Vol. 335 No. 1
asked the Minister for Industry and Energy if he will make a statement on the future role of the Irish National Petroleum Corporation; and when legislation will be brought before the Houses of the Oireachtas to give a statutory basis to the corporation.
19.
asked the Minister for Industry and Energy if the Irish National Petroleum Corporation will hold the shares in the Whitegate Oil Refinery on behalf of the Government; if he will make a statement on the role of the corporation with specific reference to the management of the refinery; and if he will make a statement on the matter.
20.
asked the Minister for Industry and Energy if he will make a statement on the Government's policy on the financing, operation and public accountability of the Whitegate Oil Refinery.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 18, 19 and 20 together.
The Irish National Petroleum Corporation will hold the entire share capital of the Irish Refining Company on behalf of the Government and will, through the latter company, and in consultation with me, make the necessary arrangements to ensure that the refinery continues to be operated effectively. It is expected that the refinery can resume operations in August.
As already announced, it is intended that operation of the Whitegate Refinery will be on a cost-recovery basis.
A sum of upwards of £10 million is being earmarked to get the refinery back into operation and the Deputy will have noted from the Minister for Finance's Budget Statement that provision has been made for this amount in the current year.
I intend, in the near future, to introduce legislation to provide a statutory basis for the capital structure, organisation and functions of the INPC. This legislation will also provide for the preparation and presentation of an annual report and accounts and any other matters relevant to public accountability. It is my intention, when presenting this legislation to the House, to make a full statement in regard to the Government's policy on the corporation, including in particular, its future role and functions.
Is the Minister aware that the decision to buy this refinery was a difficult one and was taken by the former Government only after consideration of certain proposals? Is he aware that unless the refinery is managed most efficiently and that the role it plays in the Irish economy is handled with care there could be a heavy cost to the taxpayers? Will he ensure when introducing legislation that the concept of the management of the refinery will be one of public accountability and that we in this House will at all times be able to get the fullest information necessary to ensure that the refinery is run efficiently and that the policy being pursued by the Government in office can be open to full scrutiny in this House?
I share the Deputy's opinion when he said that the decision was a difficult one. I know it was the correct one. I also share his opinion when he said it will be essential that the management of the refinery be efficiently conducted. I think the legislation that will be presented to the House and the presentation of the annual report and accounts will permit the House to take a close look every year at the management, running and success of the refinery. In that way I think public accountability will be well looked after.
Will the Minister ensure that in the preparation of the draft legislation there will be a positive direction to the operating company to ensure that the lead level in the petrol to be produced will conform to the proper European standard?
I am not in a position to tell the Deputy much about that because it is not in my brief but much will depend on the type of mix used. I am sure the Minister will be conscious of the need to minimise the lead content of the petrol.
Could I emphasise the seriousness of this matter and the amount of worry and public unease about the high quantity of lead in our petrol and that this opportunity of refurbishing the refinery should be used to ensure that the end product is safe so far as lead content is concerned?
I shall bring that matter to the Minister's notice.
I am obliged to the Minister.
Is the Minister aware that in fact I issued a directive, in regard to the purchase of the Whitegate refinery, that the lead content would be the same as that in other EEC countries? Now I think we are moving towards a situation where we will have lead-free petrol and I think this is correct. Could the Minister expand on the future role of the Irish National Petroleum Corporation and in particular could he say whether it is intended to expand State contracts for the supply of oil with the oil producing countries? Would he also state the present position in regard to the State contracts for the supply of oil?
I believe that the intention is to expand the present role of the company. It will have other functions also.
To give us some confidence in the operation of the INPC could the Minister outline the situation to date, of its profitability or otherwise and of its present operations? Is the Minister satisfied with the present situation and has he any figures as regards its profitability to date?
I have not that kind of information here.
I think I saw a report in a paper recently that indicated that there was a very substantial loss——
The Deputy may only ask a question.
Has the Minister any information on that point?
I shall arrange with the Minister, if it is available, to provide it for the Deputy.
Does the Minister not appreciate that this type of information is absolutely essential if we are to talk about the future role of the petroleum corporation?
Could the Minister be more specific regarding the contract presently held by the Irish National Petroleum Corporation with Saudi Arabia, Iran or Iraq and if it is intended to increase the number of contracts held? Is it also intended to allow the corporation to deal on the spot market or is that outside the role of this corporation?
I am not in a position to give the details sought. I would envisage an expanding role for the corporation. Matters such as dealing on the spot market may be mentioned or contracts may be entered into with other countries.
Would the Minister ask the Minister for Industry and Energy to communicate with me on this matter?
I will.
Has the Minister any information as to whether it is intended that the INPC in operating Whitegate will be given power, if that can be done legally, to compel the oil companies here to take a certain proportion of the Whitegate product from them?
I think that will be included in the specific instances, in that the different companies trading in our State will utilise a certain amount of the product.
On the assumption that the Whitegate product will be more costly than imported products would the Minister agree that that arrangement will imply compelling the oil companies to take a certain proportion of their supplies from Whitegate at a higher price than they would be paying for products imported from elsewhere?
The Deputy's assumption may not be correct because one would have assumed then that with the closure of Whitegate there should have been a consequent reduction in the price of the products used by the different companies here. The closure of Whitegate did not bring any reduction in the price of petrol or oil, here, so it would be wrong to assume that when companies are utilising the Whitegate products it should bring an increase.
Accepting the force of the Minister's argument, I would like to know why the closure of Whitegate did not produce a fall in the cost of product to the consumer? The Minister is getting away from what I wanted to find out. Does he not acknowledge that an arrangement under which the oil companies operating in this State will be obliged to accept and pay for a proportion of the Whitegate output can be nothing but a compulsory arrangement, in other words, that the only way it can be done is by forcing them to do it, because everyone is agreed that the Whitegate product was and will continue to be substantially dearer than the imported product and that is admitting the relevance of the question which the Minister himself asked?
The words "substantially dearer" are rather wild.
Well, it will be at least a couple of pence a gallon at the consumer end.
There is that possibility.
This is the final supplementary.
Well, I will have to make it a long and complicated question if you are going to confine me like that. Would the Minister agree that, having regard to the fact that the INPC losses last year were only maintained at their level of £2 million by virtue of the fact that the ESB were compelled to absorb the real loss by taking from the INPC oil which the INPC had bought at a price much dearer than the going spot price, and that with that kind of record behind the INPC, it is all too likely that an arrangement of the kind I envisage will be what they will be looking for?
I would not like to comment on that, because the Deputy is envisaging a situation where the spot price of oil would always be lower than the price for which they would have entered into a contract and that situation might not always apply.
It might not but it has applied in the last couple of years. Would the Minister admit that the only reason the INPC's shown losses are as little as £2 million is that during that period they were in a position to oblige the ESB to take oil for a far larger price than the ESB would have been able to get it on a spot market——
Deputy, you may not make a statement, you may only ask a question.
I dealt with fuel variation before the Deputy came in.
I realise it is not fair to press this Minister who is standing in for a colleague but I would like to raise this matter on the Adjournment, perhaps not today but tomorrow.
If you want it today you will have to say so now.
Very well, I will raise the matter again tomorrow.
21.
asked the Minister for Industry and Energy if he will deposit in the Library of the House of the Oireachtas a copy of the contract of purchase in respect of the Whitegate Oil Refinery.
I am prepared to answer any questions which are put down to me in regard to the share acquisition, subject to confidentiality agreements on technical matters into which my predecessor and our consultants entered, but I do not think it is appropriate that these commercial agreements should be made available in the Library.
Arising out of the Minister's reply, is he aware that the State is nationalising the oil refinery at Whitegate? Am I to understand from the Minister that neither the Members of this House nor the general public are entitled to see a contract nationalising a company in their name? Would the Minister not agree that, from the point of view of public accountability, it is very important that we are able to see such a contract, where nationalisation of a major company has been effected and which could have major repercussions on our economy?
I believe a certain balance is necessary between what needs to be available in the public interest and the precedent which would be set in making commercial agreements available for examination and consideration of different matters such as legal aspects, in which the public interest might not be the motivating factor.
I should like to distinguish between commercial confidentiality and national priorities such as this is.
A question, please.
Is the Minister aware that we have nationalised a very important facility and, because of that, a principle must be seen to be present? The Members of this House and the people are entitled to see that contract and to be satisfied with its terms.
If Deputy Collins cares to put down questions with regard to share acquisition those questions will be answered but the Minister does not consider it appropriate that details of commercial agreements should be made available in the Library.
Has the Minister something to hide?
I do not believe he has.
22.
asked the Minister for Industry and Energy if he will confirm that the annual cost of operating the Whitegate Oil Refinery will result in a 1p per gallon excise duty on the retail sale price of all oil products in the country; and the manner in which this excise duty will be channelled to the company.
It is not possible to say precisely at this stage what the incremental per gallon cost of operating the Whitegate refinery will be, assuming any such incremental costs do arise; nor is it correct to assume that such cost would necessarity be recovered by way of excise duty mechanism. When the INPC, in consultation as necessary, with my Department, have made all necessary arrangements as regards the "mix" of crude oil to be fed into Whitegate and have established the exact nature and level of their operating programmes, only then will it be possible to identify with precision what the operating costs will be. Until that stage is reached it would be impossible to quantify accurately the possible impact on oil product prices. It is fair to say, however, that indications are that any additional per gallon cost which might arise is unlikely to be significant. Indeed I am most anxious to ensure, in all relevant arrangements being made, that the cost is minimised. I will continue to impress on the board the need to achieve the highest degree of competitiveness possible, consistent with the technical and marketing circumstances applicable.
Is the Minister aware that the Minister for Industry and Energy, Deputy Reynolds, and a senior official in his Department stated at the time the contracts were being finalised that the extra cost would be 1p per gallon? I am seriously disturbed at the elusiveness of the Minister's reply today. Is he further aware it is very important that the extra cost of processing oil at the refinery must be seen to be transparent from the point of view of the public? It is very important that this transparency should be indicated on a monthly basis to the public and to this House.
I am afraid that the Deputy must accept that until all the matters I have mentioned have been gone into, the exact mix which will be fed into the Whitegate refinery, the areas from which the crude oil will come and the level of operation of the refinery, it will not be possible to say what effect it will have on the price and the operation costs, which will undoubtedly have to be recouped. I have no information at my disposal which indicates it will be more than 1p or less than 1p.
In an earlier answer, the Minister said that the decision to buy the refinery was a marginal decision with possible adverse economic effects on this country. In that context, is the Minister aware that the Minister for Industry and Energy stated in public that the extra cost of operating the oil refinery will be 1p per gallon?
It could be more but I have no definite information to indicate that it will be more than a penny or less than a penny.
The remaining questions will appear on tomorrow's Order Paper.
