I received notice from your office this morning, Sir — a handwritten note, which reflects conditions in the House — informing me that an amendment was judged to be out of order. Since this Bill proposes to amend the principal Act, the whole purpose of which was simply to set borrowing and share capital requirements and the manner in which the company would report to the Minister, it is difficult to understand why it is not in order to amend the Schedule of that Act.
Nitrigin Éireann Teoranta Bill, 1993: Committee and Final Stages.
Question proposed: "That section 1 stand part of the Bill."
I have quite clearly conveyed my decision to the Deputy. I am satisfied that the amendment is not relevant to the provisions of this Bill. The Deputy may not move it on that basis but he may comment upon it, as indeed he has done.
Question put and agreed to.
SECTION 2.
We now come to amendment No. 1 in the names of Deputies Cullen and Richard Bruton. Amendments Nos. 4 and 5 are related and I suggest, therefore, that we discuss amendments Nos. 1, 4 and 5 together. Is that agreed? Agreed.
I move amendment No. 1:
In page 2, paragraph (a), line 13, to delete "‘£100,000,000'" and substitute "‘£82,500,000".
As I intimated on Second Stage, the funding the Minister proposes to make available to NET is too great and allows for a lack of responsibility on the part of the Department. Problems will continue in this area and no decisions will be taken with regard to the future of NET. That is very unsatisfactory. Will the Minister explain how the £22.5 million share capital invested in the company will be used? How long will that funding be available to the company? Will it be available for six months, 12 months, two, three or four years?
State guarantees are being increased from £180 million to £200 million, an increase of £20 million. Again the funding being made available to NET is far too great in the context and allows for a lack of decision making. I propose that the funding be reduced substantially, that an increase of £5 million be made available in terms of share capital and an increase of £7 million in terms of State guarantees. That increase of £12 million would allow the company to overcome the difficulty we all accept exists at present. The company would continue to be viable and would survive. That sum would be sufficient for the company for at least another 12 months.
It is interesting that the Minister's colleague said last night in the debate on the gas Bill that the Culliton task force is examining the viability of the relationship between Bord Gáis Éireann and Nítrigin Éireann Teoranta and that a decision was awaited.
The Minister did not refer to this in his speech and did not say it would be available to him in the next few months. Will he also comment on that?
Concern has also been raised by published documentation which goes back to the relationship between NET and Irish Fertiliser Industries. It was my understanding — and I am open to correction — that the assets of NET became the property of the new company, IFI, but when one looks at the figures in both companies, one finds that NET has retained assets of up to £132 million. This does not make sense if the assets belong to IFI.
Since NET's two main objectives are the management of their existing debts and the operation of their gas contract with BGE, is it fair to say that NET is depreciating all the plant which is fully available on some form of lease basis of £1 per annum to IFI in the Marino Point plant in Cork? This does not appear as a depreciation charge in the IFI accounts and one can only conclude that it is under cost of sales. If this is the case, it is obvious that there is massive subsidisation. When operating under Richardson Fertilizers, IFI, whose real beneficiary is ICI, was losing from £5 million to £6 million per annum. Now they are making a profit — at least on paper — of £5 million. It is easy to make a profit if you do not depreciate your assets and if there are no real costs. IFI is benefiting greatly because NET is carrying all the costs. Any reasonable businessman would be delighted to be involved in a deal of that magnitude because, no matter what they did, they would make a profit. Will the Minister refer to this aspect of the deal?
Fine Gael is happy to support this amendment, which is also down in our own name. Its purpose is to show that the Dáil does not accept the notion of not questioning the continuous demands for extending loan guarantees and shareholding investments in NET. We have today a request for £40 million, between share capital and guarantees, for a shell company that operates debt. It seems there are other areas - Aer Lingus is a clear example - where the demand for equity is to create an ongoing viable business, but we are being asked to rubber stamp this situation. It is clear the Minister is thinking of selling this company, or at least is considering it as a way of extricating the State from the problem. If this is the case, then it is right that the Government should tackle the problem urgently and they should be obliged to come back to the Dáil if they are seeking more equity or share capital. Indeed, I would go further, there should be an obligation on the State to introduce relevant legislation if any change in the status of NET is envisaged. However, this is beyond the remit of the Bill and would be ruled out of order.
It is news to me that the Government is considering selling its shareholding in NET, because it was known that the other shareholder, ICI, was considering the same thing. Is there a willing buyer? There was one, but it is no longer interested. If that is the case, this request will be repeated for some years to come. What have we learned from this? On the last occasion, the Minister told us that it did not matter because they were only paper transactions. However, we are giving the green light today to £40 million of taxpayers' money, either by way of guarantee or share capital, for this operation.
A more sensible approach to this was advocated by the Culliton report and the National Planning Board proposals for the eighties which stated that if one took debt out of a State company in serious difficulty, it should be removed, wiped off and put back into Exchequer borrowing and the company left trading in a transparent, open market fashion. This does not exist in the Bord Gáis-NET-IFI relationship. There are most extraordinary pricing arrangements between them, to which the public are not privy and it is strongly believed that they are not on the basis of arm's length market arrangements. It is also known that the NET price is well below what the ESB is paying, and, it is suspected, also below the IFI price. There appears to be not only open investment of equity and loan guarantees into the shell company but also concealed subsidies given by other energy users and taxpayers to IFI. The proper approach to this was that advocated many years ago. Debt should be written off and absorbed by the Exchequer. We should not create a distorted situation by taking money from one pocket and putting it into another or a third pocket and causing confusion as to whether there is social subsidisation and to whose benefit.
Will the Minister describe in more detail the efforts in his Department to find a buyer for NET and how that will effect it in the long term? At present, when the company has a bad year the taxpayer, as the lender of last resorts through NET shell, carries a substantial part of the losses. We are carrying all the risks, and receiving few benefits. What does the Minister think we have learned from this arrangement? Why does he not feel that the simpler approach advocated by Culliton, where everything is clear and above board, is not more sensible? Why are we not considering putting legislation in place to reinforce this approach?
We indicated on the last occasion that the Culliton group have conservatively estimated the effective subsidy to be £250 million. If one looked at other pricing available for the sale of gas that figure could be as high as £400 million in addition to sustained losses in NET of £212 million. Those are enormous sums — £600 million in a company that employs 500 people. What lessons can be learnt from this? Why have we not come up with a more market related solution to these problems? This would have been expected from the present Minister of State who has always advocated transparency in the manner in which the State conducts its business.
Deputies who quibble about the State guarantee to assist this company and who challenge the Minister's responsible approach to this matter, obviously have no idea of the situation on the ground or have no feel for the situation both in Arklow and Wicklow. I have been involved with this company in the past and spent 17 or 18 years at senior management level. I was responsible for the distribution of the product from the Cork and Arklow plants and I know exactly what this industry has meant to many parts of County Wicklow and Arklow, and many more in north Wexford and Cork.
Since the rundown of NET, Arklow, the south Wicklow hinterland and the north Wexford area have been economically devastated. The IDA put the problem in perspective by earmarking Arklow as one of the top three towns in the country requiring assistance in terms of job creation. When one speaks, behind the scenes, with people involved in the IDA, they will state categorically that Arklow is one of their greatest problems. The problem is not only the company and the jobs lost following the rundown, it is also the spin-off situation. CIE, private hauliers, shipping agents, dockers, sawmills, pallet manufacturers, engineering suppliers, plastic manufacturers, plastic bag manufacturers and many more spin-off beneficiaries benefited from the plant and the jobs that were there. That is what the Minister has in mind and what he is examining.
For over three decades our farmers have been assured of a constant supply of nitrogenous fertilisers, both straight nitrogen and compounds. Without that guarantee they would have been in dire straits. Without our own nitrogenous manufacturing unit in this country, agriculture would not have thrived as it did the last three decades. Farmers would have been at the mercy of importers charging astronomic prices for the product.
That is not true.
That is absolute fact.
They are not even buying NET products.
I am talking about the last three decades and it is an absolute fact. As the Minister said earlier, the present company, IFI, is a thriving viable company. This is thanks to the excellence of the core staff from the old company, both at management and worker levels. I am grateful to the Minister for introducing this Bill in a responsible, competent and admirable way. I thank him for it and I hope it goes through the House speedily.
What help will it be?
I congratulate the Minster for introducing this Bill. This money is necessary for the security of jobs in the Marino Point and Arklow factories. There is enough unemployment in the Cork area at present, especially with Irish Steel under threat. I welcome the Minister's decision to introduce this Bill and especially the £22.5 million borrowing increase for the NET plant.
NET have no plant.
One of the points the Minister made — and it was a critical point in relation to the Bill — was the impact of the currency crisis. It is having a major impact on business generally, quite apart from the outstanding debts of NET. There is general agreement that the Government's handling of the currency crisis has been disastrous. Would the Minister like to outline how the Government intends to reduce those interest rates which are having such a serious impact?
I do not support the amendment. Would Deputy Cullen explain why these particular figures were put forward? Deputy Cullen questioned the Minister's figures in relation to this Bill and he then produced his own figure and said he believed it to be the correct one. He has made no attempt to explain to us why it is this figure and not another.
It is sufficient.
It is one thing to say it is sufficient but it is another to prove it.
That is a question of semantics.
I would be unhappy with a reduction in a figure which, to me appears reasonable, without good reason being given. There is an ideological reason behind this reduction as opposed to anything else. It is interesting, considering how Deputy Cullen approached similar arguments relating to State investment in Aer Lingus. I understand — I was not at the meeting but Deputy Kavanagh has made the point——
Is this reference to Aer Lingus in order?
——that there were strong arguments for substantial investment in Aer Lingus. This is a reasonable point.
It proves I am not ideological on this.
I did not interrupt the Deputy when he was speaking even though I disagreed with what he was saying.
The Deputy is trying to make a comparison and she must be allowed to make her own speech in her own way.
The jobs in Aer Lingus are vital to this country but so are the jobs in Cork and Arklow. We cannot afford to lose employment in these areas particularly now when the company is making a profit, and trying to provide a service and provide jobs on a secure basis. Anybody who under-estimates the importance of that success is not living in the real world particularly when one views Cork — obviously I have a particular interest in Arklow — which has been a blight area for employment. I am concerned about privatisation. I understand that the Minister made a firm commitment that the workers could feel secure for the future but I do not believe, if this business is fully privatised, that the Minister can deliver on that commitment. This is an unrealistic commitment. I would seek clarification in relation to the future of those jobs because we cannot afford to lose jobs in either Arklow or Cork.
Finally, we are all here to represent constituencies. I have heard Fine Gael and PD Deputies making special cases. They do not deserve to be criticised for that in any way. I will be making special cases from time to time where I think there is merit for County Wicklow and east Kildare but there has to be consistency. The idea of criticising Deputies for that kind of special pleading is really nonsense when one considers that much of what we are doing is representing the people who elected us.
Last week I welcomed the Minister's statement that this Bill would secure the jobs in both Wicklow and Cork. In his reply last week he said that the money being made available would ensure continued employment in both of these areas for the foreseeable future. I welcome the swift action of the Minister in introducing this Bill to secure these jobs. If the Department of Finance found it necessary to raise the share capital and the borrowing by £42 million, they would have looked very closely at this Bill to ensure that the money being made available was the minimum amount necessary to carry out the requirements under this Bill.
When I enter this House on a Tuesday, sometimes I find it strange to listen to Fine Gael and the Progressive Democrats pleading on behalf of the Digital workers. I am delighted that so much concern is shown. In that case, they maintained that the Government had not moved fast enough. In this case where the Government has moved, there is something wrong.
One of the first Bills brought into the House by this Government was enacted to maintain IFI and NET in operation. IFI has operated profitably over the past five years, since it was set up. It has made profits of about £70 million. The company deserves to be supported. The IFI company is not responsible for the heavy debts being carried forward since the beginning of the operation of NET. IFI was brought into operation in 1987, and has carried out its business efficiently and with great sacrifice, because almost 1,000 people have lost their jobs in this operation since then. The small amount that is been asked for under this Bill to maintain employement in IFI, so that NET, the holding company, can get on with managing its debt, is very welcome.
It is reasonable to ask in what way the company will operate in the future. Is it to be privatised? I would be concerned if privatisation was part of the long term future for this company and I would resist it. The argument against giving the amount required to ensure the continuance of this company does not make sense.
On Second Stage Deputies Bruton and Cullen argued about the cost of producing a bag of fertiliser from NET, and asked about the agreement made between Bord Gáis Éireann and NET on subsidised gas. It is reasonable to ask that question. It was highlighted that if the gas was sold in the domestic market, Bord Gáis could get five times the price for it. A very limited number of people benefit from the operation of Bord Gáis Éireann and it is reasonable that industry should be given preferential treatment in the gas contract. I know that the city of Dublin and the domestic users of gas in Dublin got a very big subsidy against their costs for fuel, by having the ability to use gas.
They are paying six times the price.
If they had to buy turf, coal, timber or oil, as people in my constituency have to, they would be quite willing to pay six times the price that is being paid for gas by IFI. This is a very limited operation where gas is available to very few areas here. If one lives in rural parts of my constituency, one will find that the price of basic fuel is very expensive. Consider the price of bottled gas for instance. That is the only method for heating and domestic consumption in some rural areas.
This Bill is urgent and timely. If £42.5 million is required to continue the operation of the company, it would be very dangerous to accept this amendment. I know the Minister will oppose it. Certainly the people on these benches will oppose it also.
This type of debate is new. Normally, the other side of the House look for extra money to keep jobs viable. Over the last couple of days we have heard them making much noise regarding jobs in other parts of Ireland, but they seem to have changed their stance with regard to this Bill. What they are recommending in this amendment is something that will require a Minister to come in here in a year or two with another Bill giving funds to NET.
Is that not democratic control?
This is enabling legislation and if the Deputy was on this side of the House he would be arguing to give the Minister the powers to give the money if necessary. I agree with Deputy Kavanagh, and the other Deputies on this side of the House, that this organisation deserves aid from the State. There are about 1,000 jobs directly involved with IFI, both in Arklow and in Marino Point. It would be a shame if we were to close our eyes to the necessity to keep those people in jobs.
Nothwithstanding that, transparency is something that should be taken into account. The time must come when the operation of companies such as IFI is let stand alone, and the debts that were incurred prior to the setting up of IFI are moved aside, as Deputy Bruton said.
I would ask the Minister to look at this aspect of the NET set-up, because it is important for the workers to see that they are producing profits and that they are getting credit for same. We do not need to have headlines in the papers, as we have had recently, that NET is losing millions and costing the Exchequer money. That has a demoralising effect on the workforce. At the moment voluntary redundancies are being requested by IFI both in Marino Point and in Arklow. If funding is not made available to NET, we will have more redundancies in those areas that have been very badly struck by unemployment over the last number of years. I welcome the Minister's proposals. It is wise to give him the enabling power to provide the funding if necessary. The amendment is only a quibbling one.
I thank Deputies opposite for tabling their amendments, because it gives us an opportunity to discuss the future of the company. The purpose of the relevant provisions of the Bill is to increase the share capital of the company from its existing £77.5 million to £100 million on the share capital side, and we do that by the issue of shares. That permits the Minister for Finance, after he has consulted with the Minister for Enterprise and Employment, to take up these shares which would not exceed £100 million. It is an enabling provision. The actual amount of new capital which will be subscribed by the Minister for Finance this year or in the following years will be a matter for the Minister to decide, after consulting the Minister for Enterprise and Employment. That will be done in the light of the company's needs, and, indeed, the priorities of the Exchequer at that time. It does not mean that we are giving the company £42 million. It means that, if the House passes the legislation, the relevent Ministers are enabled to provide £42 million — that is the Minister for Finance and the Minister for Enterprise and Employment.
NET borrowings have now reached £180 million and it is faced with insolvency, in a technical sense, unless further support is provided now. Its projections show that if the abnormally high interest rates persist, this requirement could be as high, for 1993, as perhaps £15 million. The amendments presented to me today would allow the relevant Ministers to provide £12 million which would be less than the projections of the company for the current year, so there is an immediate problem here. The projections, incidentally, are less than £15 million, but our estimates are that they could go as high as £15 million on current interest rates. It depends on current interest rates and other volatile factors such as exchange rates. There is also the more deep-rooted problem that a proportion of NET's debt is a sunk cost and cannot be recovered, at least not within the normal income stream of the company.
Over the five years to September 1992, NET had to service borrowings of some £176 million over the period, from income which proves in retrospect to have been insufficient. It is only sufficient to service borrowings of £144 million whereas the borrowings were £176 million. This was the cause of the growth in NET's guaranteed borrowings over five years. In seeking this legislation I have decided to address not only the immediate threat to NET's solvency but also to provide the enabling mechanisms to allow us to continue to address the situation over the next few years. The Bill seeks to provide for the restructuring of NET's finances which it is important to undertake at this stage. I will be having discussions with NET about the restructuring of their finances and this Bill is the first step in that direction.
In December last, in order to keep the company afloat it was necessary to provide a grant of £6 million by way of Supplementary Estimate. This money is already used up but it may be considered in any restructuring of finances to make the appropriate arrangements to effectively capitalise this sum. I will also discuss this with the company. This would reduce the new moneys which could be advanced to the company under the increased share capital arrangements proposed in the Bill to £16.5 million.
The effect of the proposed amendment tabled by the Deputies would be to restrict the enabling mechanisms and increase the maximum additional money which can be put into the company on the capital side by as little as £5 million, and on the guarantee side by as little as £7 million, which is a total additional amount of £12 million. As I have already mentioned, depending on interest rates the amount this year could go as high as £15 million.
While this might be partly addressed by Deputies' proposals, I believe it is insufficient given the scale of the problem. It is practical, therefore, to reject amendments Nos. 1, 4, and 5 which seek to limit the share capital and the amount the Minister may subscribe to £82.5 million. It is not my normal philosophy to throw money at companies but this is a practical business problem and has to be dealt with in a practical way. There are real debts and interest bills to be met and trying to deal with it in an ad hoc way will not solve the problem.
The purpose of section 2 is to increase the company's borrowings from £180 million to £200 million. The power of the Minister to guarantee borrowings is covered by section 7 of the NET Act itself and the guarantee is extended to both principal and interest. Unlike most State companies operating in the commercial sphere, NET's activities are now extremely limited. As I mentioned the last day, it is a holding company and its main activities are the management of a gas contract and its borrowings.
While the parameters governing NET are fixed, NET's room for manoeuvre is very limited. It depends on very volatile factors such as oil prices, the dollar-punt exchange rate, fertiliser profits from an independently run subsidiary and interest rates. If its income is inadequate to meet the interest on its borrowings and its cash resources are used up, the only option left is to call in the State guarantee. The extension of the guarantee limit will provide extra leeway for rolling over debt and enabling the calling in of guarantees to be avoided. The amendment tabled by the Deputies would reduce the increase sought in the guarantee limit to £7 million. This would not provide anything more than an immediate and very short respite with the possibility of further legislation very soon.
The Oireachtas is kept informed of NET's guarantee situation as statements detailing the guarantees are laid before the Houses of the Oireachtas at the end of each year. In seeking this legislation I wish to provide for the solvency of NET over the next few years, while at the same time maintaining some flexibility within budget constraints with regard to the funding of NET through equity. The amendment proposed would not allow this and I therefore ask the House to reject amendment No. 2.
In regard to the amendments, I accept the bona fides of the Deputies and I understand and have some sympathy for their position. They do not wish to throw money at the problem. As Deputy Ahern said, it is unusual for a Government to want to give out money and for an Opposition to wish to restrict it. It is usually the reverse. Anyone familiar with my legislative and policy record in recent years will know that I would be extremely reluctant to sign State cheques for State companies without very good reason. There is very good reason in this case because very important jobs are to be protected. There is no blank cheque to NET in this legislation. There are present limits which I want to increase by £42 million as a enabling measure and which the amendments want to limit to £12 million, which would be insufficient.
I wish to thank Deputy Kavanagh for his support for the legislation. I agree with the Deputy that a great number of workers have made sacrifices and it would be a pity to lose all that by not seeing this problem through.
Deputy McManus is concerned with the protection of the jobs in the plant and, to a lesser extent, privatisation. As a shareholder the State has always to hold the sale option. If it automatically rules out that option, then it is never really in the marketplace and accepts many things which are not sensible for the company to accept. That does not mean that any decision is being taken to sell NET's stake in IFI. There are no proposals to do that at the moment. I have to tell the House that I regard it as weapon and as an option which any sensible shareholder will always retain and continue to study, to see whether it is in the better interests of the State and the workers to dispose of shares held by the State or to continue to hold them.
A strategic study of the fertiliser industry, the cost to the State and the security of the jobs is needed before deciding on the future of the State's holding in IFI. I reiterate that IFI is a profitable, successful company and it is my duty to continue to stress that NET is a separate holding company which holds the State's share in IFI.
Then why is it paying the depreciation costs on Marino Point in Cork?
I will respond to that question in a moment. It is important for workers to understand that IFI is separate and successful. NET is a holding company which manages debt and is not a trading company. If the workers in IFI felt they were locked into the NET box, as it were, it would undermine their confidence which would be a pity because they run a very successful company and it is important that they understand that. Incidentally, I agree with Deputy McManus in regard to TDs' rights for special pleading.
It is a pity the Minister would not agree with us in relation to the Government's handling of the current crisis.
All of us have duties and responsibilities, nationally, but we are each elected by people in our consituency and while we do not have to blindly repeat in a glib fashion what they ask us to do, we do have a responsibility to bring to the attention of the nation particular problems in our constituencies that sometimes seems to be against the national interest. That circle has to be squared at Government level and I would stand over the rights of Deputies to plead for industries and problems in their area.
I want to thank Deputy Jacob for his support for this legislation. Deputy Bruton asked me if I would again expand on the sale option. I have said that I regard it as just that — an option which I will continue to study. I do not rule out a further study of whether it is more sensible to hold onto those shares or whether it is more sensible to offer them on the marketplace.
In answer to the Deputy's question on depreciation, which Deputy Cullen is interested in, under the joint venture agreement, NET leases the Marino Point plant to IFI at a nominal rent. While NET has retained the legal ownership to it, IFI has the legal right to purchase the plant for a nominal sum on 31 December 1999. IFI pays the insurance costs and the rates at the Marino Point plant but — the Deputy is correct in this — NET charges the £10 million or so depreciation costs in its account. The main reason for this arrangement is to ensure maximum dividends for NET. If IFI's profits are reduced by having to carry the depreciation, then the dividends to NET and ICI are correspondingly reduced, so both ICI and NET get a better dividend from IFI, so it enhances the dividend from IFI.
Where the depreciation is carried is a matter of judgment. It could all be charged on IFI but that would show a worse picture in IFI. Two companies would them have problems instead of one. Perhaps the better way to proceed at this stage is to confine the problems to NET.
Is it a fair summation to say that the entire contribution made was on behalf of the Irish taxpayer? It seems to me that very little contribution was made from anywhere else.
The Deputy must cast his mind back to the debates in this House in 1987 when there was near panic trying to find a joint venture partner. A very sensible arrangement was arrived at. The State had to give a lot but it got a lot. It got ICI on board and it is one of the finest companies in the world.
All matters, including this matter, relating to the joint venture are covered by legal shareholder agreements which were signed, sealed and delivered at the time of the formation of the joint venture. The arrangements relating to the Marino Point plant were agreed at that time. The advantage to NET for carrying its depreciation on its books is that it gets a higher dividend. It is not a complete £10 million write-off. ICI also gets a higher dividend because the depreciation is not being carried there directly.
The Deputy should cast his mind back to the near panic atmosphere of trying to put together a deal at that time when this House was faced with choosing between allowing close-downs on the scale we may be facing in Galway now, or else putting together the joint venture arrangement. It is not a deal which would be arranged in commercial peace time but it is certainly a good deal in commercial wartime. It was the best that could be done at the time.
Deputy Bruton asked me about publication of the gas price. The consequences of publishing the gas price would, in our view, be commercially damaging to IFI. IFI is one of our largest indigenous manufacturing companies. It operates in a fiercely competitive European market, dominated by major multinationals who use their muscle to increase market share. The gas price is the major cost component in the production of ammonia from which most of IFI's fertilisers and industrial chemical output is manufactured.
Knowledge of a competitor's cost base is the essential information needed to attack that competitor's market. That simply means knowing how far one company must push selling prices down to put the other company out of business. IFI would not have this information about its competitors. In any event it would be less useful where the competitor is a dominant multinational with plans spread over different countries, and possibly one activity or business used to cross-subsidise others. This is regarded as sensitive information in relation to IFI and they take the view that it would be tantamount to handing over their markets to their foreign competitors.
We could consider putting the accounts of subsidiaries of NET before the Oireachtas but this does not happen in other State companies. To my knowledge no other State company such as ESB or Aer Lingus, is required to lay subsidiary accounts before the Dáil. Personally, I am uncomfortable with this. I have argued strongly for transparency in all the Departments I have had the honour to serve in. However, the future of those jobs must come first. If it is IFI's view that the gas price and the gas deal is commercially sensitive information which can really only help their competitors, then why shoot ourselves in the foot?
Most sensible economists can probably work out the deals anyway. Perhaps the competitors know the deal. That is a difficult problem to resolve, because it could be argued that if they know anyway, why not give the information out, or on the other hand, if they already have the information, what is the point in giving it out? If the companies make the point that it is commercially sensitive and that confirming it legally and formally would be tantamount to undermining them, then on balance we have a hard enough struggle in this country to hold onto jobs without being so bold as to shoot ourselves in the foot in that regard. I am convinced there is nothing to hide there. The amounts involved can be worked out and I am sure the competitors have already tried to do so. I am convinced that we should stop short of confirming it to them, there is no need to do that.
I know we are very constrained by time so I will be brief. In my view this Bill is not really about jobs in IFI. As the Minister rightly said, IFI is profitable because it is getting a favourable price for its gas and because NET has written off the plant and given it to IFI gratis. The company is returning profits. What I am proposing does not in any way jeopardise those jobs. The Minister rightly said that anyone with a sharpened pencil could work it out. I have not had the time to do so, but we know what the dividends of IFI are, we know what Bord Gáis gets for the gas, we know what NET receives — the Minister has published a figure which shows that NET has received £70 million from IFI. The information is all there. The only people who do not have the information are the taxpayers and other energy users. Potential creditors are not in the dark about it.
This debate today is about democratic control. We just do not know what is going on in this company and we are expected to come into this House every second or third year to underwrite more share capital and guarantee more loans. The planning group some years ago recommended that where a debt is to be paid for a company, it should be done cleanly, the company should be told that the debt has been paid and that it is up to them to get on with the operation of the company. In this case we have paid the debt but we have not made that clearcut. The company is not operating in a proper, transparent way. The Minister's instincts are right and his advice is wrong. He should stick to his instincts and say these matters should be above board.
The issue of democratic control also comes in in regard to the proposed privatisation of this company. It is not satisfactory that we might discover some day that this company, for which we have provided share capital and loan guarantees, year after year, has suddenly been sold off. That is not acceptable. It is not in accordance with the terms of the Programme for Economic and Social Progress. It is not in accord with what this House should do in relation to companies that the State owns.
What is the real future for IFI when the gas interconnector comes into being? Is it not true that the price of gas will rise to at least three times what IFI are now getting from NET, when the gas interconnector comes into being in 1999? How will this company cope then? The year 1999 is not aeons away. These are issues which we should be addressing in this debate. We should have a proper debate and we should let the Oireachtas Joint Committee on semi-State bodies examine the way in which we are heading.
If the Minister can produce figures to show that what we suggest by way of cash will not last a year, I can accept that it is not viable to press those amendments. However, I believe the Minister should give a commitment that this matter will not be put away in a box for three or four years to be forgotten about. If that happens, the Minister will come back and we will have another debate of this nature, again in the dark, with talks of share capital to be pumped in and more loan guarantees.
We really do not know anything about the success or failure of this company. I find that totally unsatisfactory. Is it doing well? Is the State getting a good deal for its shareholding and what are the options?
I compliment the Minister on his forthrightness in handling this debate. I appreciate the contribution he has made and the honest way in which he made it. At the outset, I wish to make it clear that I am not against the workers in Arklow, Wicklow, Cork or anywhere else. Each Deputy has the right to speak on behalf of his or her own constituents and my two colleagues Deputy Cox and Deputy Quill as Deputies from Cork, are only too aware of the situation. However, I would be failing in my duty if I was not to come into this House to ask difficult questions and analyse the answers.
In response to Deputy McManus, it is quite clear I am not taking an idealogical view when my views on Aer Lingus are considered. I am looking at these issues on a case by case basis, which is a responsible attitude. What this exercise is really about is to examine the scarce resources of the State and to try to maximise them in order to tackle the huge unemployment problem of 300,000 people. In this context we need to look at the funding and assets that are available. For example, are we getting the best value in return for our investments in NET?
The world market is over-supplied in the context of fertilisers. With the investment of major players in the fertiliser industry in Eastern Europe and the volume that can be produced there at a very low price it is going to continue. It is unlikely that IFI will make a profit this year. The Minister did not refer to that when he spoke about the requirement of £15 million, he simply spoke about interest charges. Is this because the outlook, even in the current year, may be fairly bad, given world market prices?
Secondly, 40 per cent of the fertilisers produced by IFI are being exported, so the Irish taxpayer is subsidising farmers in other countries throughout the world. I did not realise that 40 per cent of the production of the plants — and I am referring specifically to Arklow and Cork, I am not including the plant in the North — is being exported. I am not against exporting and the revenue that it earns, but I am concerned about the massive subsidisation by the Irish taxpayer of farmers in other countries who are utilising these products. It would be remiss of me if I did not put these questions to the Minister and ask for answers.
To compare Digital with the Bill before us is disingenuous to say the least. In terms of the investment of taxpayers' money, the position of the two companies is not comparable. The figure I propose in my amendments was not pulled out of the sky. I examined the enabling legislation for this company over the past number of years and I believe it was fairly reasonable to work out the type of moneys made available on each occasion, what the money was required for and how long it actually lasted the company. I believe it is a fair assessment to suggest that £42.5 million is about a three to four year run, nothwithstanding the exceptional interest charges which the Minister has outlined. These are hypothetical at this stage and one can only make a guess at them. I want the Department of Enterprise and Employment to come back into the House, through the Minister, to discuss, on a much wider footing, the future of this industry. The situation should not arise whereby we will not hear a word about it for another three years at which point the pressure will be even greater.
Finally I ask the Minister to advise us what life is left in the plant in Cork? Are there four or five years left in it? If the lifetime left in that plant is only another five or six years will further massive State investment be required to bring the plant up to capacity to be competitive in the years ahead? There has been no reference made to this point at all.
As it is now 11.45 a.m. I am required to put the following question in accordance with an order of An Dáil this day, that the sections undisposed of and the Title are hereby agreed to in Committee and the Bill is accordingly reported to the House without amendment, that Fourth Stage is hereby completed and the Bill is hereby passed.
Question put and agreed to.