain, or" after "the Board," in line 34.
This is a minor drafting amendment which is necessary to make subsection (3) (g) consistent with subsection (3) (f), by having similar wording.
I have read this several times and cannot understand what the amendment means or what it expects to achieve. I know this is a drafting amendment but the subsection, as it stands, is badly drafted and hard to understand. To put the same words in a second time seems to me to mean nothing——
The parliamentary draftsman advises that the word "and" is used in one subsection and the word "or" is used in the other, and this is proposed to make the wording in both subsections the same.
The Minister, I am sure, will correct me if I am wrong but the paragraph as proposed to be amended will read as follows:
for or on behalf of the owner of a pipeline used or intended to be used to supply gas to the Board, provide, operate and maintain, anything which is a thing mentioned in paragraph (f) of this subsection
If the Deputy looks at line 25 he will see that the word "and" is not used, but "or" and it is to maintain the same wording in both subsections——
Is the Minister saying that the words "provide, operate and maintain" which appear in subsection (g) should be deleted and replaced by "provide, operate or maintain"?
No, the two together. Subsection (f) reads
subject to subsections (7), (8) and (9) of this section, provide, operate or maintain, or provide, operate and maintain...
In the following subsection the second set of "provide operate and maintain" is inserted but "provide, operate or maintain" is not included. These words are inserted to make the wording in both subsections the same.
The Deputy should look at it in conjunction with subsection (f).
Subsection (g) now reads:
for or on behalf of the owner of a pipeline used or intended to be used to supply gas to the Board, provide, operate or maintain, or provide, operate and maintain anything which is a thing mentioned in paragraph (f) of this subsection.
That is right.
The Minister might confirm that the language we are speaking is English.
I confirm that. These sections were written by the parliamentary draftsman in the formal language used in drafting Bills.
It is horrible, to say the least of it.
It may be horrible but it has been around for a long time. The Deputy should be more aware of that than I am.
"...anything which is a thing..."
Legal language is somewhat different to that used in the pubs of Ireland.
I would like to remind the Minister that legal language, no matter how ancient, can be very beautiful.
I am not saying whether it is beautiful or not but that it is different.
There are beautiful terms derived from Norman French but "anything which is a thing" is far from that.
The parliamentary draftsman advises me that this is necessary to make it legally clear. I agree with the Deputy and this is not the way I would phrase it.
As a matter of general principle, would we not be better expressing these terms in normal understandable language rather than in these horrific, warped and appalling phrases?
I would not disagree with that but the parliamentary draftsman might argue that if the same form of language is used in all Acts the people interpreting them will recognise what is meant. That is not a legal opinion.
I move amendment No. 2a:
In page 7, after line 51, to add a new subsections as follows:
"(10) The Board shall not export natural gas unless it has already been liquefied within the jurisdiction of the State or subjected to such other processing as the Minister for Industry and Commerce shall approve in advance".
In putting down this amendment we appreciate that it would be most unlikely that we would be exporting natural gas from the present gas supply of Kinsale. We envisage bigger strikes and, hopefully, more natural gas being available and the day could arrive when we would be exporting natural gas. Under present technology the only way it can be exported is in liquefied form. This is the way it is exported from the Middle East and elsewhere.
We believe it should be liquefied within the jurisdiction of this country. We are not confining such processes to within these shores. It is feasible that at some time in the not too distant future modern technology will devise a means by which it can be done at sea. To get the maximum benefit from this activity for this nation, we believe all liquefying and downstream activities should be carried out by this country within our own jurisdiction.
Let me give another example. It appears that we will be exporting concentrates from the Tara mines thereby losing heavily with regard to employment and so on. The same thing could happen with natural gas if it is not used properly to the benefit of the people and creating more employment. We put down this amendment to be prepared for any future situation when we may be exporting natural gas.
I support this amendment which may prove to be one of the most important to be put down by either side of the House. It puts the emphasis on the process of liquefying natural gas at home, thus providing employment. The gas finds off our southern coasts might well be sent to the bigger cities, Dublin, Waterford, Galway, in liquid form as Britain and most countries are doing at the moment. There is a great need to establish a liquefying plant in Cork or at sea. We must move quickly to ensure that the distribution of Kinsale gas will not be hampered by the fact that we have it only in its natural form. If we had a liquefying plant we could export the gas and also serve our own cities. This would save the expense of laying mains all over the country. I support the amendment.
I must reject this amendment. Section 8 subsection (7), reads:
The board shall not export gas or construct a pipeline, except pursuant to and in accordance with a consent given by the Minister under this subsection and the Minister shall, if he thinks fit, when giving such a consent attach conditions to the consent, and in addition to the foregoing, where the consent relates to the export of gas, the consent shall be given by the Minister only after consultation with the Minister for Industry and Commerce.
This subsection allows, if necessary, for the liquefication of gas. To write into legislation that any gas exported must be liquefied first might present tremendous problems in the future. For instance, there could be a situation years hence where small gas fields would be found at the edge of the Irish continental shelf. It might be more advantageous to sell that directly to the British in return for something else. To insist that such a field off the east coast of Ireland should first be brought to Ireland, liquefied and then exported would make it unnecessarily expensive. There is the further point that if very big gas finds off our coast were brought ashore and put into a national grid to serve the country. I would visualise that the pipelines would be extended up the east coast and on to Belfast. Acceptance of this amendment would mean liquefying the gas at the Border before sending it on whereas the obvious thing to do would be to extend the pipeline.
We are disappointed that the Minister does not propose to accept the amendment.
The Deputy should bear that last point in mind.
If we were in that fortunate position we should quickly pass amending legislation. If there is a large gas find off the south coast there would be tremendous pressure or encouragement to pipe that gas direct to northern France where they are seriously short of natural energy at present. We do not envisage the likelihood of piping gas to Britain because Britain has ample gas of her own. Though all the gas finds are in the North Sea, the British gas grid has now extended as far as South Wales, and other places on the west coast of Britain are being supplied through the national grid from the North Sea. There would be no question of our piping gas to Britain because she does not want it. We foresee a huge demand for gas in Brittany and Normandy and that there will be encouragement to pipe the gas from our southern waters to the French coast. We would like to avoid a situation in which a large quantity of gas would be pumped in untreated form into France because one of the great benefits of gas or oil finds is the value that can be added at home for our benefit. To sell the gas in an unprocessed form is not adding the substantial value that could be added. I appreciate the Minister's point, but we are trying to avoid the piping of gas from our southern waters to France in an unprocessed state.
In addition, there may be major gas finds off the west coast. The water off the west coast is very deep and the distance from the shore would be considerable. Apparently the most promising places are over 200 miles from the Galway coast.
There is the danger that the gas will not be brought ashore and will be taken away in an unprocessed form. I understand that it will be possible in the reasonably foreseeable future to establish a liquefication plant in the sea. This means it will not be necessary to land the gas from far out at sea. That, of course, would be within the jurisdiction of this State and would be subject to financial and other controls. Our concern is that none of our gas leaves our jurisdiction without maximum value being added to it. The direction in which it is most likely to go is towards France. We feel it should be liquefied on land or at sea and exported in tankers direct to northern France. It is very disturbing that the number of jobs arising out of this gas find off Kinsale is very small. The number of permament jobs being created is only 700 and that, unfortunately, is very small. We are anxious to see that the maximum utilisation would be made of it. I will not go into the whole question now of usage by the ESB but that is an example of underutilisation. We want to avoid the situation where if there were further fairly extensive finds in the waters of the southern coast they would be piped direct to France. We feel that it should be liquefied or processed in some other fashion if appropriate before it would leave our jurisdiction so that the maximum value would be added to it.
I do not understand what the Deputy's fear about direct piping is when the gas must be landed in this country under the terms and conditions and the licences issued by the Minister for Industry and Commerce. It cannot be exported directly by pipeline from a field off the south coast to France because the conditions of the licences issued by the Minister for Industry and Commerce say that anything found must be landed in this country. If the situation as envisaged by Deputy O'Malley were to come around in 20 years' time, any legislation that was there would then be looked at in the light of what would be most profitable for the economy as a whole. I subscribe to the point made by Deputy O'Malley that as much value as possible should be added inside this country for the benefit of the Irish people but from the point of view of employment a liquefication plant is very highly capital and quite small in employment.
There is no fear that except after full debate gas will be piped directly to France because that would mean that the terms of the licences would have to be changed. The amendment put down in relation to the increase in the capital of the company would diminish the chances of that debate taking place in this House rather than improve them. I feel that this amendment is unnecessary, that the powers under the licences issued by the Minister for Industry and Commerce ensure that all gas must be landed in this country and that the power in this legislation under section 7 means that only with the consent of the Minister for Industry and Commerce and myself can gas be exported in any fashion. I can attach any conditions I like to that so it is possible under the legislation to attach a conditions that it should be liquefied first. To add in the extra power saying that all must be liquefied may in certain circumstances be a bit restrictive and not leave all the options open and it is unnecessary because the power to attach conditions is there anyway.
As well as the reasons that we have given for liquefying the gas the Minister should seriously consider setting this in motion. If you take the Dublin Gas Company as at present constituted and the prices which they are compelled to charge for gas in this city, we have a situation now where the Dublin Gas Company are paying $160 a ton for naphtha and they will be forced to continue to pay this secula seculorum. Since the oil crisis it is quite obvious to everyone that the Dublin Gas Company are in dire straits. They will continue to be in dire straits. When you consider that the ESB can at the moment buy fuel oil on the open market at $60 a ton as against approximately $160 that the Dublin Gas Company are paying for naphtha. Surely if we are to be serious about the Dublin Gas Company, we should make provision for making natural gas available to them. The Minister on Second Stage said that the cost of piping this gas and setting up the infrastructure is overwhelming and so forth. We know from what is happening in France and other countries that it is quite feasible and viable to import natural gas and the only way you can import it at the moment is in liquefied form.
We said last week that we should seriously consider bringing it around the coast in small tankers for the benefit of the Dublin Gas Company. To do that we would have to liquefy it. Has anybody in the Department gone into the costing of this whole process? If we are serious about doing something about the Dublin Gas Company and the rises to which the people were subjected to last week, we have to eliminate the naphtha element which is the only element they have got for the manufacture of gas at the moment. At present it costs nearly three times the cost of fuel oil to the ESB.
We have an opportunity here to broaden the whole concept of our natural resources and start on the ground floor by getting the maximum benefit from a gas find such as this. By doing this we are laying the ground work for a further find. We should not be afraid to get involved in liquefying the natural gas whether modern technology will permit it to be done at sea or on shore. We would create more employment at the construction stage and surely we would create a number of permanent jobs afterwards when it was in operation. We cannot see any reason why the Minister will not accept our amendment. It sets in motion something that would be worthwhile and it ensures that there will be no further waste and that we will get the maximum benefit from the natural gas not only from the present strike but from any future strikes.
The Minister said earlier that he visualised a situation where we would send piped natural gas from a well of ours into Wales or somewhere and they in turn might pipe it from their area into our country. According to the Minister, you cannot pipe it anywhere unless it is landed on the shore so that argument, as Deputy O'Malley pointed out, would never arise because of how plentiful natural gas is in the North Sea and Britain has lots of it. We are ensuring that the greatest use will be made of the present find of natural gas and anything that is found in the future and our proposal is helpful in getting to grips with the present situation with the Dublin Gas Company which otherwise will go on and on and they will continue to be screwed by the multi-national oil companies for naphtha as has been done for the last three years with the result that the gas consumers in Dublin will have to pay the bills. We could really start doing something about this problem at the moment. Our amendment is a way of getting this business in motion. We believe it is a reasonable amendment; it is for the benefit of everyone and it should be accepted.
Another aspect which would create a further demand would be if we had a liquefying process in Cork or at Achill Point. It is sad to say that Irish Shipping Ltd. have not even one tanker in their whole fleet. I can visualise a situation where if the Minister decided to press ahead with liquefication we could well have Verolme Dockyard building a suitable tanker in order to transport the liquefied gas from Cork or Kinsale all over the country. The Minister should look at this aspect. We should start off here on a firm basis for the use of this most precious new source of fuel. The Government should be imaginative in their approach and decide now to put the emphasis on the liquefication of the gas and the carrying by tanker to the various parts of the country. The Minister will appreciate that Verolme Dockyard is very competent to build a type of tanker we want. We have something very definite here where we could use ships made in Cork to carry this fuel to other parts of the country. The Minister should seriously consider the acceptance of this amendment and what it could lead to as regards demand for the construction of even small tankers which could carry the liquefied gas. People will argue that we might as well use a maid to take the gas all over the country. In the last world war the allies had PLUTO, a pipeline under the ocean by which they carried petrol from England to France. That was done in war time; here we have a much different way of doing it. I want to impress on the Minister the need to take this amendment very seriously. Apart from what is in it, he should consider the great things it could lead to, even in the shipbuilding line.
Deputy Moore and Deputy Barrett have referred to the use of gas inside the State but in fact their amendment refers to the export of natural gas, that it shall not be done without liquefication. I have a certain amount of sympathy for this idea but as regards any conditions for the export of gas, the Minister in the future, after consulting with the Minister for Industry and Commerce, has all the power he wants under subsection (7) to deal with that situation. It may be right, as Deputy Moore and Deputy Barrett say, that the way to serve the Dublin Gas Company is to liquefy the gas and transport it by tanker. I think Deputy Moore would be wrong in suggesting that the tankers that carry liquefied gas would be the same as the tankers that deal with crude oil. They are totally different and very much more expensive.
I did not suggest that.
These tankers are very specialised. That would be one of the options for the use of further finds of natural gas but, as I said earlier all the options are being examined by Bord Gáis Éireann. It may or may not prove feasible but the power is in the Bill for the board to liquefy the gas if they wish to do so and to transport it by pipeline or by other means.
Here we are only talking about exports of natural gas and if we get to a stage where we have a surplus of natural gas, obviously the Government of the day would like to see as much value added to it inside the country as possible. If it is considered best to liquefy the gas at that time the powers are there under subsection (7) and conditions can be attached by the Minister. Therefore, I do not think the amendment is necessary.
I agree that potentially this can be done under subsection (7) but we cannot be certain that it will be done. We feel it should be written into the Bill whether as we suggest, by an additional subsection, or by some amendment or addition to subsection (7). How it is done does not matter greatly but we would like to ensure that it is done.
I agree with the Minister that under subsection (7) these conditions could be imposed but we have no guarantee that they would be imposed. I want to raise a query on one point the Minister spoke of earlier, about it being a conditions of all the licences hitherto issued that gas found under those licences would be landed here. I have not seen individual licences, only the general terms published, and I do not think that is so. It is not a matter of great concern, but the provision as I recall it is that the Minister can direct what is to be done with it.
I can give the Deputy the wording. It says that it must be landed except with the Minister's consent.
That is the point because some of the gas—hopefully —will be found in 2,000-2,300 feet of water 200 miles or more west of our west coast and there is no way within the next 12 or 15 years by which that gas can be landed other than by pipeline. It will have to be brought up into tankers and in order to be put in tankers it must be liquefied there because it is not possible to transport the gas otherwise. A technology of some kind of floating liquefication plant in deep water will have to be developed; otherwise, we shall not be able to make any use of the gas because it will not be possible to lay a pipeline to land either gas or oil from a point 200 miles west of Slyne Head in 2,300 feet of water. That cannot be done within the next 10 or 12 years unless some appropriate form of submarine technology is developed. I believe that is being worked on at present but the gas or oil will not be commercially recoverable, if they are discovered, for perhaps 10 or 20 years. This may be a minor point but it is one that must be borne in mind, that in the immediate future it is only finds of the type made off Kinsale Head where the water is very shallow—I think it is only 300 feet—and where the find is very close to the shore as it is there, only 30 miles, I think, off-shore, that commercial recoverability is on at the moment.
In considering this section, which lays down the powers of the board, as the amendment also seeks to do, we must think a good deal ahead and consider situations we can hardly envisage at present, the most important of which is that, hopefully, the really important gas and oil fields are not the little ones we now know of off the Cork coast but will be huge ones 200 or 250 miles west of Galway and Donegal. The technology that will be involved is totally and fundamentally different from what is now involved off the Cork coast. This Bill should look ahead as far as possible at this stage to that sort of situation which will be fundamentally different from that with which we are now dealing.
I accept largely all that Deputy O'Malley says. We are really looking into a very misty future in which we cannot see what will happen. Perhaps he is right. I do not know if the major finds will be off the west coast but what we are seeking to do here is to retain the control of the Minister for Transport and Power and the Minister for Industry and Commerce and of the Government over what is done with any finds of oil or gas off our shores. I agree we cannot see what will happen in the future and therefore, we should not excessively limit Ministers in future as to what will be done. We must see that the control is within these shores and that the people who discover the gas cannot do as they like with it and under the licensing conditions by the Minister for Industry and Commerce they must land it. After that, it is the Minister for Industry and Commerce, in consultation with the Minister for Transport and Power, who will decide what is to be done with it. If they allow exportation, it can only be exported subject to such conditions as are imposed by the Minister for Transport and Power. That would include perhaps, liquefication or perhaps something else will be developed in the meantime. We should not at this stage say, in relation to something that will happen in 20 years' time, that it must be done in a particular, confined way. We must leave it as open as possible so long as we ensure that we have the control here over what is being done. We should not say that in 20 years' time it can only be exported in liquid form when other technology may be developed in the meantime. We should leave it open to the Minister at that time to ensure that it can be exported only subject to the conditions he imposes. That may mean liquefication but we do not know at this stage. We should thus ensure that the control is tight for the Minister concerned and not tie his hands too firmly in the future.
We say, in our amendment:
...unless it has already been liquefied within the jurisdiction of the State or subjected to such other processing as the Minister for Industry and Commerce shall approve in advance.
We are not asking the Minister to accept an amendment which would compel the Government to ensure that it can be exported in liquefied form only. Our amendment is much broader, as can be seen from reading it. With this amendment we are making absolutely certain that the best possible use will be made of, and the maximum benefit derived from, natural gas finds whether they be at 200 feet or 2,000 feet. It may well be that it would be better business from the country's point of view to export some of this gas if it is a few hundred miles out at sea. It will also be to the benefit of the country to have whatever processing is necessary for its export carried out within this jurisdiction, whether that be at sea or on land. We must ensure that we reap the maximum benefit from natural gas. We are making absolutely certain of this. We are not asking the Minister to accept something which would compel any exporter to have it liquefied. We are leaving it open.
Then what is the point of the amendment?
The point of our amendment is to ensure that the greatest use is made of and the greatest benefit derived from this natural gas, that a situation will not arise where it could be piped away, as it is found, by any large company involved.
That is the point: that cannot happen.
But the Minister says that it is according to the terms of the licence. The Minister is talking about a licence. We are talking about legislation to make absolutely certain. There is an enormous difference between a licence and legislation. We are tying it down in legislation.
If this Bill is passed the legislation will be there to control the export of gas. Subsection (7) of section 8 says:
...and the Minister shall, if he thinks fit, when giving such a consent attach conditions to the consent,...
It cannot be exported without the consent of the Minister for Transport and Power, with the conditions attached, after consultation with the Minister for Industry and Commerce.
We make the point that it would be preferable that the Minister did not even have the power to consent to it being exported in an unprocessed form.
He has the power under the Deputies' amendment.
unless it shall have been liquefied or subjected to such other processing as the Minister shall approve.
It is subject to such other processing as the Minister for Industry and Commerce shall approve in advance.
It is the same as set out in paragraph (c) of subsection (3) of this section—" liquefy or otherwise prepare, process or treat natural gas,..."
That is one of the powers embodied in the section, as the Deputy said: that the board can do any one of those things. But we are talking here about the export of gas and, under paragraph (c) of subsection (3) they can liquefy the gas. That could be one of the conditions to be attached in the future to any futher finds.
I do not see the point in the amendment. I do not think it is necessary or that it improves the Bill. All the powers that the Deputy rightly seeks to have in the hands of an Irish Governemnt are in the Bill already. What I would be concerned about is that the people who discover the gas should not be the people to decide what should be done with it. That should be in the hands of an Irish Government, whoever may constitute that Government.
The Minister's amendment on this section has been passed. This is an important section inasmuch as it sets out in some detail the functions of the board. There are just a few general observations I should like to make with regard to their functions. I have read this very long section as carefully as I could. It seems to me to give power to the board, if it sees fit, to construct a gas grid in this country and to deliver gas to the cities or larger urban areas if it believes it to be economic and so on. Obviously this will be very costly. If I am not mistaken, the current estimate of that cost is approximately £120 million.
The Deputy can pick any figure he likes ranging from £10 million to £200 million, depending on whichever expert he consults.
A fairly authoritative figure at present is £120 million. That is not to say it will not be more if and when the grid is built. But so far as it can reasonably be guessed at present, approximately £120 million is the figure, which is a great deal of money. There is no question about that. Unfortunately, the problem with which we are faced is that basically our population is too small; we are dealing with only three million people, when a country like Holland, much smaller in area, has perhaps three or four times as many people to supply and can, much more economically construct a grid of this kind. We must face the situation that we have a terribly sparse population. For that reason the economies of a national gas grid are more questionable than they would be in a more compact or thickly populated country such as Britain where it is clearly very economic.
There is an alternative method of supplying the domestic market— Deputy Moore spoke about this already this morning—that is, the construction here of a liquefication plant and the use of small, purpose-built tankers to go around to cities—assuming it was built near Cork Harbour— and deliver the liquefied gas to the municipal undertakings in, say, Dublin, Limerick, Galway, Dundalk and such other cities as would be in a position to take it. Apart from the construction of a grid and its incidental costs, it would be necessary to adapt existing appliances in existing municipal supply areas, the cost of which would be fairly hefty. I do not know what would be the exact figure for that but obviously it would be a significant one.
What we would have wished to have seen at this stage is a fairly authoritative costing of all possible domestic uses of natural gas put before the House by the Minister and the Government. That is not an unreasonable request. The Minister told me a few minutes ago, quite truthfully, that when one tries to estimate the cost of constructing a national gas grid here one can almost pick any figure from £10 million to £200 million, depending on whichever expert one consults. I am afraid that is basically the situation and it is a pity that that is so. We would have wished that the Minister would have come in here on a Bill such as this, in a debate on the Estimate for Transport and Power, or on some other suitable occasion, and said: "We have had a study carried out on our behalf. It would cost £X million, at current prices, to build a national gas grid; it would cost £Y million to adapt existing domestic appliances for conversion to natural gas; it would cost £Z million to manufacture a liquefication plant and build two, three or whatever number of tankers would be necessary to deliver it to the various cities, to the existing municipal gas plants." We would then be in a position to consider these various alternatives so that we might reach a decision as a House and as a country generally as to what would constitute the best value. Unfortunately, though, we are not in that position. We are at the beck and call of a myriad of experts whose figures vary enormously from one another. Few, if any of us, is qualified enough to decide which figures are right and which are wrong. This is a task that should be undertaken by the Department but it should have been undertaken before now. There is provision in some section of the Bill for the carrying out of an extensive detailed study but it is somewhat late in the day for us to be only starting that study now. We have known of the commercial availability of gas off our shores for the past three or four years and we are hoping to have some of that gas ashore within two years. The gas found up to now is committed but, in the opinion of many of us, not committed as beneficially as it might have been.
This section is very broad. It will not tie the board to any great extent but will enable them to adopt either of the alternatives I am talking of in relation to internal domestic supply. However, we should know where we stand in relation to these potential internal uses of gas. We should know what are the economics of the situation. There is no problem in so far as the technology involved is concerned. This has all been done in other countries. What may be economic in Britain and Holland which are densely populated compared with Ireland may not be economic for us. These are factors which would have to be studied not only by gas experts but by those concerned with the social aspect of the situation. It is proposed in the Bill to ask the board to initiate such studies but in discussing the Bill we should have available to us the sort of information which will be available after the study has been completed. We should know, for instance, whether we are to have a gas grid or a liquefication plant and delivery by tanker. Unhappily, we do not even know when that information will be available. This is a great pity.
I wish to emphasise to the Minister and, through him, to the future board, that, in performing their function, the board should go out of their way to try to utilise the gas in the way in which there is the minimum wastage and minimum loss of its thermal or calorific value. Unfortunately, the major use proposed up to now will cause a heavy wastage. The greatest benefit and the least wastage will result if, as is the case in Britain and Holland, the gas is piped direct into existing gas undertakings and municipal gas plants. Unfortunately, it is difficult to come down in favour either of a national gas grid or of a liquefication and tanker-delivery system since I do not know the economics involved in either operation and I am afraid that the Minister does not have this information either. However, I would urge him that, regardless of whether the task is undertaken by the board or by the Department, a study of the various alternatives should be carried out at the earliest date possible so that we might be in a position to implement as soon as possible whichever is the most beneficial system.
There is one matter of detail in relation to subsection (5) on which I should like to comment. Is the provision here not unusual? I have not seen the same sort of provision in legislation of this sort to date. I refer to the provision to specify in the accounts of the board any subscriptions made of more than £1,000 or which, in the aggregate, amount to £1,000. I am inquiring gently as to what exactly this is intended to cover. Does it refer to political contributions or to the sponsorship of races, for instance?
To take the last question first, the Deputy is right in saying that this is the first time for a provision of this kind to appear in legislation. The reason for it is that the Department of Finance are anxious that in any future legislation setting up any body of this kind a provision of this nature would appear so that the Department would be aware of what State bodies are giving money to apart from the normal activities for which they were set up.
Regarding the study the Deputy referred to, perhaps he did not spot the reference to this in my Second Reading speech where I said that I am arranging to have such a study undertaken. This study will be expensive, difficult and may take some time but I agree that both in the House and in the country generally we must take every step to ensure the most beneficial and economic use of any further resources. Those Deputies who have contributed to the debate commented that the Dublin Gas Company should be given either the existing or some future finds of natural gas. In this regard let us consider the quantities we are talking of. Everybody knows that the Kinsale gas find is very small by international standards although it means a lot to us. Small as it is, only about 10 per cent of it would be utilised to satisfy the demand for town gas.
As established at present, but this is because town gas is very dear and also very bad. Tens of thousands more people would be willing to use natural gas if it were available.
In England the expansion rate is about 11 per cent per year. On that basis it would take us approximately six years to increase the proportion of our find from 10 to 20 per cent for domestic use. This would leave us with a huge quantity for which to find use. Naturally, it would be our wish to get the benefits to the economy as quickly as possible so in the case of the Kinsale find we were faced with finding quickly big users. In the event of future finds this section of the Bill is broad enough to allow the board make what they consider to be the best use of the gas but they should not do that without first having a study undertaken as to the economics of the various possible uses to which the gas could be put. In the event of a liquefication plant, for instance, the cost of the big tankers that would be required would be enormous. We are talking here about natural gas and I am not sure if the technology to liquefy this is available. It is going to be enormously expensive and perhaps would not work out, but every option for the use of natural gas in the future is going to be looked at under the headings I referred to in the Second Reading speech.
With regard to the other points referred to, I accept that this must be a matter of concern to everybody in the country, that there should be as much debate as possible over the various uses of natural gas before a decision is taken. Any option or series or combination of options that might turn up in the future for the use of natural gas are allowed for in the subsection. The Minister and the board in question would then have the right to choose between those various options in the future and hopefully there will be a debate in this House either on my Estimate or some other form, and legislation on that.
Section 9, the following section, gives even further power to the Minister in this regard. In case there is anything omitted in section 8 the Minister under section 9 can take further power and invoke existing power to ensure that all options are broadened further to take account of any further work which may arise.
Before we leave this most important section of the Bill, we know it takes over the functions, liabilities and so forth of Bord Gáis Éireann Teoranta. We maintain that these examinations should have been initiated about two years ago or whenever it became reasonably certain that we were going to find gas. It is not such an insurmountable task, in our opinion, to go into the costings with regard to liquefying gas and bringing it from the coast by tanker to make it available to the Dublin Gas Company. There are three main factors involved, namely liquefying, the cost of transport and the adapting of appliances.
Taking the last one first, how to cost the adapting of appliances, this gas is to be made available in Cork city for domestic uses, so there must be a way of costing what is to be costed under that heading in Cork city. From that costing it should not be impossible to estimate what it is going to cost in Dublin city. We know Cork is not as big as Dublin, but it is a starting point.
Number 2 is the transport cost and tanker costs. This is the easiest of all to find out because they are already in estimates. I do not know if tankers for the transportation of gas are as plentiful as oil tankers. If they are only one per cent as plentiful it would pay to take them. So there is no cost problem where transport is concerned. Bord Gáis Éireann Teoranta should have done this long before now.
With regard to liquefying, again that is not impossible to cost. If Bord Gáis Éireann Teoranta wanted to do if they could have done it. I have no doubt that liquefication of natural gas is already taking place in other countries. In the Middle East gas is being exported in liquefied form into France. Surely costing is a further process they understand. To maintain that nobody can estimate it is a lot of codology, in my opinion. These things are already happening in other parts of the world.
By all these standards Bord Gáis Éireann Teoranta, through the Department, should have been able to apply this. They are in existence for about two years, and the only thing they have done in that time, as far as I can see, under their functions, which are now being taken over by this board, was to throw away 60 per cent of their natural gas to the ESB. The argument they swallowed was that they should do this in order to create viability out of the wealth they have in order to sell as much as possible and as quickly as possible. This is the argument put forward for giving this gas to the ESB. People must not lose sight of the fact that the board by giving this function to the ESB ensured the loss of perhaps up to 75 per cent of the thermal value of that natural gas. That is happening and, whatever is said about viability or about the price, one has to decide between quantity and money, and if you are wasting that percentage of what the ESB gets you cannot be talking of less than about 10 per cent of the total wealth coming into Dublin, possibly between 7 per cent to 20 per cent.
Of course it would make it more viable if you are balancing tremendous losses created against tremendous use created in Dublin for the benefit of consumers. How can anyone be persuaded that it makes the wealth more viable to use as much of it as possible immediately? Even some of the people writing articles can prove that they are basing their figures on diesel oil. We have to avoid the tremendous wastage which has been created by the forerunner of this board, which is an inescapable fact. This has happened and should not be permitted to happen, but we will come to that later.
We come to the costing for the Dublin consumer market and making gas available to the Dublin Gas Company for liquefication. I want to ensure it is quite possible and feasible to get those costings and Bord Gáis Éireann Teoranta should have had those long before now if they are capable of doing it. If they are offering it to Cork people it seems they must be able to estimate what the converting of appliances is going to cost. Certainly if we consider countries such as France who are comparable for transport of gas in liquefied form, it should not be difficult to find out this aspect of it. If this is going to be a long drawn out business my suggestion is that the Minister would consent to send Deputy O'Malley and myself to the Middle East where we can study this aspect.
I do not know where to start in answering all that. Most of it is emotional and bears no relation to the land in which the Government has to live. It may be one in which we would live if the Opposition were in power. Apparently the Deputy disagreed with the decision to allocate gas to the ESB and he refers frequently to how much study is done in making natural resources available, how much study he is doing, and what alternative, but he has in his think-tank to catch on——
I never mentioned it.
Bord Gáis Éireann Teoranta did not decide to allocate gas to the ESB. The Government made that decision, again on the basis of a report from the Department of Industry and Commerce long before Bord Gáis Éireann Teoranta was set up.
There were other questions besides economic ones. I do not accept that in the conversion of natural gas to electricity there would be a 75 per cent wastage, according to Deputy Barrett, or even the 60 per cent Deputy O'Malley spoke of. Even the Fianna Fáil experts cannot agree on what the wastage would be. It is a difficult complex question and if a person is a gas fan he will say the wastage is very high but if he is an electricity fan he will say there is no wastage at all.
This affects not only Dublin. Cork, Limerick, Waterford and I think Drogheda are affected. We must remember that we will still be using only 20 per cent of the output of this field and have to find users for the balance. In three years oil prices have quadrupled, affecting the prices of fertilisers and oil for industrial purposes. It is essential, therefore, in the context of our international payments, that the ESB should be able to use home produced raw materials. We should do everything possible to make ourselves self-sufficient in fertilisers. We can generate only a limited amount of electricity from hydro and peat sources and would have to depend on imported oil for many years ahead. In our own interests we should seek to lessen that dependence and to use indigenous sources to an optimum degree. All things were taken into consideration by the Government and subsequent to their decision An Bord Gáis was set up to come in between the customers to whom gas would be allocated and Marathon, the discoverer of the gas, to handle the contracts and to build pipelines to distribute the gas to the people to whom it would be allocated. The study made at that time agreed that that was the correct decision. It might not be correct in regard to a further find at another time but in regard to this one it was correct.
The Minister spoke of Fianna Fáil's battery of experts. We do not have any battery of experts.
I thought they had.
I am telling the Minister my own position.
Do Fianna Fáil not have a think-tank?
In some fields they use it. The Minister said we have been coming up with varying figures. I do not accept the Minister's figures. According to the Institute of Industrial Research and Standards the wastage of natural gas in its conversion to electricity is 70 per cent.
The Opposition will have an amendment later and we can debate the whole thing on it.
The Minister said it was essential to cut down ESB dependence on imported oil. What we have been suggesting is that we cut down the Dublin Gas Board's dependence on it.
The Minister has spoken about wastage in the conversion of natural gas to electricity. We will lose 78 million therms per year.
There does not seem to be much point in trying to preach to the unconvertible in this matter.
This section gives me cause for concern. Perhaps subsection (3) lessens the degree of concern because draft orders have to be passed by each House and therefore the changes cannot be put through on the quiet or without the publicity attached to public debate on them. However, the section is an unusual one. During the years there have been Bills of this kind setting up State boards and they have a lot in common, the limitations on the boards' functions being pretty well defined. If they want a change or an extension of their functions they must come here for legislation.
In this section there is a new concept in that the Minister may make an order extending the board's powers, duties or functions. The order would be made in draft form and would need the approval of both Houses, with which I concur, but in view of the wide range of section 8 it would be preferable if this section were extended so that the Minister would have to come back and legislate again. I agree that what can be done in subsection (3) is a type of legislation but it is not legislation proper. I am sure the Minister will produce some old Act from about six years ago——
Twenty-six years ago —the Transport Act, 1950.
I hope the Minister is not coming in here holding out CIE as being a good precedent to follow because I do not think we would find any aspect of their operations worth copying in this or any other undertaking. I am not opposed to the section but if Deputy de Valera were here he would be very eloquent on it because it proposes the kind of thing that gets under his skin. This is Parliament giving away to a great extent its functions in relation to an important public matter—the limitations on the powers of a State board, and this is going to be a very important State board. It may not be that important when dealing with only a small gas field like that off Kinsale Head but, please God, in five or ten years' time natural gas will be a really significant factor in Irish economic life. It will probably be more important than the ESB is at the moment. It will probably be really vital to our economic, social and industrial life for decades to come and one wonders is it right that the Minister should have this kind of omnibus section under which he can confer additional functions on the board. Even though there is this subsection (3) requiring the approval of both Houses, if you take the analogy of an ordinary company, this would be like forming a company, setting out its powers in the memorandum in the usual way, and then it would be as if the Companies Act contained some sort of provision allowing the directors to extend the powers more or less off their own bat.
They would have to go back to the shareholders.
To the shareholders. At the moment there is a way of doing this but it is a very laborious way and properly so. You have to publicise the changes you propose to make and get the approval of the High Court sitting in public. I suppose one can draw some kind of analogy here but one wonders if section 9 is necessary when section 8 is so wide ranging. If it is necessary to change the functions of the board in some significant way because of things we cannot foresee at the moment, like a major find in deep water off the west coast, would it not be better to come back to the House in the ordinary way to amend the Act rather than have the functions changed by way of ministerial order subject to approval?
The analogy the Deputy draws is not quite accurate. If any change is being made the Houses of the Oireachtas must be consulted and any order made must be laid before both Houses and passed by both before it can take effect. Section 8 gives the board very wide powers. It is possible the board might wish in future to become involved in exploration for and exploitation of natural gas and section 9 is designed to cope with that situation and with what is now, perhaps, unforeseen. Deputy O'Malley says, hopefully, this will be one of the most important boards in the country if there are further finds. Here we are dealing with something totally new. We have no practical experience. Anything we have learned we have had to pick up around the world. Naturally, there may be something we cannot foresee now which will have to be catered for in the future. In that eventuality the Minister, if he wants to extend the powers of the board, must come back to this House and to the Seanad and get their agreement, giving his reasons for looking for whatever extra power it is for the board.
Am I right in thinking that the formula used here is that in the Electricity Act of 1927 and would be likely to be interpreted in the same way?
It is the usual provision in other State-sponsored bodies, such as the ESB and CIE.
Unfortunately, it does not operate in practice as far as CIE are concerned. The concept involved in this particular section is important. In recent years the pricing policy of the ESB has led to a great deal of discussion. When one reads the debates that took place on the 1927 Act one realises how significant the ESB subsequently became and one wonders why the-powers-that-were did not go into the matter more deeply at that time. I can see these debates being read 30 years hence when Bord Gáis Éireann has become extremely important and I can imagine its financial policy being discussed.
There is the difference that the ESB cannot make a profit.
This board can?
Subsection (e)—"it earns a reasonable return on any capital it employs".
The phrase used here "taking one year with another" is, I think, also used in the case of the ESB. Can the Minister tell us how that phrase is likely to be interpreted? Will it mean a period of two or three years or a longer period of five or six years because there could be quite sizeable discrepancies from year to year?
There could. If the Deputy looks at section 11, it provides:
The Minister may, from time to time, with the consent of the Minister for Finance give the Board such general directives concerning the pricing policy as to the sale or supply of gas or the financial objectives of the Board as he considers appropriate.
I visualise the major capital investment made in the early years of the board. The capital investment for the Kinsale find would be made in the early years and the revenue would accrue over 20 years and so the interest on the capital should be a charge on the revenue over the 20-year period and it would balance in that sense. Section 11 makes it looser than the corresponding section in the ESB legislation. I do not think the Minister has power in that case to give the board directions in financial matters but in this case the Minister for Finance can allow the board to spread its charges over a much longer period than is the case in the ESB. In the latter case I believe they must earn every year what they spend every year.
Subsection (a)—"including all charges properly chargeable to revenue"—would, of course, include the payment of interest on capital borrowed. Does it also include payment into a sinking fund to redeem the capital borrowed? I am not now talking about the interest element.
About amortisation. The ESB have to do that, but the section here is more loosely worded so that Bord Gáis Éireann need not do that. It would be a matter for the Minister for Transport and Power, with the consent of the Minister for Finance, to decide how exactly the capital borrowed should be repaid.
I do not want to make any great point about it but you could have a situation where they would be forced by the direction of the Minister to repay the capital in three or four years. My point might be more relevant on the next section but, if they were compelled to do that, the price of gas would be forced up artificially and this is something that gives rise to concern.
It is to avoid that these sections are in. That is what happens in the ESB. They have to do it every year and this forces up their charges. They have to repay their capital in a limited period and that forces up the price artificially. It is to avoid that situation these sections are here.
In the normal commercial way the plant for which a company borrowed money would be depreciated over a period of 15 or 20 years. It would be a longish period and the capital would be gradually paid into a sinking fund over that period. My point is that the Minister for Finance, in order to get back his capital, could force the board to repay in four years and the price of gas would be shoved up artificially. One can envisage this happening in bad economic circumstances like the present. The figure here is £25 million. We believe that will be inadequate but, assuming £25 million is borrowed from the Exchequer and given to Bord Gáis Éireann, the Minister for Finance of the day might be caught for money for capital development and force the board to repay the borrowing in, say, four years, when the normal commercial period would be 15 years and I suggest this would force up the price of gas artificially. Sections 10 and 11 are very broad in their terms of what they will allow. I suggest they could allow that kind of situation which would be undesirable.
The board will not be borrowing from the Exchequer, even though they could, but on the ordinary commercial market. They would write into their balance sheet depreciation, I suppose, at the rate at which they got the loan. If they got a 12-year or a 15-year loan they would write 8 per cent of whatever it is into the balance sheet. The Minister for Finance would then instruct them to write that off over four years. He would, in effect, then be borrowing from Bord Gáis Éireann. The amount between the time he insisted it be repaid and whatever length of time they got the loan for. That would be of no benefit to any Minister for Finance unless by pure chance the times happened to coincide, in a particular year. He might develop a policy to do this but it would be one which would only repay him after he got the loans through at the end of whatever period he decided, whether it was a three- or four-year period. I do not believe this is a very real problem.
I move amendment No. 2 b:
In page 8, subsection (2), line 38, after "direction" to add "provided that not more than 25 per cent of such profits in such a year shall be applied for the benefit of the Exchequer other than payment of advances or interest thereon.".
Subsection (2) of this section says:
The Minister may, from time to time, with the consent of the Minister for Finance direct that the profit of the Board in a year specified in the direction shall be applied in such manner (including application for the benefit of the Exchequer as is specified in the direction.
We put down this amendment in order to limit what the Minister for Finance could take to 25 per cent. It is very important, if we are serious about using the gas, that we provide low cost energy, where possible, and where it can be utilised. In view of past experience with this Minister, the big taxation put on petrol and also the last budget when 2p across the board was put on all oil products, those taxation measures have had a very serious effect on industry and other users of oil.
Those taxation measures are a far greater burden on industry than anybody anticipated at the time of the budget. At that time people are usually concerned about how much taxation is put on liquor, tobacco and the other hardy annuals. This type of budget taxation has had a very serious effect on industry. It is making industry far less competitive. It is now estimated that this is costing industry approximately £38 million.
We are attempting in this amendment to limit any type of action that would be detrimental to gas users in the future. Low cost energy is a very important asset to any country for employment and everything to do with the gas. Gas in England at the moment is providing low cost energy. Now the electricity authority and the coal board over there find they cannot compete against it. They have been lobbying the Minister concerned to put 20 per cent or 40 per cent taxation on natural gas in order to permit them to compete. We believe that is the wrong approach. The more low cost energy we can provide and can continue to provide, the more beneficial it will be for every one concerned and the country as a whole.
There have been many hidden measures in recent budgets. A rake has been taken off fuel. This has had a dreadful effect on the economy, particularly the industrial sector. We put down this amendment in order to prevent situations like that getting out of hand. We want to limit the Minister for Finance to a 25 per cent take because we believe that this is a realistic approach to this problem. We know from experience in the last two years, where energy taxation is concerned, the effect it has had on the economy. We are attempting to remedy this situation in the future with particular reference to the use of gas.
I cannot accept this amendment. It would be wrong to limit the Minister for Finance or any Government Department in this way. Deputy Barrett quoted the case in England of the conflict between natural gas, the coal board and the electricity generating stations. If that happened here it would mean that one section of energy users would get a cheaper supply than another. I do not believe that is desirable. It would distort competition among various users. People using electricity as a source of energy would have to pay more than the people using gas, if this amendment were accepted. That would not be desirable. It would create a distorted market in gas, that because it was cheaper people would come away from using turf and electricity and try to get natural gas, which would increase the flow from the present and future fields and deplete our resources much faster.
There has to be a policy in the energy sector where one source of energy is not more advantageous to its users than another source of energy. The correct way to get the benefits from the use of all energies into the Exchequer is to give the Minister for Finance the power to take any excess profits in that regard and then use them in other ways for the good of the community, whether it be for social welfare benefits, the establishment of industry or something else. The correct thing in this case is to give the Minister for Finance the right to cream off those profits and put them back into the economy wherever the need is greatest. Deputy Barrett proposes in this amendment that the benefit of all gas in the economy should go to gas users and not to electricity users, road users, social welfare recipients or anybody else except inasmuch as they would use gas.
The Minister has made the situation very clear in what he has just said. What he has said is extremely important and we should pause to reflect on the significance of it. The Minister has said that the Minister for Transport and Power in Ireland is now, in effect, agreeing to what the energy secretary in Britain, Mr. Benn, will not agree to: the imposition of taxation on natural gas at the request of the central electricity generating boards and the coal industry.
I am not.
Let us analyse this calmly. The Minister for Transport and Power is now doing what Mr. Benn has been asked to do and will not do. A conference is going on in Westminster at the moment between all the various conflicting interests. Mr. Benn is trying to do the best he can to keep them all under control and keep them together. There is serious conflict in Britain between coal and electricity on the one side and gas on the other. Gas is substantially and significantly cheaper.
There has been a considerable increase in the use of gas since cheap natural gas became available in Britain. The demand for electricity is not increasing at the rate at which it might have and the use of coal in Britain is declining. There are vast stocks of coal that should have been used, either by the electricity generating stations or domestically, that are not being used because they are being replaced by an alternative, cheaper and more efficient form of energy in natural gas, of which Britain is fortunate to have an abundance at the moment. The Minister will have to reflect on all of this. What he has said has been very important. He has said he regards it as wrong that one form of energy should be cheaper than another form.
That is not what I said. I said the effect of the amendment would be to have one form of energy cheaper than another.
That is right—to ensure that it would be kept cheaper. Our amendment certainly sets out to do that, because gas is basically cheaper than electricity. Some 64 per cent of our electricity is generated from oil and oil is now expensive; it is three or four times more expensive than it was three years ago. Electricity costs and charges have increased enormously and it is now very dear by European standards. We have a certain amount of natural gas-not a lot, but enough for certain purposes. For the first time we have a cheap source of efficient native fuel. We have had turf for many years but it is not the most efficient of fuels. Our hydroelectric capabilities are limited because we have only a few rivers that are capable of being harnessed and all of them have been harnessed for a long time.
For the first time we have a new form of native energy. So far it is available in fairly limited quantities but, hopefully, it will be available in greater quantities. Clearly it will be much cheaper than electricity or any other form of fuel that may become available. If properly utilised—and Deputy Barrett has been making this case over a long period—it will give certain Irish industries a great chance that they have not had up to now. It is a benefit that corresponding British, Dutch, Belgian and West German industries are getting.
If the policy that is set out in section 11, and which has been enunciated with greater clarity by the Minister now, is followed, we will have the situation that the Minister for Finance will give directives to the board regarding the price of gas to be charged to consumers which will raise the price way above its natural and its necessary economic figure. It will bring it to a figure that will approximate roughly to the price of energy when purchased in the form of electricity or oil. We believe that is totally wrong. It is throwing away the advantages that the discovery of gas can give us.
The reason for our amendment is to prevent the price being forced up artificially or being manipulated in the way the Electricity Generating Board and the National Coal Board in Britain want Mr. Benn to do at the present time. He has not done this up to now and one assumes he will not do it. Our amendment, which would limit the percentage of the profits that could be applied for the benefit of the Exchequer to 25 per cent, would prevent the Minister for Finance of the day making a killing on the profits of the board. The Minister for Finance of the day could use this board as a tax gathering operation. He could raise huge sums by telling the board they would have to pay him 95 per cent of their profits. That could be a huge tax gathering operation but it would be at the expense of the Irish economy generally and the benefits of gas would be gone. We might as well as then be importing oil because it would amount to the same thing.
We have had two examples of the thinking of the present Minister for Finance in relation to tax gathering on energy sources. One was the sudden imposition in the House at the end of November, 1974, of an additional tax of 15p on a gallon of petrol. It was done on the grounds that we were cheaper than Northern Ireland, that that was not right and that there would be a leakage across the Border. The second example of the thinking of the present Minister for Finance in relation to his anxiety to raise taxation out of energy sources was the imposition in the budget introduced on 28th January, 1976, of an increase of 2p per gallon right across the board on all forms of oil and petroleum products that had never been subject to any taxation before. The oils included those used in factories and in industry, for central heating purposes and so on.
The Minister for Finance believes, in my view totally falsely, that energy sources are fair game for the raising of revenue and that huge increases and the imposition of entirely new taxes, such as the imposition of 2p per gallon last January, are justified even though they drive up costs and prices, fuel inflation in a real sense and create enormous difficulties for industry in particular.
If this amendment is not accepted, whereby the Minister cannot take out of the board more than 25 per cent of the profits, we will have a situation where the Minister who can control, in the overall, the financial policy of the board, the pricing policy of the board, will seek to make Bord Gáis Éireann maximise their profits in order that he can get more from them for the Exchequer. In effect, there will be taxation on natural gas and we will be throwing away the benefits which would have accrued to us from this very fortunate discovery and hopefully future discoveries.
Natural gas will not be the cheap native source of efficient energy we expected it to be. It will be a form of energy the price of which will be artifically driven up by the directions given under section 11 by the Minister for Finance in order that the Exchequer will benefit to the maximum degree. While these may be called profits under section 11 of the Gas Act, 1976, as it will be, in effect they are taxation. It would be the same as if the Minister were to come in here and move a Financial Resolution providing a tax of 10p per therm on natural gas. I am sure the Minister sees that. It comes to the same thing. It does not matter to the Exchequer if the £50 million a year which, perhaps, may be made out of this——
The Deputy is answering his own point.
——comes in as excise duty imposed by the Minister on natural gas or comes in under the name of profits. The principle there is wrong.
The net result is the same.
The Minister for Finance could not contemplate putting a tax on natural gas to drive up the price but, in effect, he is doing that here. If he will be able to ask for an unlimited percentage of the profits, 90 per cent or 95 per cent or whatever is left after the various charges have been paid, in effect he is putting a tax on natural gas and he is driving up the price. The Minister has expressed it in this way but our amendment which would prevent that happening would have the effect of keeping one form of energy cheaper than others. That is precisely the point. It would.
It will be a tragedy if, after all this long waiting, we land our natural gas and find it is costing the consumer the same as the ESB's extremely dear electricity, or the Arabs' extremely dear oil. There is no benefit to the country. There is benefit to the Exchequer. There is no benefit to the economy. It will be totally wrong, in my view and in my party's view, if the Minister for Finance is able to force the board, under these directives, to adopt a pricing policy, a financial policy, which will enable the board to earn very big profits, but those profits will be creamed off by the Exchequer. This will be the same as if he came in here and moved a financial resolution imposing taxation on natural gas. I do not think he would do it in that form because there would be an outcry if he sought to do it. In effect he is doing it here.
We are seeking to limit what he can take to 25 per cent to try to ensure that the price level of energy will not be fixed by the ESB, or by the Arabs, and that the price level of natural gas at least will be fixed at its natural level. In other words, the cost the board have to pay for the gas to Marathon, or whoever brings it in, plus the current cost of the equipment and plant which the board have to provide, plus some reasonable figure to cover their overheads and give them some reasonable surplus in order that they will be self-financing in the long term.
They are the factors which should govern the price of natural gas. A comparison with electricity, and an effort to bring the price of natural gas up to a level approximating that of electricity, is wrong. It will diminish to an enormous extent the value of this find for us. It will mean industry will not have the advantages it would have had. We will, of course, have the advantage of money going into the Exchequer but we will have put ourselves in the situation which the British Government have strenuously resisted over the past number of years. Up to the present Mr. Benn has continued to resist the urgent request of the electricity generating boards and the Coal Board to do something of the kind being done in section 11, that is, to force up the price of natural gas to an artificially high level in order that electricity and coal could better compete with it. Mr. Benn and the British Government over the past number of years have resisted that for obvious reasons. I believe they were right. We should resist it here too. It would be disastrous not to resist it. This is a very fundamental point. This goes to the root of energy policy. We should think about it and think out what the long term consequences will be.
It is pretty evident—and I want to draw the Minister's attention to it— that the logic of what he has said is that gas will be as dear as electricity, and electricity and oil will create the price level for energy generally. The Minister says otherwise we would have a kind of two-tier price system and that gas would be down here and electricity and oil would be up there. That is the whole point in my view. That is what we should have. That is why we have a public board getting in all the gas, being the only group entitled to buy the gas, buying it on behalf of the Irish nation and saying: "We have so many million cubic feet available per day. In the national interest we will allocate some to A, B, C and D. We will not allocate it to those who will pay most for it".
That is the point in setting up this public board. If the gas is to be allocated to A, B, C and D and each is to be told: "You will pay the full economic going price for energy established at the moment by virtue of the price of oil and electricity". that gas will be of very little use to them. This is extremely important. I urge that, unless this amendment in Deputy Barrett's name and my name is accepted, that will be the situation and, if that is to be the situation, the whole ball game will be very different from what many people thought it would be.
I wonder does Deputy O'Malley realise what he is proposing. Does he see the effect of what he is proposing? We have one gas find. If we have another and a national grid is established serving Dublin, Cork, Waterford and Limerick, he is saying to any industrialist: "Do not go to Mayo or Galway because you cannot get natural gas there and you will be disadvantaged. You will have to pay a high price for your energy. If you stick to the already established centres you will get it cheap and you will blow them out". That would be the end result of what Deputy O'Malley wants. It would be a crazy situation if we were to say the only areas which should develop because they have a cheap source of energy are the areas where natural gas exists. That is not what we want to do. We want to get these benefits for the whole economy. The Deputy quoted Mr. Benn. This argument is going on in England and I do not know what side they will come down on. The argument is not over here yet. We must look deeply at this matter. If we accept the amendment the argument is over. That is the end of it.
If you do not accept it, it is over.
There is no contrary view which can then be put. What are An Bord Gáis to do with the profits if the Minister for Finance can only take under 25 per cent? What happens to the other 75 per cent?
Reinvestment. If he can only take 25 per cent there is no incentive for him to keep up the profits. If he can take all, there is.
All Bord Gáis Éir-eann can then do is lower the price of natural gas. Some people would have a competitive advantage over others.
There are only two undertakings so far that are getting it.
So far, yes, but we must look to the future in all this, and we cannot deliberately disadvantage people; indeed we have been encouraging them to set up industries in parts of the country where perhaps there will not be natural gas. The Deputy is wrong in taking the example of England. The Netherlands, who have far more natural gas and are far more dependent on it than England, have always maintained a policy of an equivalent price for oil and natural gas. The Deputy says a future Minister for Finance could use this as a method of raising money for the Exchequer. A Minister for Finance would not need this for that purpose. If he wants to put an excise duty on natural gas he can do it. This merely allows the Minister to take these profits if it is desirable in the future.
If it is Government policy that oil and gas should have an equivalent price in the economy so as not to distort competition among industrialists, then the Minister can take all the profits, or, alternatively, if it is decided to give out cheap gas, the Minister need not take the profits. We are open to do either under this section, but under what Deputy O'Malley and Deputy Barrett are suggesting there is no choice. The gas would be sold cheaply giving a certain competitive advantage to industries who by chance are situated in the line of the proposed grid. That is not sound policy.
It is wrong of the Minister to say that Deputy O'Malley and myself are saying in effect in relation to this amendment that industry will not go to Mayo or other such places because of the low cost of gas.
Will not go to places where there is not a natural gas supply.
That is right, where there is not a natural gas supply. At Second Stage we said very clearly that natural gas should be made available in places like Limerick, Shannon, the west, Dundalk, Drogheda, as well as Dublin.
If you have not got enough, how can you make it available?
How can you have enough if you are wasting 70 per cent of it? This is the basis of the whole argument. You cannot have enough if the Government are throwing it away. First of all, we said it should be made available in these areas, and the purpose of making it available is to provide low cost energy. When the oil crisis came about I remember the Minister himself and other Ministers stating in this House that we would never have low cost oil or low cost energy again, that we were in the hands of the multi-nationals, and so we were. But now we are on the threshold of something that will permit us to have low cost energy, that will enable us to get out of the hands of the multi-nationals. We are trying to ensure that low cost energy will continue to be made available by what we propose in regard to the usage of natural gas and what we are now proposing in this amendment, limiting the take the Minister for Finance can get.
The Minister also mentioned earlier that our proposal would interfere with Bord na Móna turf production and other natural sources of energy. Let us take Board na Móna. Even at the previous rate of production and without the increase in production that is envisaged in the immediate future, the life of the bogs in Ireland was only 30 years. In the 30 years, without an increase in production, employment is being given to approximately 6,000 people, that is at least an expectation of life employment. Therefore turf is the commodity that would be hit.
The ESB have some hydro-electric schemes, a very small section of their activities. They are mainly dependent on oil. In England there is the Coal Board, a very powerful lobby, far more powerful than Bord na Móna could possibly be here, and they have not been able to persuade Mr. Benn to put on this taxation in order to bring up the cost of gas. If the Minister puts on excessive taxation on low cost energy such as natural gas, if properly utilised, then it might have some affect on Bord na Móna. The people the Minister is really helping are the multi-national oil companies. He is helping them to maintain their prices by keeping up the cost of gas which is now available to him.
The multi-nationals are the people who really profited from the oil crisis, but we could do nothing about it. Now we are in a position to do something about it, and in order to ensure that we continue to do something about it we put down this amendment to protect gas users by keeping down the cost of energy from natural gas. By this means the multi-nationals would be made to compete. This is a serious matter for the refineries and the multi-nationals because the price of fuel oil is falling. There were instances recently in Britain of a price war because of competition from other continental oil companies within the British market. Is this not something that would make these people who are making massive profits each year bring down the cost of what they are selling? Is it not a good thing that we can ensure that they will bring down the cost of the energy they are providing from oil?
I fail to follow the Minister's argument. What is wrong with using this natural gas in areas in the west as against electricity? What is wrong with providing low cost energy? Why should it be left open to the Minister for Finance to ensure that the cost of gas would be kept up to the same price as the cost of oil, benefiting nobody more than the multi-national oil companies. Britain has refused to impose taxation on natural gas, and this is affecting coal, which is a very big industry. What are we afraid of affecting? We are afraid of affecting the oil companies. That is what it amounts to. They still have to sell fuel oil to the ESB. The more low cost energy we provide the more industries we shall have and the more competitive they will be.
Again I appeal to the Minister to accept this amendment, because it ensures low cost energy at last without reference to the multi-national oil companies.
I cannot accept this amendment. It would defeat the whole purpose of the Bill and would mean that if there are no other finds of gas in this country, any industry that ties up the Cork Gas Company has an advantage over an industry anywhere else in the country. That is not what we are trying to achieve. That is the effect of what the Deputies opposite are proposing. This section allows the Minister for Finance to take off profits, if necessary. It may be that the national policy will dictate what the Opposition want, that we will say, "to hell with everybody else; we have only this one find of gas and we are going to sell that at a cheap price". That is what has happened and NET and the ESB got the advantage at this cheap price.
I do not understand Deputy Barrett's allegation that the multi-nationals are going to benefit from this. The price has been fixed already for the find of gas we have had. That has been bought and nothing can interfere with that now. It has been purchased by BGE at a price and if huge profits accrue to BGE they will not find their way back to Marathon or anybody else, they will be halted in BGE and to the advantage of Net and the ESB. It may be that we will decide if there is a further find of gas off Donegal to pump the whole lot into one industry there and not give the benefit to anybody else; that we will decide for the national benefit that an industry there should have it cheaper because they are not competing inside the country and they will have no advantage over other industries in Ireland. It may be that we will decide to give them the gas at a special price so that they can build up their industry but if this amendment is accepted we would be prevented from doing this. The amendment proposes to remove from BGE the power to decide that there should not be unequal competition between industries. That is not what is desired but would be the effect of the amendment if passed.
I do not wish to prolong this argument but the matter is very important. I put it to the Minister that he is putting the situation wrongly. He postulates the possibility that there will be no further finds of gas. That is a possibility although we hope it will not happen. In the event of there being no other finds there would be no question of anybody going to Cork Harbour, as the Minister said, to plug in there to a cheap source of power. The Kinsale Head field is committed.
I did not say Cork Harbour; I said the Cork Gas Company.
That field is committed, and wrongly committed in our view because the ESB are getting a lot of it. The ESB are getting about 60 per cent and NET are getting about 40 per cent with a dribble going to the Cork Gas Company. There is no more available and I do not see what the Ministers' argument is because there is nobody else who can use it.
The effect of the Deputy's argument would be that the Cork Gas Company would be getting a cheaper form of energy than the Dublin Gas Company or the Limerick Gas Company and, therefore, highly intensive industries would see that the gas is cheaper in Cork than in Dublin or Limerick.
An industrialist with a high energy intensive industry would not be able to run that industry on the dribble being made available to the Cork Gas Company. Presumably, that is being made available for domestic purposes. They are supplying domestic consumers at present and, possibly, they may in some small way supply industrial consumers but they would not be able to make any significant additional quantity of energy available to anybody, industrialists or otherwise. The Minister is taking a kind of situation that cannot arise. The gas from Kinsale Head is, rightly or wrongly committed. We may not agree with the way it was committed but we must face the fact that it is committed. If there are no other finds the problem will not arise.
I should like to come back to the fundamental point here: The Minister for Finance has power under section 11 to give directives as to the pricing and financial policy. There is an incentive for him to force the board to make huge profits in order that he can take the whole lot. Fianna Fáil think the board should not make huge profits because if they make such profits it will be at the expense of driving up the cost of natural gas to approximate to the cost of other forms of energy. There is no competition with the existing imported forms of energy because all our oil is imported and 64 per cent of our electricity is imported. As Deputy Barrett said, the price structure is now basically fixed for oil and, consequently, for electricity by the multi-national oil companies.
Down through the years, particularly since 1973, we have had no chance to break the ring. We could not do it because our native energy is limited. We have a very small amount of hydro-electric power and we cannot get any more because all our harnessable rivers are harnessed and they are very small. Turf is not a great source of power. It is not a very efficient form of energy and is expensive. It has only become worth while for Bord na Móna to expand as they are now doing because of the increase in oil prices. They would not be expanding if there had not been the huge increase at the end of 1973 because turf is not an efficient fuel. For the first time we have something under our control that will help us bring down energy prices. We can make our own gas compete with Esso, Texaco, Shell and others. Instead of saying that we have an efficient source of native Irish fuel which we will sell at a lower cost than imported oil and electricity we are increasing the price of that native efficient fuel to the price level fixed by the multi-nationals. We are not competing with them and we are throwing away the first and only chance we have had to break the ring that exists. We will have no competition because we will continue to let them call the tune. That is wrong and we are throwing away the benefits of this find if we permit the Minister for Finance to drive up the price artificially by directing the board to make huge profits which go into the Exchequer.
I have no objection to the profits going into the Exchequer. Naturally, it is the place where they should go but there should not be an incentive for the Minister to maximise the profits. The Minister should desire, in the national interest, that BGE should make a moderate profit on the basis of what I have said, that the profit would cover the cost to them of the gas, the cost of plant and installations, capital repayments and day to day running expenses. The Minister can take some of the moderate profits, if he wishes, but there is an incentive under this section for the Minister to drive up the price and let the multi-nationals call the tune again. That is wrong because there is no benefit to Ireland.
It is wrong for the Minister to say that by keeping the price of gas down to its natural level we are excluding certain areas from industrial development. The Minister might as well say that because it is not feasible to put supply into certain areas they are being discriminated against.
They would say that.
One cannot start a major industry in a remote corner of the country where the cost of putting in the power would be enormous. People do not start huge energy intensive industries in desperately remote places for that reason, unless they have a local supply of power beside them. That was always the situation but the Minister is bringing in a red herring. If we have a national gas grid, and I hope this will ultimately develop, all the major urban centres, and anywhere along the line of that grid, will have natural gas available. Most parts of the country would be able to develop industry based on natural gas. There are many industries for which natural gas is not suitable and it would be no advantage to them to have natural gas, even in the cheapest form. For example, if they use certain types of machines which can only be run by electricity it is obvious that they do not have to be near the grid; they can be anywhere. There are certain types of industry, such as NET, which are intensive users of natural gas and should get it as cheaply as possible.
Deputy O'Malley put the argument for the adoption of this amendment very well. We should aim at the establishment of a national gas company which would help to establish industries in various parts of the country. The Deputy also referred to the fact that there are many industries for which electricity is more suitable than natural gas. The Minister should raise his sights and plan not just for the find at Kinsale, but for any future finds in any part of the country. The only way this can be done is by forming a national gas company. We could then call on the expertise of semi-State and private industries to ensure that the national gas company would bring the benefits derived from finds of natural gas to the people.
I support wholeheartedly the watch dog attitude of Deputy O'Malley on this point. We do not want the benefits accruing from natural gas to become a source of income for the State. We want natural gas to be used for the benefit of the people. Deputy O'Malley also mentioned turf, which is not nearly as powerful as natural gas. The time has come when the Minister must consider all our natural resources, especially natural gas. He must ensure that it will not be confined to one small section of the country or to certain industries. We should hold out the hope to many struggling industries that they will benefit from this discovery. We must also ensure that the organisation set up by the Government is the most appropriate to ensure that the most effective use is made of natural gas. This is not being done at the moment but the amendment would go a long way towards putting us on the path to full development.
I have not a great deal more to say. I agree with Deputy Moore that Deputy O'Malley put his point very well, but I think he had a very bad point. Section 11 (1) reads:
The Minister may, from time to time, with the consent of the Minister for Finance give the Board such general directives concerning the pricing policy as to the sale or supply of gas or the financial objectives of the Board as he considers appropriate.
NET are not using gas as an energy source. They use it for the manufacture of fertilisers and so on. In that case, the Minister would give directions for a specific industry to get gas at a specific price.
Under subsection (4) he is precluded specifically from doing that.
There is a section in the ESB Act which says that no customer can be treated differently from another. There are separate charges for electricity for domestic use and for industrial use. This subsection is meant to prevent the Minister saying that, for example. Mr. O'Malley is to get gas cheaper than anybody else in Limerick. The Minister can and should advise, or direct if necessary, the board as to what price they will charge the industrial sector, providing, of course, that the price he fixes does not prevent the board from meeting their ordinary obligations.
Deputies opposite seem to fear that the Minister for Finance could use this as a means of gathering taxation. If he wants to put an excise duty on gas, he can; he need not depend on this. What the Deputies are doing will in my view, prevent debate on another gas find as to its use and as to pricing policy in the future and I do not think we should put ourselves in that position. The amendment in effect says that the gas must be sold cheaply in spite of all other considerations. That is not wise and I recommend that the House should not accept the amendment.
I move amendment No. 2c:
In page 8, after line 47, to add a new subsection as follows:
In giving directives under this section the Minister shall seek to ensure that the price of gas shall be kept as low as is feasible having regard to its cost, even if it is significantly lower than the price of other forms of energy.
The arguments we have used in our previous amendment apply to this amendment. It is imperative that we provide low cost energy and this is our big opportunity to do so, an opportunity that we did not realise we would have at the time of the energy crisis when we were all worried and talking about the high cost of energy and never again having cheap oil or cheap energy. We now have an opportunity to provide low cost energy. We should avail of it and not be afraid of some of the arguments put forward by the Minister about keeping it up to ESB standards and so on. The people who would be harmed mainly in the long term or the short term by the provision of this low cost energy are the big multi-national oil companies who did a wonderful job on their own behalf at the time of the oil crisis and continue to do so. This is an opportunity we should avail of to the full and ensure that it is availed of properly by introducing legislation. Despite very powerful lobbies England is refusing to tax natural gas further in order to make the coal board and the electricity authority more competitive. There is a seminar in progress in England at the moment. The chairman of the English gas board yesterday in a statement said that the argument that it is good social policy to do things which bring the price of gas up to the price of electricity for consumers, thereby depriving traditional gas users of a cheap supply of energy is a fallacious argument. We are talking not only about traditional gas users but about industrialists and others who would like to have access to low cost energy. By giving access to low cost energy, as against what they now have to accept from the oil companies, we will help our economy in every way. It will lead to expansion of industry, to more employment, and it will make industries more competitive in the export market, which is very important.
Many industrialists have suffered badly as a result of the taxation on oil in the last budget of 2p a gallon across the board, which nobody anticipated except possibly the Minister for Finance. We believe that the subsection which we are seeking to have included in the Bill, is fundamental to any future policy with regard to the utilisation of natural gas. The Minister refused last week to disclose what it costs but maybe we will find out in the near future. It is imperative to ensure that natural gas is provided at the lowest price possible, in order to get ourselves out of the grip we have found ourselves in for the last three years—the grip of the big oil companies. This is the opportunity to set about doing this, and that is why we have put down the amendment. We believe the amendment should be accepted.
With reference to the fact that the Minister for Finance increased the tax on fuel oil by 2p per gallon in the last budget, the ESB must be paying a ferocious amount of taxation every year which they pass on to the consumer. The price of natural gas must be kept as low as possible because of the rather crazy set up in relation to imported fuel oil. Companies like the ESB must include the tax on that oil in their manufacturing costs and the consumer pays it. The ESB has been given a very raw deal by the Government. Being the biggest importers of this type of oil, they pay the most tax. In the long run it is the consumer who must pay that penal tax. Many smaller industries here are suffering considerably from this imposition. The amendment should be accepted because it makes provision to stop price manipulation which will result in increased charges. This is a very simple requested. Unless the amendment is accepted we can see the Minister being tempted again to increase the tax on natural gas landed at Cork Harbour.