Priority Questions. - Peat Station Project.

Seamus Brennan

Question:

13 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the situation regarding the EU in relation to the new peat station project for the midlands; the reason it was necessary to run two competitions for consultants in relation to the project; the reason for the delays associated with the project; and the amount of the Economic Infrastructural Operational Programme funds which has been spent. [3853/97]

Robert Molloy

Question:

15 Mr. Molloy asked the Minister for Transport, Energy and Communications the current position regarding the EU review of proposals to construct a peat fired power station in the midlands; and if he will make a statement on the matter. [3858/97]

I propose to take Questions Nos. 13 and 15 together.

I am glad of the opportunity to give Deputies an update on the new peat fired power station. This project will underpin the future of Bord na Mona over the next 20 or more years and ensure the continued use of peat in this country's energy fuel mix. The station will be acquired by way of open competition. This will be the first competition of its kind in Ireland for a major power station and I want to make sure it is successful. I have engaged independent consultants to run the competition.

The project has been included in the Economic Infrastructure Operational Programme with EU grant aid of £21 million. The allocation of funding for the project was agreed in a memorandum of understanding agreed with Regional Affairs Commissioner Monika Wulf-Mathies. The schedule for drawing down funds under the Economic Infrastructure Operational Programme requires expenditure commitments to be made by the end of 1999 with actual expenditure completed by the end of 2000. On the basis of the preliminary work done by the independent consultants, there should be no difficulty in complying with the first of these deadlines. The main constraint in complying with the second deadline is the time necessary to secure environmental and planning permissions for the project. The Commission can extend these deadlines and I intend to seek such an extension to cater for this uncertainty.

Press reports last week referred to the midterm review of the Structural Funds. Consultants have been engaged to evaluate all projects under the various operational programmes. The new peat station is just one of the projects under review and it has not, in any way, been singled out for special treatment. This process is part of the normal routine of the Structural Funds and contrary to reports in the press last week, my Department has not received instructions from the Commission about references to the grant in tender documents. Firms which are interested in bidding for the project have known for some time that the Government has EU approval for the grant.

I stress that Government support for the peat station project is not dependent on the availability of Structural Funds, as reports in the press seem to indicate. Successive Governments have taken the view that Ireland must use its own fuels to protect our security of supply as far as is possible. The Government is fully committed to the peat station and we look forward to a competition which will see a new modern peat fired power station being built in the east midlands.

I accept that it has taken some time to get this competition under way. This is the first time that such a competition has been undertaken here. Any extra time taken reflects the care which the Government is exercising over the establishment of this competition and its desire to see that it is conducted properly.

With regard to the issue of engaging consultants for the project, the House will be aware that it was originally intended that the ESB power procurer would run the competition for the new station. On that basis, a firm of consultants, Combustion Systems Incorporated, was engaged to advise my Department with regard to the technical specification which the ESB proposed for the competition. The cost incurred, £26,957, was cofinanced from the Technical Assistance Programme amounting to £20,217.

However, as I indicated in a written answer to Deputy Molloy yesterday, following legal advice from the Attorney General it was decided that the competition should be conducted by independent consultants rather than by the ESB. This assignment is complex and onerous and requires a broad range of skills. Following a selection process in accordance with EU procurement rules, a consortium of consulting firms was selected for the task. The consortium comprises five firms who have been given the task of designing the framework for the competition and running the competition itself. They have been working on the project for the last few months and have almost completed their consideration of the competition framework. There is some further work to be done to complete the project documentation and I expect the competition will be formally announced by the end of March. No EIOP expenditure has been incurred so far on this project.

Is the Minister telling the House the reports in the national media on Tuesday, 4 February and Thursday, 6 February were not accurate? A spokesman for Commissioner Wulf-Mathies in Brussels was quoted as saying that "a supervising consultant had concluded that it would take up to 2004 to complete the plant construction" and that "that would be far beyond the deadline of the year 2000".

Quotations are not in order.

The project is on "hold". Is the Minister telling the House that this is not the case?

That is exactly what I am telling the House. The reports were not accurate. I have been unable to find any foundation for them or any evidence in the Commission that the project is on "hold" or any backing for the claim attributed to the Commissioner in the press.

They are direct quotations from reports by extremely reputable writers. The Minister said he will seek an extension. When does he think the plant will open? What is his best estimate?

I have outlined the factual position. I cannot take responsibility for what the media produces. I intend to seek an extension and will discuss the matter with the Commissioner tomorrow morning. I hope the project will be completed by 2001.

As the Minister is aware, the project which all parties in the House support was initiated during my time in the Department. He will accept that the delay, for which I was previously given a different reason, gives cause for concern. The reason I was given was that because some of those who had expressed an interest objected to the condition that required joint and several liability for the execution of the contract, the contract had to be readvertised. We have now been informed the reason for the delay is that the ESB wishes to act as a procurer. Has the fact that the Government has decided that the ESB can participate in the tendering process for the construction of the plant and that it would be selling electricity to itself caused a problem in the Minister's discussions with European officials on advancing the project?

The Minister informed me before Christmas that the report of the consultants would be available before the end of December and he would enter into a contract early in 1997. I understand the consultants' report has not yet arrived. It is difficult to understand why there should be such a long delay. We have had statements from the Minister and his predecessors about the complexity of the matter but that is a cover-up for mistakes or whatever.

No, the Deputy believes too readily in the conspiracy theory of life.

They are the facts.

There is no conflict or inconsistency between the two matters raised by the Deputy. It caused a delay at the beginning when the decision was taken that the ESB would run the project. That subsequently proved, for reasons that could not be foreseen at the beginning, not to be a practical way of going about it. A change in the procedure had to be adopted.

We told the Minister's predecessor that would happen.

There was a difficulty in the appointment of consultants. When the job was advertised it included a number of conditions, including joint and several liability. One firm of consultants refused to tender on that basis, others did so and then said they did not like the conditions. That part of the project had to be readvertised. The delay added about eight weeks to the timescale for completion of the project.

As Deputy Molloy and other Members are aware, we have the beginnings of a serious problem in the approach to major projects of this kind as they necessarily involve extensive procedures laid down by the European Union as to how one should go about giving contracts for the design of a project, as well as extensive procedures here in relation to planning and environmental legislation and the invitation of tenders. It will be difficult for many Governments from here on to ensure that a project will be carried from conception to birth in the normal lifetime of a Government of four to five years.

The involvement of the ESB in the project to which Deputy Molloy referred adds several layers of complexity. It wants to be a bidder, which is a perfectly legitimate position for it to take. It will also purchase the power generated at the plant. To ensure all of the bidders believe they will be treated fairly we have to ensure the way in which the ESB is treated cannot be represented as a way that favours the ESB over any other bidder.

That is the crux of the problem.

It presents a difficulty but it would be wrong to approach the project on the basis that the ESB should not be entitled to bid for the contract. The Government has taken the view that there will be open competitions for any new power stations on a build, own and operate basis. It would not be reasonable to exclude the ESB from such competitions.

I understood the Minister to say that, even if the grant of £21 million negotiated as part of the operational programme is not forthcoming from the European Union, the Government is committed to the project. Given that he has now informed the House for the first time that the plant will not open for another five years, is he telling the House there is a doubt that this grant will be forthcoming? I fully support the idea that the ESB should be permitted to tender for the contract for the project as long as it is kept at arm's length.

I cannot explain that to the Deputy because that is not what I said. I counsel the Deputy to be careful in parsing what I said. The words I used were I would like to stress that the Government's support for the peat station project is not dependent on the availability of Structural Funds.

That is what I said.

That is not what the Deputy said. He said something quite different. I will explain what that means.

Do not bother. The grant is not forthcoming.

The Deputy asked a question and, even if he does not like the answer, I insist on giving it to him. Under the memorandum of understanding with the Commission £21 million in EU funds will be available for this project.

Will the station be built without a grant?

Everyone who will bid for the project knows a £21 million grant is available.

Answer the question, yes or no.

The project is included in our operational programme. I will be discussing an extension of the project with the Commission. One extension is already more or less in the system and a further one can be negotiated.

Answer the question.

I intend to negotiate that extension in the belief that this project will be finished by the year 2001. I want to ensure that the £21 million of European Union funding is available for a project that will be completed in the year 2001.

Will the Minister ensure it is built, even without a grant?

Such is the Government's belief in this project that it would have proceeded even if there had not been any European Union grant of £21 million.

That is what I said the Minister said.

However, that question does not arise.

The air must be thin across the floor. The Minister's hearing must be poor at that height.

I will ensure, in so far as it lies within my power to do so, that the Deputy's last question, like so many others he tables in this House, remains hypothetical.

I now call Question No. 14.

A Leas-Cheann Comhairle——

Deputy Molloy, if I do not call that question now, I may not call it. A time constraint applies to these questions. The Deputy will note that the third priority question is tabled by his party.

The third priority question has been answered.

The second priority question obtains as the third priority question and the Deputy strives very hard each day to ensure it is dealt with.

We are dealing with the first and third priority questions.

I have called Question No. 14.

On a point of order, before the Ceann Comhairle left the Chamber he said he would call me. The third priority question in my name has been taken with Deputy Brennan's question.

The Deputy has been facilitated.

I have not been.

If I do not call Question No. 14 now, I may not call it. The Deputy heard me say this repeatedly in relation to the third priority question.

We are now dealing with the third priority question, No. 15.

I have called question No. 14 because I do not have an alternative.

The Chair has one. It is used here every sitting day.

Let us hear Question No. 14.

Excuse me——

If the Deputy wishes, I will be pleased to take this matter up with him privately.

The Ceann Comhairle said he would call me.

I may not call the Deputy now.

There is nothing in the rules——

I put it this way, I will not call the Deputy.

This is extraordinary. It is jackboot tactics.

I resent that comment.

I withdraw it. This is extraordinary.

I will be happy to thoroughly explain this ruling to the Deputy.

The record will show that the Ceann Comhairle said he would call me.

One minute remains in which I can call Question No. 14.

If my priority question is taken with that of another Member, I am entitled to ask supplementary questions. The Chair knows it has made a wrong decision.

This issue arises each day because of the constraints of our Standing Orders on priority questions and our wish to protect the third priority question which, today, is in the name of the Deputy's party.

Those questions can be taken in ordinary time. On a point of order, each day a priority question is not reached the Chair says it can be taken in ordinary time.

I regret I cannot accommodate the Deputy. He is wrong in his interpretation of the rules on this. His interpretation applies only to the fourth and fifth priority questions. If we do not reach the first three priority questions within the 20 minutes allotted, they fall. I do not intend to let them fall. I do not let them fall for the Deputy's party and I will not let this happen today. I call the Minister to reply to Question No. 14.