Vol. 419 No. 1
4 Miss Flaherty asked the Minister for Energy if he will outline the financial arrangements which are currently in place in relation to the construction of the gas interconnector for which contracts have recently been signed; and if he will make a statement on the doubts about the viability of the project following the withdrawal of the ESB from the project.
15 Mr. Kenny asked the Minister for Energy if he will give details of the proposed gas interconnection between Ireland and Britain; and if he will make a statement on the matter.
24 Mr. Allen asked the Minister for Energy the steps he has taken to ensure that An Bord Gáis have taken every action to ensure that Irish companies have an input into the laying of the pipeline for the proposed new gas grid; and if he has satisfied himself with the level of Irish involvement at this stage.
60 Mr. McCartan asked the Minister for Energy if his Department were consulted by Bord Gáis Éireann prior to its decision to grant the contract for the proposed gas interconnector to a Scottish-based consortium; whether his Department approved the awarding of the contract; if his attention has been drawn to the public concern about the low Irish labour content and at the exclusion of the ESB from the consortium; and if he will make a statement on the matter.
94 Miss Flaherty asked the Minister for Energy if he will be introducing legislation in relation to the management, distribution and access to supplies of gas via the new interconnection.
I propose to take Questions Nos. 4, 15, 24, 60 and 94 together.
The gas interconnector project is now at an advanced stage. There are various aspects which are scheduled for execution at different times throughout the period up to the target completion date in October 1993.
The pipeline route will run from North County Dublin to Moffat in southern Scotland. Major contracts have recently been awarded for subsea construction, supply of pipeline steel and pipe coating. These contracts are worth about £140 million. Further contracts will be awarded during the coming year.
While I have made the interconnector project a priority and my Department have been closely involved in the planning, Deputies will appreciate that I have no function in regard to the award of these contracts by Bord Gáis Éireann. I understand from the board, however, that they have adhered to all the relevant tendering and evaluation procedures, including, where appropriate, advertising in the Official Journal of the European Community. This will ensure that the project is carried out in the most cost effective manner and in accordance with EC requirements on competition.
The financial viability of the interconnector project is not in doubt; indeed it received Government and EC approval only after intensive and detailed examination of project economics and feasibility.
Bord Gáis Éireann will fund the cost of the project, net of EC grant aid at approximately 35 per cent of expenditure, from borrowings, own resources and I hope, through participation by other parties. It is my intention, however, that the pipeline will be operated by a separate company in which Bord Gáis Éireann would have a controlling interest. The financial package will depend on the level of outside participation in this company. The interconnector pipeline will be operated as a commercial venture. That means that there will be access to supplies, wherever practicable, and particularly for major customers. It is not clear at this time that this requires any legislative intervention.
Regarding ESB participation, Deputies will recall the answer given on my behalf by my colleague, the Minister for Industry and Commerce, recently in which I made it clear that there is no question of the ESB being excluded from this project and that the recent rejection by the board of Bord Gáis Éireann of participation terms proposed by the ESB in no way precludes the ESB from submitting a more suitable proposal.
Would the Minister indicate the gross cost of the construction of the interconnector? What arrangements have been made to sanction the required borrowings and what level could these borrowings reach for Bord Gáis Éireann? What impact could this have on the cost of gas in the long term?
The estimated cost of the project, in current terms is £290 million. As I indicated, Bord Gáis Éireann are the company charged with promoting and bringing this project to fruition. They are having discussions with potential investors in the possible joint venture project. Therefore, the financial arrangements in relation to that matter have not been finalised. Of course my Department, with the Department of Finance, will be closely involved in granting approval to the arrangements entered into.
The Minister referred to ongoing discussions. Can he state whether there are other interested parties actively taking part in the discussions at present? In the absence of such participation can he say what Government clearance, and to what extent, has been given for Bord Gáis Éireann to enter into financial commitments on their own behalf, as clearly they are doing at present? Furthermore, can he say what will be its impact, first, on Government dividends from Bord Gáis Éireann and, second, the cost of gas here in the future?
The Deputy and the House will appreciate that these are commercially sensitive matters and it would not be appropriate for me to disclose any great detail in relation to them at this time. If the final financial package is such that it has an impact on the dividend payments of Bord Gáis Éireann to the Exchequer, that is a matter that will be carefully examined by my Department and by the Department of Finance. These form very much part of the overall ongoing discussions.
