Dáil Éireann debate -
Tuesday, 27 Apr 1993

Vol. 429 No. 6

Written Answers. - Bord na Móna.

Bernard J. Durkan

Question:

33 Mr. Durkan asked the Minister for Transport, Energy and Communications if he has reached any conclusions since I April 1993, regarding possible equity for Bord na Móna; if he has evaluated fully the board's potential in terms of employment in the midland area with particular reference to County Kildare; if he expects to be in a position to relate the peat fuel requirements in respect of electricity generation to the production potential of Bord na Móna in order to utilise, in full, all the resources available with a view to protecting and expanding employment in both sectors; and if he will make a statement on the matter.

Bernard J. Durkan

Question:

265 Mr. Durkan asked the Minister for Transport, Energy and Communications if he intends to introduce legislation to enable Bord na Móna improve its potential by way of an increase in State equity or other means; and if he will make a statement on the matter.

Paul McGrath

Question:

266 Mr. McGrath asked the Minister for Transport, Energy and Communications the views he has on the injection of State equity into Bord na Móna; if he had given an undertaking to the Board or to others that equity would be forthcoming; and if he will make a statement on the matter.

Minister for Transport, Energy and Communications (Mr. Cowen)

I propose to take Questions Nos. 33, 265 and 266 together.

The Government remains fully committed to Bord na Móna, to the development of peat reserves and recognises the importance of peat to the economy of the midlands. The commitment is specifically recognised in the Programme for a Partnership Government.

The board is a significant employer in the midlands and has made enormous progress in recent years in reducing costs and improving productivity. This is evidenced by the fact that operating profits per employee have risen by a factor of four over the last four years. I am satisfied that continued progress on this front is the only means to secure long-term employment in Bord na Móna and I am fully confident that management and the workforce will build on the achievements already made. On the basis of current operating costs, peat is now almost competitive with oil or gas but, of course, the price of peat paid by ESB also reflects the cost to Bord na Móna of servicing its excessive burden of debt.

In considering Bord na Móna's difficult financial position which is due to this debt, it is important to remember that through its sales of milled peat to the ESB the company receives the equivalent of an annual subsidy of about £18 million. This "subsidy" has been at this level for a number of years and is even more advantageous than a direct equity injection because no dividend is payable on it. One of our objectives must be to minimise costs within the economy to promote industrial growth and this burden on the electricity consumer cannot continue indefinitely; however simply transferring it to the taxpayer would not benefit the national economy. In accordance with the proposals in the Culliton report I am working on arrangements to make the subsidy more transparent with a view to its eventual elimination in parallel with a reduction in the excess debt. It is likely that if we do not take action ourselves to eliminate the subsidy, we will come under pressure from the EC Commission to do so in the interest of ensuring fair competition in the energy sector at European level.

The Deputy will be aware that Bord na Móna is currently in the process of conducting a full feasibility study into the construction of a new peat-fired power station. The Government is committed to such a station provided that it is found to be feasible and if it proceeds it will utilise 1 million tonnes of peat per annum. This will be an important element of the current programme to secure the future of the peat industry.

My objective for the future is to see Bord na Móna develop as a solidly structured company capable of making a useful contribution to energy requirements and sustaining viable employment. I am confident that the efforts of all concerned will contribute to revitalising the peat industry and will lay the foundations for the continued use of peat at a competitive and economic cost for the national benefit.