asked the Minister for Industry, Commerce and Tourism the names of the members of the board of NET; by whom they were appointed; and the dates of their appointments.
Ceisteanna — Questions Oral Answers - NET Operations.
8.
The directors of NET are appointed by the Minister for Industry, Commerce and Tourism, after consultation with the Minister for Finance. The further particulars sought are in the form of a tabular statement which, with the permission of the Ceann Comhairle, I propose to circulate with the Official Report. Following is the statement:
Board of Nítrigin Éireann Teoranta
|
Name |
Date of original appointment |
|
Professor J.P. O'Donnell, Chairman |
15 December, 1996 |
|
Mr. G.T.P. Conlon |
1 April, 1980 |
|
Mr. T.J. Kiernan |
28 June, 1978 |
|
Mr. J.F. Carroll |
28 June, 1977 |
|
Mr. T. Finegan |
13 October, 1961 |
|
Mr. M.J. Walshe |
16 July, 1976 |
|
Mr. J.W. Good |
28 June, 1978 |
|
*Mr. D. Naughton |
22 June, 1979 |
|
*Mr. J.J. Byrne |
22 June, 1979 |
|
*Mr. J. O'Riordan |
22 June, 1979 |
|
*Mr. K. Wood |
22 June, 1979 |
|
one vacancy |
*Directors appointed in accordance with the provisions of the Worker Participation (State Enterprises) Act, 1977.
9.
asked the Minister for Industry, Commerce and Tourism the steps he proposes to take to establish the reasons for the size of the deficit in NET; the amount of money borrowed by NET in each of the last five financial years; the origin of the funds borrowed and the amount of interest paid, or due to be paid, by NET in each of those financial years; and the estimated funds required for the company this year.
The principal reasons for NET's losses in recent years have been (i) the effects of the delay in construction and the cost escalations associated with the company's ammonia/urea plant at Marino Point, County Cork; (ii) the company's inadequate equity and high borrowing level and consequent heavy financing charges; (iii) the impact of the continuing strength of sterling and the US dollar (particularly in the last quarter of 1980) on NET's substantial foreign currency borrowings; (iv) the high depreciation charge associated with the Marino Point plant; (v) changes in production technology which have made the company's involvement in the manufacture of phosphoric acid and compound fertilisers at Arklow unprofitable resulting in increasing financial losses at the Arklow plant; (vi) the general depression in fertiliser price levels since the 1973 oil crisis; and (vii) overmanning and high labour charges in many of the company's operations. In addition, NET's losses for 1978, 1979 and 1980 were also influenced by the write-off of substantial losses associated with NET's Arklow Gypsum plant and the effects of a four months strike at the Arklow fertiliser plant in 1978-9.
With the permission of the Ceann Comhairle, I propose to answer the Deputy's questions relating to NET's borrowings and interest payments in a tabular statement to be circulated with the Official Report, showing the borrowings outstanding at the end of each year.
As regards the estímated funds required for the company this year, capital repayments amounting to approximately £50 million—based on exchange rates prevailing at 31 December 1980—will be required to be made by NET in 1981. The level of additional funds which will be required in 1981 will depend on the company's financial performance this year.
Following is the statement:
NÍTRIGIN ÉIREANN TEORANTA
Based on Foreign Exchange Rates ruling at 31st December in each year
|
Borrowings at Year End |
1980 |
1979 |
1978 |
1977 |
1976 |
1975 |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Short-Term |
14,510,000 |
29,688,851 |
158,256 |
6,133,838 |
5,829,812 |
8,846,581 |
|
Bridging Finance |
42,160,000 |
— |
— |
— |
— |
— |
|
Bank Syndicates |
115,620,000 |
89,451,209 |
62,500,000 |
37,500,000 |
— |
— |
|
European Investment Bank |
13,510,000 |
15,498,800 |
17,495,787 |
17,318,824 |
14,243,551 |
— |
|
Export Credit Guarantee Dept. |
14,530,000 |
15,423,236 |
15,600,000 |
10,997,400 |
7,720,899 |
— |
|
Term Advances |
2,650,000 |
3,884,280 |
11,236,903 |
7,223,452 |
10,225,057 |
14,379,179 |
|
Central Fund Advances |
1,897,000 |
1,957,089 |
2,030,287 |
2,099,116 |
2,163,837 |
2,224,694 |
|
204,877,000 |
155,903,465 |
109,021.233 |
81,272,630 |
40,183,156 |
25,450,454 |
|
|
Interest Paid |
26,750,000 |
18,832,362 |
9,750,581 |
6,867,474 |
3,030,745 |
1,807,841 |
10.
asked the Minister for Industry, Commerce and Tourism the estimated profit or loss made by NET for each of the last five years; and the estimated profit or loss for the present year.
The information requested by the Deputy in connection with Nítrigin Éireann Teoranta up to the period ended 31 December 1979 is contained in the annual accounts of the company, which are laid before the Houses of the Oireachtas in accordance with the NET Acts.
I understand that the unaudited estimated loss for the year ended 31 December 1980 is over £55 million, which consists of a trading loss of £19.7 million — after taking into account financing charges of £26.7 million — depreciation charges of over £11 million, a book currency translation loss of over £18 million, in respect of the conversion of the company's outstanding borrowings in foreign currencies to Irish pounds at the exchange rates prevailing on 31 December 1980 and a write off of £6.6 million in respect of losses at Arklow Gypsum.
I would regard it as premature at this stage to give any indication of the estimated profit or loss for the year ending 31 December 1981.
Is the Minister in a position to indicate to the House the likely impact these disastrous figures will have on employment in the Arklow area and generally amongst NET employees throughout the State?
The whole question of the future of the industry is at present being considered. I think it is accepted that there will be job losses. I could not put a figure on them at present but there would seem to be an indication that there will be job losses.
In view of the fact that it was the Joint Committee on Semi-State Bodies who effectively unearthed and displayed to the public the full extent of the mismanagement of NET is the Minister in a position to indicate to the House whether the Government will go back to that committee before any final decision is taken with regard to the restructuring of or redundancies in that company? Will the Government seek the opinion of that committee who played such a critical role?
The Minister has made some public announcements in relation to the position of this company. He has had consultation with some experts in relation to the matter and I am sure that the recommendations of the Oireachtas Committee would have to be taken into account by the Government in considering the future of NET.
11.
asked the Minister for Industry, Commerce and Tourism the estimated original cost of the NET Marino Point plant; and the percentage increase in cost between the original estimate and the actual cost of the plant.
The Government took the original decision to proceed with NET's Marino Point plant on the basis of an estimated total cost of fixed assets of £42 million. However, when NET subsequently made allowance for costs other than fixed asset costs — for example, pre-production expenses and interest payments, working capital and cost escalations, the overall cost of the project was put at £63.5 million, which the company regard as the first detailed estimate. The final cost of the Marino Point plant is estimated at £137.3 million, representing an increase of 116 per cent on the estimate of £63.5 million.
Is the Minister aware that considerable, sustained charges were made on the trade union movement as being uniquely and virtually exclusively responsible for the escalation of costs of 116 per cent? In view of the answer that he has now given to the House, will he undertake to clarify through the GIS that the trade union movement and the workers on the site at Marino Point in no way contributed to the increased costs as they were charged with doing?
A number of factors have been mentioned in relation to the escalation of costs. I doubt if there is anything further I want to add.
Would the Minister not agree that, on the basis of the figures he has now given to the House, if anybody is to be charged with neligence or irresponsibility in the increase of costs, it is the management of NET when the estimate went from around £40 million as a sketch price to £63 million before the work started, and that labour on site costs can in no way be held responsible for that kind of mistake? Will the Minister, in some way within the responsibility of his Department, clarify that matter because workers in the Marino Point area have been blackguarded in this regard by informed opinion which has emanated as a result of lack of statistics?
It is true that the workers would not be involved in the figures that the Deputy has referred to.
In the light of the enormous escalation of costs, is the Minister satisfied that, because of the method of contract used and the giving of contracts and so on, every effort was made to get the costs down to a minimum?
Everybody is concerned about the costs. The Minister has made public comment on this. I cannot comment on the other part of the Deputy's question because I do not have any detail in relation to how the contracts were arranged.
12.
asked the Minister for Industry, Commerce and Tourism the estimated total foreign loans raised for NET since 1970; the currency denominations of these loans; and the estimated revenue loss as a result of the fall in value of the Irish pound.
The answer to the first two parts of the Deputy's question is in the form of a tabular statement which, with the permission of the Ceann Comhairle, I propose to circulate with the Official Report.
The unrealised book losses arising on the foreign currency borrowings referred to in the tabular statement, as a result of the net change in exchange rates between the time of borrowing and 31 December 1980, amount to just over IR £18.61 million. The actual losses will be determined by the relationship between the Irish pound and the other currencies on the dates of repayment.
Following is the statement:
Total medium-term and bridging facility borrowings raised by Nitrigin Éireann Teoranta since 1 January 1970.
|
Currency |
Total Borrowed |
Total Outstanding at 31 December 1980 |
|
Sterling |
Stg. £39.124m. |
Stg. £34.164m. |
|
U.S. Dollars |
U.S. $153.314m. |
U.S. $148.896m. |
|
Deutschmark |
DM 26.241m. |
DM 12.839m. |
|
Dutch Guilders |
DFL 28.126m. |
DFL 18.775m. |
|
French Francs |
F. Fr. 8.970m. |
F. Fr. 3.591m. |
|
Austrian Schillings |
A. Sch. 7.500m. |
A. Sch. 5.583m. |
|
Japanese Yen |
J. Yen 325.000m. |
J. Yen 242.028m. |
In view of the sequence of answers that the Minister has given comprehensively, have the Department, as distinct from the Oireachtas Committee, made a detailed investigation into the management of NET? Are current proposals being discussed within the Department for the restructuring and improvement of the management of that State-owned company?
As I have stated on a number of occasions my Minister has shown his concern publicly about the whole operation of NET and every possible steps will be taken within the Department to ensure that matters are streamlined in the best possible way to prevent losses being incurred.
If the Minister is in a position to do so will he give us a description of some of the steps under review at the moment?
I do not have any detail and in view of the fact that this matter is still being discussed with some consultants and that the Oireachtas Committee are also finalising their report on it, I think it would be better not to give any more detail about it.
13.
asked the Minister for Industry, Commerce and Tourism whether he proposes to alter in any way the method of financing NET.
I have under detailed examination at present proposals from NET for the capital restructuring of the company in the light of its existing financial position. Until this examination is completed and the matter is considered by the Government, I am not in a position to indicate what changes will be made in the company's finances.