That a sum not exceeding £9,649,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1987, for the salaries and expenses of the Office of the Minister for Energy, including certain services administered by that Office, and for payment of certain loans, subsidies, grants and a grant-in-aid.
In this debate we are covering the Estimates for Energy, Forestry and Communications. I will deal with them in that order.
The Energy Estimate is relatively small, representing less than 1 per cent of the total Estimate for the Public Service. The size of the Estimate, however, does not reflect the relative importance of the role of my Department or the wide range of activities for which it exercises responsibility.
The stance that was adopted by the Government in framing the Energy Estimate and related policy measures now before the House for discussion reflects the economic and financial situation at home and developments in international energy markets which affect the cost and availability of our energy supplies and natural resources.
In economic terms the role of energy policy is to: (a) meet the needs of economic development and consumers; (b) to underpin security of supplies while maintaining reasonable costs; and (c) to maximise the gain to the national economy from the exploitation of our indigenous resources.
In so far as the Energy Estimate is concerned, the priority of the Government to restore order to the public finances has been carried through into the Estimate before the House and, above all, in the provision for capital expenditure in the energy sector contained in the public capital programme.
Gross expenditure in the Energy Vote has been reduced by 3.5 per cent as compared with a growth of 3.5 per cent in total supply services. This reduction must be assessed against a background in which the expenditure in the Vote for Energy is now not significantly different from that in 1980 when the Department of Energy was first established. On the capital side, major reductions are being made on investment to complete programmes for electricity production and distribution and bog development but it is necessary to continue development of our natural gas resource.
With regard to future developments, I intend to pursue a programme as rapidly as possible: (1) To revitalise our oil and gas exploration programme. Our immediate objective is to delineate certain discoveries of oil and gas off our south coast and to promote their commercial development; (2) To exploit our natural gas resources by the extension of the gas grid to serve the horticultural industry and to the Drogheda/Dundalk area; (3) Taking advantage of the lower prices now prevailing for coal, oil and gas to improve the efficiency and competitiveness of electricity supplies, for the benefit of industry and of the householder; and (4) To urge the European Community to make positive moves to strengthen and integrate electricity and natural gas supply, particularly in the peripheral regions of the Community.
Considerable attention has been focussed recently on the drilling operations on Block 49/9 in the Celtic Sea. While oil flowed in that well, it has not, unfortunately, fulfilled the oil companies' expectations for it. The data obtained from the well is being integrated into the companies' existing data banks to assess further the potential of Block 49/9.
However, the potential of the entire Irish offshore, or even of the Celtic Sea basin, does not hinge on the results of any one well. I can, of course, accept that the results of this as every other year's drilling will have an important bearing on our exploration programme, but it must equally be accepted that we have a long way to go before offshore Ireland can be regarded as fully assessed.
There has been much criticism in industry circles concerning the terms being offered by Ireland as compared with other exploring nations. I want to take this opportunity to assure all concerned that I am undertaking a major review of our licensing terms for oil and gas with particular emphasis on marginal fields. It is my intention to ensure that our terms will be clearly seen to compete favourably with régimes in place elsewhere. I place great importance on this particular sector of my Department's activity because it requires a medium-sized oil development only to make this country self-sufficient in oil and to improve our balance of payments significantly.
An initiative which my Department recently launched sets 1 July as the closing date for licence applications for a five-block package in the Celtic Sea which the Department believe offers an attractive prospect for the oil industry. Presentations have been made to a number of companies of the integrated geological and geophysical interpretation of the blocks. I look forward to seeing the companies' interest in the presentations translated into licence applications.
Natural gas now supplies approximately 20 per cent of Ireland's primary energy needs. Sales of natural gas to the utilities and industry now represent 26 per cent in volume and 31 per cent in value of total sales. When the Government decided to build the pipeline from Cork to Dublin they did so as part of a national energy policy and strategy. Natural gas is a premium fuel and Dublin is the largest premium market. It also supplies ESB at Dublin as well as Cork. The pipeline was completed in 1982 and the conversion of the city was completed in September 1986.
The Dublin Gas development programme ran into difficulties which have been fully aired on so many occasions that I do not intend to elaborate on them this evening. However, I am pleased to say that present indications are for continued steady expansion in natural gas sales in Dublin — particularly in the premium sector. Progress towards viability of the Dublin Gas Company has been slowed to some extent by the heavy pipe repair programme consequent on the tragic events of January last. This rapid increase in Dublin Gas Company's repair programme will, of course, reduce the future need for such works and, consequently, enhance the future prospect for the viability of the Dublin Gas Company.
The Government have already decided upon and achieved the completion of a bid by Bord Gáis Éireann for the assets of Dublin Gas. The contract for the acquisition of the assets is due to be signed in the near future and Dublin Gas will then be integrated into Bord Gáis Éireann.
These and other issues facing Bord Gáis Éireann in the near future will require some amendment to existing legislation. This amending legislation, which I propose to introduce shortly, will allow for the transformation of Bord Gáis Éireann from being essentially a gas-transmitting body to being a fully integrated, safety conscious, streamlined modern and efficient national gas company with responsibility for the transmission and distribution of natural gas.
After the tragic events in Dublin last January the question of safety must be a top priority for any gas utility. The recommendations of Cremer and Warner have been accepted by the Government. On foot of these recommendations the Government appointed a task force, under the aegis of my colleague, the Minister for the Environment, to identify potentially vulnerable buildings, provide technical guidance on the implementation of practical remedial measures and to identify all relevant codes and standards that need to be reviewed and updated. The task force will report to the Minister for the Environment before the end of July. The recommendations specifically relating to Dublin Gas are being implemented by Dublin Gas and the implementation is being monitored by my Department.
On 26 April 1987 the Government approved the construction of a natural gas pipeline from Dublin to Dundalk as part of a policy of extending the gas grid to the north and north-west. The pipeline is designed and routed so that supplies can be offtaken in the region for industry, for horticulture and for domestic purposes. Project planning and acquisition of rights of way is under way by Bord Gáis Éireann who expect to have the project completed by summer 1988. The estimated cost of the project is £30 million approximately. The routing and design would allow for possible interconnection of a supply of gas via the UK should that be the option which commends itself to me and to the Government.
This project represents a major extension of the natural gas grid and a significant growth in the market for natural gas. I expect that the availability of natural gas in the region will clear the way for the expansion and development of new industrial and commercial opportunities.
My Department's energy conservation programme is designed to improve the awareness of the consumer of the value of saving energy. It is important in the long run that the impetus on conservation should not be allowed to decline. It is basically in the interest of users of energy to continue to use it efficiently.
In December 1986 this House unanimously called for the closure of the Sellafield reprocessing plant. The operation of the plant has been of major concern to the Irish people for some time. The increasing number of incidents there has led us to the conclusion that the plant was inherently unsafe and that the Irish people were living with the threat of serious nuclear contamination on our doorstep and this has been borne out by the report on Sellafield published by the UK Health and Safety Executive a few days after the passing of the Dáil resolution.
As part of the Government's international campaign for the closure of Sellafield and the elimination of radioactive discharge to the Irish Sea the House will, no doubt, be aware that the Government tabled a number of recommendations for adoption at the meeting of the Paris Convention in Cardiff which finished today.
I am pleased to inform the House that the Paris Convention has adopted an Irish recommendation concerning discharges from all nuclear industries. The recommendation provides that "the Contracting Parties to the Paris Convention for the prevention of Marine Pollution from land-based sources declare their firm intention to apply the best available technology in order to minimise and eliminate as soon as possible any pollution caused by radioactive discharges from all nuclear industries, including reprocessing plants, into the marine environment".
The Paris Convention agreed on the basis of an Irish proposal to establish as a first step a system for reporting of unplanned discharges from nuclear installations in member countries. It was also agreed that Ireland, as lead country would undertake the responsibility, with the Secretariat of the Commission to identify any improvements to the reporting procedure adopted by the convention today.
The Government also tabled for the first time at an international conference a recommendation for the closure of Sellafield. While the recommendation was not successful, nevertheless the Government were heartened by the expressions of understanding, support and sympathy about this menace on our doorstep which we received. The Government intend to resubmit a similar recommendation for next year's meeting of the convention in Portugal. I want to assure the House here tonight that the closure of the Sellafield complex will be pursued relentlessly by this Government as it poses a threat to the health and safety of our people and our environment.
I have allocated £895,000 to the Nuclear Energy Board for 1987. Approximately £300,000 is for the provision of new laboratory facilities in Clonskeagh. The acquisition of better analytical facilities will improve the environmental monitoring programme. These measures are consistent with my intention to place increased emphasis on radiological protection and monitoring through the establishment of the National Radiological Protection Institute.
As I have already indicated to the House in a reply to an oral question on 8 April 1987, I propose to replace the Nuclear Energy Board with a National Radiological Protection Institute. I am at present considering the legislative measures that will be appropriate and I propose to introduce the necessary legislation at an early date, in the autumn session.
Turning to the minerals prospecting and mining sector, I see this as an area with potential for considerable expansion and with capacity to play a significant role in the economy of the State. I need not remind the House that the period 1960-1970 was one of intensive prospecting activity which led to a number of significant mining developments. These greatly benefited the State in a number of ways in terms, for example, of jobs created and the positive effect on our balance of payments.
We have been unable to escape the worldwide recession in the minerals sector in recent years which has led to a downturn in prospecting activity and consequently in new mining developments. What we must ensure is that no factor within our own control will have a dampening effect on such activity.
As in the case of the oil licensing terms there has been criticism of the State's practice in relation to mining lease terms. The approach has been not to define these terms in advance but to settle them on an individual basis at the time that a commercial orebody has been fully delineated and the economies of the mine development have been evaluated. Prospecting companies have put it to me that this creates a degree of uncertainty as to what the State will ultimately seek as its share of the revenues arising from a project. This, they say, contrasts unfavourably with the situation in other countries where lease terms are defined in advance. It is my intention to remove this uncertainty. I have put in hands a complete review of existing policies in this regard and I expect to make an announcement shortly of clearly defined terms which would ensure a fair return to all parties. I hope that the industry will then respond with increased exploration activity.
As regards developments of current interest I might mention first that there has been increased activity recently in investigating the country's gold potential with a number of encouraging areas being identified.
Unquestionably, the main talking point on the Irish mineral exploration scene during the past year has been the identification of highly encouraging mineralisation at Galmoy on the Laois-Kilkenny border. A major benefit of the find has been to focus once again the attention of the major international mining companies on the potential Ireland offers for further mineral discoveries. Already there has been renewed interest and increased exploration activity as a direct result of this.
There is a continuing high level of interest in prospecting and development in the Leinster coalfield. I will be responding in a positive way to this interest and I have approved of certain measures aimed at a comprehensive programme of prospecting and mining in the coalfield. I will be making an announcement about this in the next few days.
Bord na Móna are just starting to recover from the worst two years in their history with the very wet summers of 1985 and 1986. The board have reviewed their operations; taken steps to get production back, weather permitting, to full swing; taken measures to improve the financial state of the business and stepped up horticultural peat output.
The Government have included a number of developments by Bord na Móna in their proposals to the EC for Valoren aid. This, together with EURO-loans approved earlier and State support for exchange risk will help the board to complete some elements in its third development programme which would otherwise have been delayed or abandoned because of the difficulties of recent years. The task now is to rebuild stock, get up to full production and to strive for greater efficiencies all round.
Deputies will recollect that on 28 April 1987 I announced the contents of the programme, approved by the Government, which Ireland has submitted to the EC for funding under the so-called Valoren Regulation. This regulation, which was adopted by the Council in October 1986 is a regional policy measure aimed at promoting regional development in Ireland and in parts of other member states by assisting in the exploitation of specific indigenous energy resources. Under this scheme assistance of up to about £19.2 million is available to Ireland over a five year period and the programme which we have submitted to the Commission aims at drawing down our full entitlement to funds. The essence of the scheme is one of matched funding, with Community assistance coming to not more than 55 per cent of the total costs of the programme to be assisted. The total cost of Ireland's programme over the five-year period is about £35 million.
With the appointment of a new chief executive which is under way at present — interviews are being held — it is an appropriate time to evaluate the strengths and weaknesses of the organisation, to ensure its effectiveness and to affirm its role for the future. I am particularly anxious that Bord na Móna should concentrate all the efforts of their management and of their very loyal workers towards their main purpose of maximising the production of peat products in the most cost effective way.
The Electricity Supply Board's non-voted capital expenditure for 1987 will be of the order of £127 million. This represents a decrease of 20 per cent of the 1986 outturn of £168 million, and reflects the continuing trend of reduced capital expenditure by the board as the Moneypoint generating station nears completion.
Favourable trends in oil prices and interest and exchange rates as well as the savings accruing from increased coal fired generation made possible reductions in electricity prices on two occasions in 1986. I am very anxious that Irish industry, commerce and domestic consumers should continue to benefit from a downward trend in prices. I am pressing the ESB for further economies in their operations which should allow for further price reductions. Supply of energy at a more competitive price is a priority for the Government and as Minister for Energy it is one to which I attach critical importance.
The 1986 fall in oil prices was very welcome for the economy. Prices to consumers showed a notable downward drift. The Irish National Petroleum Corporation had a good year due, at least in part, to the fall in crude oil prices and their operations have continued overall in a satisfactory manner. Concern has been voiced that the full benefit of the oil price fall is not being passed on to the consumer as a result of the abolition of the National Prices Commission in January 1986 by the previous Government. Arrangements have been put in place to enable the Department of Industry and Commerce and the Department of Energy to monitor movements in oil prices. While the area of price control is a matter for the Minister for Industry and Commerce under the prices Acts, I can assure the House that whatever measures might prove necessary will be taken to ensure that Irish consumers of oil products benefit fully from movements in the international price of oil. At this stage I question the wisdom of the decision made by the previous Government to abolish the price control mechanism which was in operation until 1986.
I turn now to the Forestry Vote. The Government are convinced that forestry is an area which can contribute significantly to the resolution of this country's economic and social difficulties through generating increased employment, improving our balance of payments, as well as contributing to the national tourism drive through its wildlife conservation and amenity programmes.
State forestry has passed the difficult development years of estate formation, planting and species experimentation,et cetera and has reached a point where it is timely and opportune that it be separated from its present role within the Civil Service and be given a more prominent profile. Forestry is one of the great economic and social achievements of this country and an activity, I am glad to say, which has received the support and encouragement of all parties and successive Governments.
The Fianna Fáil Programme for National Recovery indicated that it would be the Government's intention to stimulate investment in the forestry industry and to restructure it to cater for market needs. The Fianna Fáil Government are committed to arranging for a commercial semi-State structure to be established to develop the potential of our forestry industry. This approach was also the conclusion of the Review Group on Forestry. We have decided to establish such a semi-State body. I am keen to have this new body operational as soon as possible and to this end the Minister of State, Deputy Smith, and I are preparing the necessary legislation to give effect to the Government decision. I intend to introduce this to the House later this year. May I take this opportunity to thank my colleague, the Minister of State with responsibility for Forestry, Deputy Smith, for his commitment to the forestry area and for the work he has done since his appointment.
The previous Government, in a decision on the Estimates for this year, decided that the forestry service should raise £3 million by the forward sale of the standing timber in non-amenity immature State forests — the money so raised to be used this year principally to fund the acquisition and planting of 1,000 additional hectares over and above normal planting. This Government support this decision, particularly since it will not involve the sale of the land which in time will revert to the production of a new timber crop. What are being offered for sale are stands with approximately 20 to 25 years of their rotation still to run. My Department have selected the initial group of stands which are being advertised for sale within a week or so.
The sale of the timber in immature State forests enables the State to acquire additional 1,000 hectares and to plant a total of 8,000 hectares this year. This, coupled with an expected 3,000 hectares of private planting, will give a national planting total of 11,000 hectares — which will be an all-time record in planting in this country. The future of forestry is dependent on maintaining a sustained yield by adequate levels of annual planting and it is the Government's intention to vigorously pursue this desirable objective.
Total production and revenue from timber this year will be 1.25 million cubic metres and £17.25 million respectively. The dramatic improvement in these figures can be judged by a comparison with the performance in 1980 when total production and revenue stood at 530,000 cubic metres and £6.6 million.
To turn to the Communications Vote, I would first draw the Deputies' attention to the establishment of the Departments of the Marine and Tourism and Transport and I will, therefore, restrict my comments to the items that remain in the Vote for the new Department of Communications.
The Minister for Finance in his financial statement on 31 March talked about the need to give the economy a new sense of direction, that people were dispirited and that there was a prevailing lack of confidence in our ability to achieve progress. The State sector under my responsibility clearly demonstrated what can be achieved. An Post, Telecom Éireann and Radio Telefís Éireann are three major success stories. In the case of An Post, they have reversed a loss-making situation, having achieved a modest profit in their financial year ended 31 December 1986. Mail traffic volume is now 14 per cent higher than when the operation was set up. Quality of service is high with 90 per cent of letters being delivered on the working day after posting. An Post have been active and inventive in the introduction and extension of measures to develop the postal service. The company are giving a high priority to the expansion of their express mail service and now operate an international network extending to some 50 administrations. Thre are plans to extend the express service even further.
It is gratifying to be able to note that basic postal rates rose for the first time in almost four years in March 1986 and that An Post are committed to keeping rates at current levels until the end of 1987 at least. The company have shown their capacity for achievement in the way they are operating the national lottery. The results to date have vastly exceeded expectations.
An Post have been allocated £8 million in the 1987 public capital programme. There will be no draw on the Exchequer as the entire allocation will be funded by a combination of borrowing and internal sources. The bulk of the money will be spent to effect further improvements in the standard of accommodation and security at post office premises and on replacement of part of the company's extensive motor fleet.
Telecom Éireann took over responsibility for the telecommunications services on 1 January 1984, and since then, building on the accelerated development programme laid down by the Government in 1979, they have over the past three and a half years made dramatic improvements. There are now 750,000 subscribers connected to the network. The telephone system is now fully automatic. The technical quality of the network has been transformed. With 40 per cent of subscribers connected to digital exchanges, we are at the forefront in the use of the most advanced telecommunications technology in the world. Bord Telecom Éireann have been allocated £120 million for their telecommunications capital programme. This expenditure will be funded entirely by the company from non-Exchequer sources and substantially from internal sources. It is expected that 78,000 consumer connections will be carried out in the year.
To turn to broadcasting, the Estimate for Communications provides for payments of grants-in-aid to RTE under subheads F1 and F2 of amounts equivalent to the net receipts from television licence fees and cable television licence fees respectively. The Estimate provision for television licence fees is £40.125 million, representing an increase of over 4.5 per cent on the 1986 outturn and therefore considerably in excess of the annual rate of inflation. The provision in respect of cable licence fees is £1.674 million as compared with an outturn of £1.28 million in 1986.
The Estimate also provides for a payment to An Post of £4.95 million to cover the cost of collecting television licence fees. RTE has on many occasions expressed dissatisfaction with An Post's achievements in this area and has sought to take on the work itself. I am also concerned to ensure that the maximum number of television households are correctly licensed and that this work is carried out in the most cost effective manner. I know that An Post have put a big effort in recent times into the introduction of new procedures and computerised systems to improve performance. I will be reviewing An Post's performance over the next 12 months in this area.
Radio Telefis Éireann is another success story. In their financial year ended 30 September 1984 they had a deficit in excess of £100,000, an overdraft of the order of £10 million and they were over-dependent on borrowings. Their accounts for the year ended September 1986 show a profit of £3.5 million after tax; dependence on borrowings has been virtually eliminated and the need for overdraft is only an occasional occurrence. I have every reason to believe their financial performance this year will be even better. Some 43 per cent of all television output is now home produced and RTE have consistently achieved their highest multi-channel audience share in many years.
The winning of the Eurovision Song Contest by Johnny Logan means that RTE will host the competition next year. I know that RTE are actively involved in making satisfactory financial arrangements to cover the costs involved while at the same time maintaining their satisfactory financial performance.
The one dark spot in broadcasting is the failure of successive Governments to tackle the problem of illegal broadcasting. For ten years now they have operated virtually unhindered, resulting in a chaotic situation on our airwaves, not to mention the impact such actions have on respect for law and order generally. I am determined to tackle this problem once and for all.
I said in a speech in Cork recently that I believed that we are no longer in a situation where unduly elaborate and costly State structures have to be established to provide and regulate local radio services. I also said that there were many people — be they business people or enterprises, community groups or co-operatives — who have the capability, the talent and the resources to get involved in providing broadcasting services on the modest scale of local radio. My task, therefore, is to create the right environment in which as many as possible of those who wish to do so can gain entry to local radio within the technical constraints of the number of radio frequencies available for local radio use. I have already been examining the options available to me and as I said in this House last week I intend to bring legislative proposals to provide a legal framework for the licensing and regulation of local and community sound broadcasting before the Oireachtas in the autumn session. I intend to seek the Government's approval to re-introduce the Broadcasting and Wireless Telegraphy Bill, 1985, in the autumn session in parallel with the legislation dealing with local and community radio.
I commend this Estimate to the House.