I move: "That the Bill be now read a Second Time."
There are two main purposes for this Bill. First, to provide for the transfer of liability for the State-guaranteed debts of NET to the Minister for Finance and, second, to provide that the Worker Participation (State Enterprises) Acts would not apply to NET in the event of any future sale by NET of its 51% shareholding in Irish Fertiliser Industries.
The Bill also provides for the amendment of the First Schedule to the National Treasury Management Agency Act, 1990. This will enable the Minister for Finance to transfer responsibility for the repayment or management of the NET debt to the NTMA. The latest date for which a report on NET's borrowings is available is 30 September 2000 at which time the total debt stood at £187.2 million.
NET was established in 1961 as a State-sponsored company to manufacture nitrogenous fertilisers in Arklow. The company started in a relatively modest way but expanded to the stage where after the completion of the Marino Point plant in 1979 it was one of our largest chemical manufacturing companies, employing over 1,500 employees. By the early 1980s it was clearly recognised that because of the construction cost overruns and operating losses in the early years of the Marino Point plant, a substantial part of the NET debt was a sunk cost which could not be expected to be recovered. The overall size of the debt and the costs of servicing it were such as to keep the future of NET's fertiliser business and that of its employees in constant jeopardy.
However, the future of the business was safeguarded with the formation of the joint venture with Imperial Chemical Industries in 1987 whereby NET's fertiliser businesses in Cork and Arklow and ICI's Richardson's fertiliser business in Belfast were transferred to the new joint venture company Irish Fertiliser Industries Limited, with NET's old core capital debt, most of which was guaranteed by the State, left with NET.
Under the joint venture arrangements NET took a 51% shareholding in the new company, with ICI taking the remaining 49%. In addition, NET entered into a long-term agreement with IFI for the supply of its gas feedstock requirements with a contract termination date scheduled for the end of 1999. At the time of the joint venture in 1987, NET already had a long-term gas con tract in place with Bord Gáis Éireann under which NET purchased gas from BGE. The old accumulated NET debt, which was £164.6 million in September 1987, remained with NET with the intention that NET would service the borrowings from its income from profits on the sale of gas to Irish Fertiliser Industries Limited and dividends from that company.
Since 1987, therefore, NET's primary activity has been the management of its debt portfolio as well as managing a gas contract and monitoring IFI. However, the combined income accruing to NET from its profits on the sale of gas and from dividends from IFI has been insufficient to fully cover the interest payable on NET's borrowings. As a result, the shortfall in interest had to be converted into new State-guaranteed borrowings, with the result that overall borrowings have continued to grow and have now reached £187.2 million.
ICI and the State have offered for sale their shareholdings in IFI. Following this decision by both shareholders to seek to sell 100% of Irish Fertiliser Industries, two indicative offers were received. However, both the State and the other shareholder, ICI, were of the view that neither offer presented a sufficiently strong basis for proceeding further with the joint sale process. Subsequently, several other parties expressed a possible interest in the purchase of IFI but no further indicative offers were received. The company is still on offer for sale.
I will now turn to the various sections of the Bill. Section 1 provides for the standard interpretation and definitions. Section 2 provides for the transfer of liability in respect of NET's State-guaranteed debt to the Minister for Finance to enable the Minister to discharge the State's liabilities under the various outstanding loans. The current legislative limit on NET's State-guaranteed debt is £200 million and this section reflects that maximum amount.
Section 3 provides for an amendment to the First Schedule of the National Treasury Management Agency Act, 1990, which will allow the Minister for Finance to transfer responsibility for the repayment and-or management of the NET debt to the National Treasury Management Agency. Section 4 is a standard provision to allow the Minister for Finance to make payments arising under this Bill from the central fund.
Under the provisions of the Worker Participation (State Enterprises) Acts, 1977 and 1988, four worker directors are elected to the NET board. Section 5 will enable the Minister for Enterprise, Trade and Employment to make an order which would have the effect of discontinuing the entitlement of the four worker directors to be elected to the board of NET. It is only intended to exercise this power in the event of the sale or disposal of NET's 51% shareholding in IFI. The four worker directors on the board of NET are actually employees of IFI. Therefore, if the State was to dispose of its shareholding in IFI there would no longer be a rationale for IFI employees to be elected to the board of NET.
Section 6 provides for the repeal of all previous NET legislation which comprises Acts stretching from the statutory establishment of NET in 1963 to the most recent Act in 1993. The section provides for the repeal of the NET Acts, 1963 to 1993, to be brought into operation by order of the Minister for Enterprise, Trade and Employment. Again, it is the intention to exercise this power only in the event of a sale of the State's shareholding in IFI and the subsequent winding up of NET.
Section 7 is a standard provision enabling expenses incurred in the administration of the Act to be paid from moneys provided by the Oireachtas. Section 8 is also a standard provision giving the short title of the Act, which will be the Nítrigin Éireann Teoranta Act, 2000. I am confident that the Nítrigin Éireann Teoranta Bill, 2000, will commend itself to the Dáil and I recommend it for approval.
Now that I have dealt with this matter on behalf of the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, I wish to address a few points on my own behalf. NET is a constituency matter for me. I suppose it is my Alma Mater because for a couple of decades I was employed by that company. I see colleagues on the other side of the House who, like me, also have a parochial interest in this. I was distribution manager with the company and was responsible for distribution of products from both the Arklow and Marino Point, Cork, plants, but I was based in Arklow. I had the pleasure of journeying to and from Cork regularly. I want to make a few points in that vein.
The NET factory in Arklow had, indeed still has and I hope will continue to have, important economic implications for my constituency. For many years it was the economic heart-blood of not only the town of Arklow but also south Wicklow and north Wexford, employing in the order of 1,000 or 1,200 people. There was a huge spin-off involvement in the wider locality with hauliers and CIE. There was a great interconnection between NET and CIE, another State company. CIE, in effect, was the end of the conveyor belt of the production line of NET, whereby much of the finished product found its way onto rail trucks, usually custom-built rail wagons, which took the product around the country to Irish merchants, co-operatives and farmers. Hauliers from all over Ireland were employed in that business and benefited substantially.
The company distributed its products through a series of distribution points, all of which were located at railheads around the country, and I was instrumental in putting that distribution network in place. That, again, had spin-off implications for many towns and villages around Ireland where NET product was stored on behalf of the company by CIE personnel, who otherwise perhaps would not have been employed in those areas. Overall it was a great State company and national employer, giving employment widely.
It also had serious beneficial implications for Irish agriculture, farmers and the agri-business generally. While in more latter years prices have fallen quite low, in years gone by that was not always the case on the international markets and were it not for the indigenous production of nitrogenous fertiliser products, for many years Irish farmers would have been held to ransom by high prices with imported product having to be brought into the country, particularly for our important grasslands. In that context, it has been a good company and its management and workers in Arklow and Cork have served the nation extremely well.
Wonderful people started off the company in the early 1960s. J. B. Heinz was seconded from the Civil Service as the supremo and first managing director of the company. He had been a senior civil servant and he was taken from that post by the Government and put in charge of the company. Some years later he was succeeded by Peadar McSweeney, another former civil servant, who took over as the company supremo and managing director and served well for many years. A few other people come to mind, like Brendan Casey, who is a very innovative factory manager. We had a wonderful commercial team at the time. Two men with whom I worked were Tom M. Cullen and Lorcan O'Brien. Mr. Cullen is alive and well and has retired. Unfortunately Lorcan O'Brien has gone to his eternal reward. They were a wonderful commercial team, operating on the world stage at the most senior management and executive level, and they did excellent work for the company and Ireland.
The Arklow and Cork operations, with modern technology and the need to trim down, are operating with far fewer employees nowadays, but it is a tighter and more streamlined operation. Let us hope that they will continue in that vein for many years to come.
The Arklow operation is currently led by its general manager, Bill Flood. Mr. Flood and his management team and their workforce have streamlined the operation and are placing great emphasis on the environmental aspect of the business. Alas perhaps this was not much in our culture as a nation in the 1960s and 1970s and perhaps environmental considerations were not high on our agenda, but they are extremely high on the agenda of that company at present. On housekeeping, the general effluent coming from the plant is negligible and I suppose lessons of the past have been learned. For this, the management and staff are to be congratulated.
The company's Arklow base was the lifeblood of the town and its wider hinterland of south Wicklow and north Wexford. That area really flourished. It was possibly one of the best provincial centres in Ireland in terms of economic activity and employment in those glorious years. Unfortunately, that was to end and much leaner years were to follow because when the fertiliser industry ran down in that town and area, simultaneously the traditional pottery industry began similarly to run down, with huge numbers of lay-offs. It was a devastating blow to that part of the country and to my constituency. Many lean years ensued for that area of Arklow and south Wicklow.
Thankfully, however, that is now in the past. There has been huge infrastructural investment in roads, sewage treatment and water works in the Arklow area. Arklow is now returning to those good years. It is a place that is very attractive to potential investors, industrialists and business people. Already, quality companies have been attracted and have been, and are being, set up. Part of the infrastructure there is an IDA park which is set to flourish with, as I said, quality people providing quality jobs. The good era of NET was followed by a lean period which is, thankfully, being followed by a good and prosperous period with a better quality of life for the people of the area. I apologise if I have been indulging in the parochial for too long but I wanted to put those important points on the record.
