Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 4 May 1995

Vol. 452 No. 4

Ceisteanna—Questions. Oral Answers. - Sale of NET.

Mary O'Rourke


4 Mrs. O'Rourke asked the Minister for Enterprise and Employment if the sale of the State-owned fertiliser group NET is being considered by the Government; if it is proposed to make a decision on the transfer of NET's debt; when a decision will be made; and if he will make a statement on the matter. [88200/95]

The sale of part or all of the State-owned fertiliser group Nitrogen Éireann Teoranta is not currently being given active consideration by the Government. As the Deputy may be aware, NET is a holding company which owns 51 per cent of the shares in Irish Fertiliser Industries. NET also retains and administers the historic debt which it retained when IFI was established.

With regard to NET's debt, a proposal to transfer this debt to the National Treasury Management Agency is currently being considered. However, the amount involved is considerable and careful analysis by my Department and the Department of Finance as to the benefits and timing of any transfer is required, before a decision can be made in this matter. I expect that a decision will be reached in the near future.

It seems that the National Treasury Management Agency is to become a sin-bin for all the debts in semi-State companies. That was not within the Agency's original remit when it was set up to manage the national debt in regard to which it has been remarkably successful. There is a plan to transfer Bord na Móna's debt of £180 million to it. NET's debt is £184 million. Democratic Left's novel idea of a local loans fund proposes the off-loading of debts onto the National Treasury Management Agency——

The Deputy is making a series of statements rather than asking questions.

—— but the Minister of State, Deputy Rabbitte, is not allowed to speak on that.

Would the lady like to ask a question?

Does the Minister consider — while I know he will tell me this is a matter for another Minister — that this loading of additional debt on the National Treasury Management Agency will have serious implications for the national debt? Furthermore, will he say whether he approves of this kind of off-loading of built-up State companies' debts on the National Treasury Management Agency?

Certainly I do approve of what is proposed here. Nítrigen Éireann Teoranta is a holding company which earns revenue, not from trading in the marketplace, but essentially from a gas contract it has and which it sells on to a trading company. As the Deputy will know, what happened over the years is that the revenue from that contract has not been sufficient to meet the accumulated debt passed to NET, when the old NET was being structured and Irish Fertiliser Industries was established. Effectively, therefore, NET is just a debt management company. There are considerable advantages in transferring the debt within NET to a larger debt management company, such as the National Treasury Management Agency, which has the resources to manage that debt effectively and, as the Deputy rightly pointed out, also has a strong record in achieving economies in debt management. Therefore, it represents a sensible application of the State resources to consolidate this debt in the National Treasury Management Agency.

The issue as to whether this will impact dramatically on the national debt, as the Deputy said, is a matter for another Minister but we realise that the NET debt is guaranteed and held by the State. This arrangement will move that debt to another company, the National Treasury Management Agency, for its management. It does not increase the debt burden of the taxpayer or the State, it is simply a matter of more efficient management.

Is the Minister aware that the National Treasury Management Agency has not been informed formally of any of these debts to be piled on that agency, but has become aware from reading newspapers, like everybody else, which is something that will have to be addressed? Will the Minister say whether the State is considering the purchase of an Imperial Chemical Industries' stake in Irish Fertiliser Industries and, if so, its cost, or does he have any idea?

That is a different question whereas this concerns what sales we would make rather than purchases. I would have to ask the Deputy to table a separate question on the matter. Of course, the National Treasury Management Agency will be involved in discussions. As I indicated in my reply, no decision has been taken to transfer such debt, discussions are continuing which will involve the Department of Finance, the parent company dealing with the National Treasury Management Agency. I have no doubt that the views of the National Treasury Management Agency will be a very important ingredient in these discussions. I believe that the record of the National Treasury Management Agency in debt management renders it logical and sensible that it should also manage this element of debt on behalf of the State.

My concern stems not so much from the proper monitoring and evaluation of the National Treasury Management Agency but that it would set a very bad precedent and example for any State company finding itself debt ridden, to have the comforting knowledge that the National Treasury Management Agency would receive it into its ample bosom.

I do not want to repeat myself but that is not what is happening in this instance.

It appears it is.

I will explain it again. NET is a debt management company, it has a certain debt it manages and has very limited revenue from a gas contract. The operating company is Irish Fertiliser Industries, the one that trades in the marketplace and that must guarantee its commercial future. There is no question of the State taking on any new debts from Irish Fertiliser Industries which is the trading company. Essentially what is proposed here is that NET, which separately manages a debt of the order of £160 million to £180 million, should not duplicate efforts on debt management which can be done much more effectively by the National Treasury Management Agency, which was established with the sole remit of managing debt of this nature. Therefore, there are no implications in this transfer of debt for the commercial exercise of any entity trading in the marketplace.

It is becoming a sin-bin.

Will the Minister of State, Deputy Rabbitte, rewrite the policy?

The time available for questions nominated for priority has been exhausted. However, I will allow the Minister to take Question No. 5 in accordance with new procedures adopted by the House for dealing with remaining questions nominated for priority.