Vol. 419 No. 1
8 Miss Flaherty asked the Minister for Energy if he will explain his refusal to adopt the Oireachtas Joint Committee recommendations in relation to the debt problem of Bord na Móna especially in view of the recent closure of the Lullymore factory and the dependence of the midland region on this company.
26 Mr. T. O'Sullivan asked the Minister for Energy if he will make a statement on the current financial and employment situation in Bord na Móna.
39 Mr. Durkan asked the Minister for Energy if he will outline his views on the future of Bord na Móna, with particular reference to general development including capital requirement, employment potential, areas of possible expansion, and if he will make a statement on the matter.
56 Mr. Sherlock asked the Minister for Energy if he will outline his response to the recommendations of the report of the Joint Committee on State-sponsored Bodies dealing with Bord na Móna, especially the recommendation that it should be structured into divisional or subsidiary companies; if, in view of the greatly improved trading performance of Bord na Móna, the Government will now consider an injection of capital; and if he will make a statement on the matter.
84 Mr. Durkan asked the Minister for Energy if the proposed closure of the Lullymore briquette factory is in accordance or at variance with the revised Programme for Economic and Social Progress; if one or either proposal is therefore likely to be reviewed, and if he will make a statement on the matter.
85 Mr. Durkan asked the Minister for Energy if he will outline his intentions for the development of the peat industry having regard to the proposed closure of the Lullymore briquette factory, County Kildare, and if he will make a statement on the matter.
86 Mr. Durkan asked the Minister for Energy if he will outline his, or the Government's, preferred options for the development of the peat industry; and if he will make a statement on the matter.
I propose to take Questions Nos. 8, 26, 39, 56, 84, 85 and 86 together as they are linked by consideration of Bord na Móna's financial situation.
I welcome the comprehensive review of Bord na Móna undertaken by the Oireachtas Joint Committee. Many of the recommendations contained in the report are in line with my thinking and have generally confirmed the conclusions of my Department.
I have noted that the committee supports, in principle, the provision of an Exchequer subsidy to Bord na Móna. I understand the committee's concern with the company's difficult financial position and I am also acutely aware of the dependence of the midlands region on the operations of Bord na Móna. It is precisely for those reasons that I am anxious to ensure that Bord na Móna will be properly positioned to operate as a dynamic, efficient and successful company and thus capable of providing viable and sustainable employment for many years ahead. In the year ended March 1992, average employment by the company amounted to 2,344 with a peak employment figure of 2,767.
The report lays great emphasis on the need for the board to implement, as a priority, a programme of debt reduction measures and draws attention to a number of areas where improvements in the company's position can be made. These areas, among others, have already been the subject of discussions between my Department and the company for a considerable time.
The House will be aware that the board and management have undertaken, with the co-operation of the workforce, a major reorganisation and restructuring designed specifically to address these financial problems. While this process has proved successful in returning the company to profitability, there clearly remains much to be done if the level of indebtedness is to be reduced to manageable levels. In the last published accounts for the year ended March 1991, the board had borrowings of £189.7 million and a balance sheet deficit of £72.4 million. The accounts for the year ended March 1992 have not been finalised as yet but the indications are that they will show a reduction in the level of borrowings.
It remains the Government's firm policy that Board na Móna should continue to make a significant contribution towards the national energy requirement and in so doing provide viable and sustainable employment.
The reality of the situation is that the only means by which the company will be enabled to maintain secure and viable employment and thus contribute to regional and national prosperity, is by becoming more competitive and reducing the level of debt. I am confident that they will do so. I am satisfied that a substantial reduction in the company's debt can be achieved without recourse to Exchequer assistance.
The Oireachtas Joint Committee's proposal that the company be formally structured into subsidiary companies, with the greater part of the company's debt assigned to a holding company, would not of itself improve the overall position. The imperative need for the company now is to concentrate on the fundamental issues — the implementation of the necessary improvements in operational efficiencies in all areas of their activities.
It is an intrinsic part of the Programme for Economic and Social Progress that commercial State companies should have the freedom to operate commercially. The programme stresses that the day to day operations should be a matter for the individual companies. The decision to close Lullymore briquette factory was one for the board of Bord na Móna to make and I do not believe, therefore, that it is at variance with the Programme for Economic and Social Progress.
I outlined the background to this decision in this House recently. The board took the view that, in the light of a severe briquette production overcapacity and a declining solid fuel market, there was no realistic alternative to the permanent closure of one of the company's four briquette factories. While I share the regret of Oireachtas and local authority representatives from County Kildare and elsewhere and the community in general at the necessity for the board's decision, I must say that I believe the decision represents a realistic response by the board to severe over-capacity in a declining market.
I am disappointed at the Minister's reply. The dependence of the midlands on this company rings very hollow in the context of the substance of his reply. Will the Minister admit to the House that the Government have a policy of drift in relation to Bord na Móna and that the consequences of such policy will be further closures in the region? No alternative employment opportunities will be put in place unless Bord na Móna are given financial assistance to cope with their debt problem. Despite the progress which has been made by the company, and the attempts by the workers at the Lullymore plant to make that factory competitive — they succeeded in doing this — this company will remain in a straitjacket due to their debt burden. The Government intend to leave the company in that position.
I must ask for the utmost brevity now as time for Priority Questions is almost exhausted.
I am greatly surprised at the tone of the Deputy's questioning and her suggestion that there is some element of drift in the Government's approach to this company. This company have been throughly examined by a number of private consultants both on behalf of the company and my Department.
Where are the recommendations?
A very firm direction is being applied to the company in order to ensure their viability and safeguard employment in a group which is exploiting one of our few indigenous fuels. It is my policy, and the Government's intention, to continue the use of peat and turf in our energy mix for the next 40 years.
I want to ensure that this company are put on a solid financial basis. The Deputy has to recognise the commercial reality of over-production of one of the company's products, namely briquettes. The company had to make a corporate decision in relation to this matter because they had too many production plants with the capacity to produce far in excess of what was being absorbed by the marketplace. Regrettably there is also an overall declining trend in the use of solid fuels generally. It is in that context and the threat to the company and the workers if something positive had not been done, and not just in the briquette section, that this decision unfortunately had to be made. It will contribute to strengthening the financial position of the company and reduce their debt by £10 million over the period of the corporate plan.
How can closing a factory strengthen a company with a debt of £190 million?
We must proceed to other questions. I will allow a very brief question from Deputy Flaherty.
In view of the dependence of the midlands on this company, and the problems in the industry generally, will the Minister consider diverting some of the funds the company have given to the Government towards alternative regional development in the area?
I am not clear to what the Deputy's question relates.
It is clear the Minister is not offering any financial assistance to this company who badly need it.
If the Deputy clarifies her question——
We are now dealing with other questions.
