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Dáil Éireann debate -
Tuesday, 26 Oct 1976

Vol. 293 No. 3

Ceisteanna—Questions. Oral Answers. - Limerick Gas Price.


asked the Minister for Industry and Commerce if he will intervene to prevent the proposed 42 per cent increase in the price of naphtha being sold to the Limerick Municipal Gas Company in view of that fact that the cost of production of naphtha at Whitegate Refinery is well below the world price which it is proposed to charge.

This would be a question for the Parliamentary Secretary, but as it is put into this part of the Order Paper, I am taking it.

The cost of naphtha to the Limerick Municipal Gas Company is settled in accordance with the terms of a contract between the company and its suppliers. In accordance with section 21 of the Prices Act, 1958, and section 22D of the Prices (Amendment) Act, 1965, the prices involved in existing contracts, or any alteration to those prices in accordance with the terms of the contracts, are specifically excluded from the scope of the Prices Acts. There are therefore no powers available to me to intervene on the lines suggested by the Deputy.

Is the Minister aware that the alterations which the oil company concerned seem to make to the prices in this contract are not in accordance with the terms of the contract in the view of the Limerick Corporation? In these circumstances, can he not intervene in view of the fact that he is not precluded from intervening by virtue of the Acts that he cited?

If the Deputy tells me that they are not in accordance with these Acts I can certainly have the matter examined. The Deputy will have to realise that if what he has told the House is not in accordance with the facts it will not be possible for me to proceed further.

Is the Minister aware that the amount of naphtha produced at Whitegate as an inevitable and unavoidable by-product of the refining process is produced at a fraction of the cost that is being charged to the Limerick, Dublin and Cork municipal gas companies and is way below the world price, and that there are no other significant consumers of naphtha in Ireland? In these circumstances, would he intervene to see that the oil company concerned charges a reasonable figure, bearing in mind the production costs rather than world prices which they are now imposing from a monopoly situation on these three gas companies?

I regret that I cannot accept as fact the statements made by the Deputy. He suggests, for example, that the only use of naphtha in this country is by gas companies. This is not true. This country is in deficit in regard to naphtha and imports it at world market prices. What is produced at Whitegate is not sufficient for our purposes. It is used to produce town gas and as a blending component for motor spirit. The statement in his question that the cost of production of naphtha at Whitegate is well below world prices is completely unsubstantiated. Whitegate is a rather old-fashioned and, by current standards, under-capitalised oil refinery. I have no figures on the matter but it seems highly unlikely that the cost of production at Whitegate is below the world price. Whitegate has been providing portion of its production at a price less than the world price to this particular gas company. To make that up, as they cannot supply the total requirement for blending and gas production, they are importing at the world price. Hitherto they were in the position of losing substantially on every ton of naphtha supplied to that gas company. These are the facts as made available to me by my Department. If the Deputy has other facts and if we are wrong, I would be very happy to intervene. Unsubstantiated charges of this kind do not help. If the Deputy can provide me with hard information I would be happy to pursue this matter.

I would be very happy to provide that information very quickly to the Minister. Is the Minister aware that the output of Naphtha in Whitegate is 4.9 per cent of the throughput of crude but that the actual amount of naphtha that is sent out as such from Whitegate is 1.9 per cent of the throughput of crude? The reason for this is that the balance is reformed in Whitegate from naphtha into petrol because petrol is a more lucrative market for the oil companies concerned. In these circumstances, how can the Minister possibly make the statement that the oil companies are actually importing naphtha for the benefit of these municipal gas companies at a loss? If it were so, why would they reform into petrol the bulk of the naphtha which is inevitably produced as a by-product of the refining process at Whitegate?

We cannot debate this matter today.

I should like to read a sentence from my brief on which I based what I said and which I believe to be true. The position was that while Irish Shell Ltd. were supplying the Limerick Gas Company with naphtha at the rate of £49 and £91 per ton they were purchasing their own requirements of naphtha for use as a blender with motor spirit, at the rate of £74 per ton. If the Deputy can prove that wrong I will act. That is a quotation from my brief and I have to depend on the technical information given to me.

Is the Minister aware that the total output of Whitegate is 12,000 tons of naphtha and that the requirement for Limerick Gas Company is only 3,000 tons? Is the Minister further aware that one of the reasons quoted by the oil company in the Limerick case for raising the price is the posted price at a given point in the Middle East, something which bears no relation to the cost of producing naphtha at Whitegate?

I have no comment to make on that.

The Minister is getting his brief from the oil companies, I am afraid.

That is an improper reflection on civil servants.

It is a reflection on the Minister.

The Minister cannot defend himself.