Gas (Amendment) Bill 2008: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

The recent uncertainty in the international energy market, although temporarily calmed, has led to substantial increases in fuel prices, which has had extremely damaging consequences for indigenous industry, farmers and fishermen. It is difficult to comprehend that earlier this year, oil on the international market was making $146 a barrel, while the price stands at just under $60 dollars a barrel at present. This has not been reflected in the pumping stations throughout this island, in which well in excess of €1 per litre is being charged. Moreover, the large increases in prices charged to domestic customers has placed an added burden on household incomes.

Therefore the extent of the reserves off our coast place us in a unique position with regard to future supply, costs and overall benefit to the people. However, this will not be realised unless the Irish State makes radical changes with regard to how the sector is controlled and how the revenues from that sector are channelled. Other countries have far more control over their oil and gas and the exploration companies are happy to enter arrangements which some people in this country claim would put them off becoming involved here. This is not the experience internationally and companies are unlikely to turn their backs on the potential that lies off the Irish coast because of higher tax and royalties, which would bring this country into line with others. I argue strongly that if international oil companies are prepared to enter into arrangements with other countries and pay far greater tax and royalties to those countries, this also should be applicable here.

In Norway, a state which ironically through Statoil stands to benefit to a greater extent than Ireland from the Corrib gas field, and which has a population similar to Ireland's, the benefits of oil and gas have been massive due to the manner in which the sector is managed by the state. For example, the Norwegians have a state pension fund of $240 billion, largely built from oil and gas revenues. During the first nine months of 2008, while the rest of the world's economies were reeling under the impact of the stock market and bank crisis, the Norwegian Government earned $18 billion in royalties from oil and gas. Combined with the $240 billion in Norway's pension fund, this argues strongly for the exploitation of our resources to the benefit of the Irish people.

There is potential off our coast, but only if it is properly managed and a proper revenue structure replaces the current one, which was put in place by former Ministers whose activities in other areas have been exposed and called into question. Their role in handing over our oil and gas should have been the subject of investigation by the tribunals.

While we are strengthening Bord Gáis, we should also consider expanding the interests of the country in oil and gas by strengthening the State's role and increasing the revenue flow. We need to ensure that the gas that comes on stream is available to people throughout the entire island. Currently, 18 of the Twenty-six Counties are part of the grid. If some of the exploration companies had their way, the gas would be piped out of the country in its entirety. At the very least, we must ensure that, when the new fields come on stream, the pipeline is extended to every part of the country, which should be reflected in lower costs to consumers. It would be ludicrous if the predicted scale of the gas to be taken from our coast did not even bring that benefit.

I welcome the boost the Bill will provide to Bord Gáis and hope that not only will it allow Bord Gáis to expand its operations for the benefit of the consumer and the economy overall, but that the Minister will engage in more hands-on initiatives in the energy sector, particularly in respect of the issues to which I have referred.

The Bill seeks to increase the statutory borrowing limit placed on Bord Gáis from €1.7 billion to €3 billion. Its enactment will give Bord Gáis the legal ability to access funds to develop the strategic direction set out in its five-year corporate plan to 2012 and beyond.

Bord Gáis was established in 1976 with a mandate to develop and maintain a system for the supply of natural gas that was both economical and efficient. The borrowing limit at the time was £25 million. Bord Gáis has played an important role in the growth of the economy through the development of a gas network of more than 12,000 km of pipeline serving more than 600,000 customers. A total of 18 counties in the Republic and four counties in Northern Ireland are connected to the natural gas network. Six years ago, the borrowing limit was increased from €700 million to €1.7 billion.

The structure of the energy industry has changed significantly since the introduction of market liberalisation and Bord Gáis has a variety of roles within the gas industry. It has expanded beyond its original base into the electricity supply market. It has two main businesses, namely, networks and energy supply. It has 600,000 gas customers and a 2007 turnover of €1.215 billion. The company employs 900 staff and has been a successful institution of which the country should be proud.

Bord Gáis holds the transmission and distribution system owner licences in respect of the natural gas network. It carries out work and provides services in respect of the network on behalf of Gaslink, the independent system operator. Through the new connections programme, Bord Gáis Networks brings the benefits of natural gas to new areas and constructs and extends the network to the highest international safety standards.

The 12,375 km of pipeline includes transmission and distribution networks, two sub-sea interconnectors linking Ireland with Scotland, an onshore system in Scotland, a spur line to the Isle of Man, the north-west pipeline from Belfast to Derry, the Mayo-Galway pipeline to bring gas from the Corrib field into the national grid and the South-North pipeline from Gormanstown, County Meath to Belfast to secure long-term gas supplies for Northern Ireland. It is important to note that Bord Gáis is licensed to supply natural gas to ten towns in Northern Ireland. In the week when it was announced that the Stormont Executive is back on track, it is encouraging to see cross-Border co-operation on a practical level.

The operation and development of the gas network in the next five years will involve adding a further 1,500 km of pipeline, the connection of 150,000 new customers, the replacement of the remaining cast iron network and investment in new systems and technology to provide improved customer service.

I wish to discuss the global gas market. Last month, Russia, Iran and Qatar announced their establishment of an OPEC-style gas cartel to control up to 60% of the world's gas supply. Russia's gas export monopoly, Gazprom, stated that it had agreed to form the cartel with an aim to its becoming a permanent body with regular meetings. Europe and the United States have warned against such a gas export body because it would pose a danger to global energy security and create room for price manipulation.

Russia, Iran and Qatar are ranked the first, second and third largest holders of natural gas reserves in the world and boast more than 60% of the global total. They have agreed to hold regular meetings three or four times a year to discuss key issues of gas market developments and claim to have a common vision of the forum's goals and of the need to transform it into a permanent organisation as quickly as possible to serve the goals of stable and reliable energy supplies. It reads like the script of a Bond movie and is an issue that should be monitored. As a member state of the EU, Ireland's voice can be heard.

Natural gas has become a global commodity of geopolitical importance. World gas consumption is projected to more than double over the next three decades, with gas surpassing coal as the world's number two energy source. Experts have suggested that gas could even overtake oil's market share in many large industrialised economies. The advantages of gas include ample supply, its greenhouse advantage over other fossil fuels and its economic competitiveness as a feedstock for electrical power generation.

Across the Atlantic, natural gas is likely to play an even more important role in America's energy production. Between 1997 and 2007, the amount of natural gas used in the production of electricity increased by more than 50%. Natural gas is now used to generate 22% of all electricity in the United States. When one considers that 55% of America's 109 million households use natural gas for heating purposes, one will realise how crucial it is as a source of energy.

Sustained high prices, in conjunction with new technologies, have led to a striking increase in production in the United States following a decade of stagnation. According to the Energy Information Administration in the US, natural gas production has grown by 9% in the past 15 months as companies make use of previously unavailable or unprofitable resources. One result of the growth in production of gas is that net US exports have increased fivefold since 1997, from 157 billion cu. ft. in that year to 822 billion cu. ft. in 2007.

Natural gas accounts for approximately 25% of total primary energy demand in Ireland, a share that is in line with both the worldwide and European averages of 24%. The Irish gas market is small in a European context, using less than 1% of total EU gas consumption. Ireland has an unusually high dependence on oil — 56% of our energy comes from oil, compared to 36% worldwide and 40% in Europe.

It is encouraging that Bord Gáis will have a capital investment programme of up to €2 billion over the next five years. The Government's energy policy framework document, Delivering a Sustainable Energy Future for Ireland, supports the sustainable development of the State energy companies. Competition and environmental sustainability are key pillars of the policy framework. As the Minister outlined, the enactment of the legislation before the House is crucial. Increasing Bord Gáis's borrowing limit to €3 billion is essential, particularly if we wish to have a world-class gas service. Bord Gáis has increased its turnover from €496 million to €1.2 billion and profits have risen from €70 million to €142 million since 2000. Net assets have increased from €672 million to €1.3 billion. This shows that the company is in a healthy financial position.

I support the legislation because it is in the interests of the country to have an efficient energy supply system. Even if we find ourselves facing changed economic circumstances, we should still encourage expansion and development. We should continually look to the future and seek new opportunities. The Bill will assist us in doing just that.

Longford is among the counties that do not have access to natural gas. Bord Gáis, at my request, sent representatives to the county on three occasions in recent years. To date, however, a pipeline has not been laid. I appeal to the company to reconsider the county's suitability in this regard.

Numerous criticisms have been directed at me recently by Members on the opposite side of the House. Five years ago, I stated that I would endeavour to do certain things for the people of County Longford. At that time, I said I would endeavour to bring gas to Longford. I will continue my efforts in this regard. I also stated that I would bring decentralisation to the county, a matter in respect of which I was successful. As a result of my efforts, 130 staff have relocated to Longford and an investment of €19.5 million has been made. I further stated that I would ensure Longford obtained a new swimming pool and a new 25 m, six-lane facility, which cost €17 million, has been put in place.

I will continue to work on behalf of the people of County Longford. However, I will do so in my own quiet way. I will not shout and roar about my achievements. I will continue to work with the people who want to work with me. Co-operation is the only way forward; it is the only means by which one can be successful in any walk of life. Members should work together for the common good of the country. I have no doubt that the Bill is for the common good and that it is designed to promote Ireland. I am sure people will put the country first and cater for the needs of Bord Gáis, particularly as we require the energy it can generate.

I visited the headquarters of Bord Gáis in Cork. I met many of the company's staff, who are a credit to Ireland. The company, as a semi-State body, is also a credit to the country, particularly in respect of the way it conducts its business. I wish Bord Gáis continued success in the future. Once it is safe in Irish hands — with an Irish board and an Irish management team — the success to which I refer will continue to obtain. Irish people are the best in the world. There is no one to equal them when they put their minds to achieving something. They have the expertise, management skills and everything else that is required to make a successful business. Bord Gáis is an example in that regard.

Perhaps Bord Gáis and the ESB might give serious consideration to not increasing the prices they charge if possible. Ordinary consumers are extremely valuable customers and we do not want a situation to arise where they will not be able to afford to pay their bills. Bad weather is predicted this winter and I would not like anyone to be in a position where they could not afford to pay for light and heat. I am sure Bord Gáis and the ESB will pay heed to what I am saying and review the position in order to discover whether there might be an opportunity to reduce prices. I will not discuss the details of discussing recent decreases in the price of oil. However, I am sure those in Bord Gáis and the ESB are aware of how people feel about this matter.

It would be remiss of me not to mention the Corrib gas field. It is important that if we have a natural resource it is used for the benefit of the majority of people in the country. While many people sympathised with those involved in that saga in terms of the inconvenience caused, Irish citizens will normally put up with anything that benefits the majority of people. The minority must sometimes be inconvenienced for the good of the majority. All reasonable and sensible people would agree with the sentiment that we must consider our fellow people. I appeal to everybody, when contemplating actions, to be charitable and to put first the good of the country.

Members on all sides of the House have welcomed the Bill. As has been stated, Fine Gael supports the Bill, which is one of those evolving measures that so often comes before the House in regard to companies like an Bord Gáis.

The Bill provides us with an opportunity to speak about the activities of Bord Gáis, where we would like to see it go and related matters. The increase in the lending limit from €1.7 billion to €3 billion is a big increase. However, all Members are happy to accede to this provision which is, I assume, based on sound management principles.

Bord Gáis has been extremely good at running its core business. Suffice to say, from a layman's point of view — the Minister of State might refer to this when summing up — Bord Gáis is a lucky company in that given the current atmosphere in the financial markets, had it to raise this type of money tomorrow morning — I presume it will require the $3 billion over a number of years — it would be facing a difficult task. Ireland is experiencing a financial crisis, as are many countries worldwide.

On an occasion like this, it is important to point out that Bord Gáis has been one of the better Irish companies. It has been extremely good at its core business, namely, the supply of natural gas. It has, in more recent times, done a great deal of work in the west. Unlike most other utilities, it is seldom we hear complaints about the manner in which Bord Gáis carries out its work despite it having laid countless miles of piping around the country, acquired land, undertaken wayleave agreements and addressed all the legal aspects in this regard. It has dealt reasonably with the farming community and landowners. It appears to have been one of those particularly good national schemes that worked as per specification and plan. As far as I am aware, there were few rows in this regard.

It is hoped that Bord Gáis will strive to deliver a first-class service at a price people can afford. This brings me back to an important issue. Everybody knows that the base price for a barrel of crude oil affects all aspects of our lives. The increase last July to $147 a barrel for crude oil sent everyone into a tizzy, including world airlines and diesel prices.

Not into reverse, I hope.

Last September Bord Gáis sought and was granted a 20% price increase. It later sought a further 8% increase. We were told at the time to consider ourselves lucky it was not seeking a 10%, 15% or 20% increase, which was of little comfort to the people using natural gas. I do not blame the company for this increase as it was tracking the ESB which in turn tracked the price of oil on the world market.

However, I cannot understand — this matter was referred to by almost every speaker — why the current cost of gas, while it has decreased a little, is based on the cost of a barrel of crude oil last July, which was $147. I heard a commentator say on the radio a week ago that at that time the price had decreased from $147 to $50 a barrel, although it is slightly higher now.

Given the Government's objective of providing value for money and to ensure the industrial and economic wheels of the country continue to turn and, above all else, given our commitment to take care of the elderly in terms of home heating, one would expect a dramatic decrease in the cost of fuel at the pumps and for home heating oil. I paid €1.10 a litre for the last tank of diesel I purchased. This was not much less than I paid for a litre of diesel six or eight weeks ago. All of the experts say that we should not be paying more than €1 or 95 cent for a litre of diesel. We are a long way from that price. I raise this issue to draw attention to the correlation between all fuels irrespective of source in that as soon as oil prices on the world market increase, the cost of all other fuels increases.

We have a regulator for everything nowadays. The Government appears to be throwing its hands in the air and saying it cannot by law interfere in these matters. Surely, there exists an over-arching system that will ensure various sectors of the economy benefit when the base price is low, as is currently the case. I am not an expert in regard to what should be the cost of gas when crude oil prices are low. I cannot do that and do not know if there are many Members in this House that could do so. Surely, there must be a relationship between the two. I cannot understand why when crude oil on the world stage is cheap, we must pay dearly for electricity, gas, petrol or diesel. It is about time this matter was examined.

We speak about value for money. I believe people are being ripped off every day. I cannot understand the level at which current prices are set. Natural gas is a clean fuel from an emissions point of view. It is a fuel we should be utilising more. I am told — I assume this is correct — that potentially, from an exploration point of view, it is likely there will be other major finds of gas off our shores during the next few years, although experience tells me this is much easier said than done.

The find off the Mayo coast is a major national asset and will make a huge difference when it is plugged into the national grid. Deputy Ferris accused us of making billionaires out of oil magnates but, if the potential was as good as he claims, I would be surprised that so few gas and oil wells were bored. We all know, however, it is not that simple. While mistakes were made over the years in terms of allowing the profits from mines and oil fields to be exported, we need to do whatever it takes to identify offshore gas resources and pipe them to households at the earliest opportunity. It is a big world in some respects but a small one in others. Russia's gas supplies are situated far from Ireland and the pipeline is vulnerable to a wide variety of interruptions. I will not waste the House's time in setting out the importance of having our own national supply. I hope our offshore gas resources come on stream.

I could not think of a better company to manage distribution than Bord Gáis. I note that none of my colleagues on either side of the House has a bad word to say about the company and, having watched its progress, I concur with them. However, I am concerned about a number of issues. Although we are lucky in counties Galway and Mayo in that most of our towns and smaller villages have access to gas supplies, from a regional and spatial perspective I find it difficult to understand why Sligo and Letterkenny will not be linked to the gas network. I understand evaluations are ongoing but it appears that the spur pipeline which would have to be built to these towns does not meet the economic criteria laid down for Bord Gáis. These criteria are business oriented, in other words, the commercial viability of connecting a town to the network is greatly enhanced if it hosts a large company.

Bord Gáis is now becoming a dual fuel supplier. It will be supplying residences as well as ESB generating plants. Somebody will have to pay a hefty bill to connect households to the network because Bord Gáis does not have the wherewithal to do so. Given that connections could cost as much as €2,500 per household, it would be far cheaper to supply alternative forms of power. It is unfair that areas such as Sligo, Letterkenny or Longford are unable to attract natural gas. Several years ago, many towns in counties Galway and Mayo were ruled out for gas supply, even though the pipeline originated in County Mayo. It was a sore point that gas from one of our biggest finds, the Corrib gas field, would pass through the two counties for economic reasons. However, a way around the problem was found by putting several towns and villages into groups of a sufficient size to make a connection economically feasible.

The north west comprises a huge area and both Sligo and Letterkenny are crucial to the development of the region. If Galway city is taken out of the equation, no heavy industrial hitters are left other than in Dublin, Limerick, Cork and Waterford. For obvious reasons, therefore, it is important that we replicate the Galway model in Sligo and, to a lesser degree, in Letterkenny. It will be impossible to achieve that goal unless these towns have access to natural gas at an affordable price.

I am delighted that Bord Gáis is involved in the supply of electricity because competition is important. It recently purchased a large wind farm in my county. I wonder how this will work out in practice because while we understand the ESB's role in this, the need for alternative energy is increasing. Although I have amassed a fair degree of knowledge on how wind farms work, I cannot understand why it is apparently as difficult to get a contract to sell wind electricity to the national grid as it is to get into heaven. We all want more wind energy but it seems to be beyond the bounds of possibility to supply it even where people have developed projects in good locations. I hope the entry of Bord Gáis into the electricity market will not make it more difficult for wind farm operators. I do not refer to huge companies but to individuals and community based operations. Wind farms are vital for our future, so the impediments placed in the way of connecting them to the national grid will have to be resolved.

I am not sure how far down the road Bord Gáis has proceeded with its dual fuel supply project. I hope it will be as good on the electricity side as it is in its core business. There is need for great competition in that market. I am not saying I have a bone to pick with the ESB group of companies as such. However, we all know what happens with a dominant player in the market and we do not need to spend time on that here.

I hope the passage of the Bill will allow Bord Gáis to carry out its plans over the next ten or 20 years. I wish it well. It has the managerial capacity to deliver. It should always have an eye on value for money irrespective of how big it grows. Whatever it does it must always be remembered that ultimately it is the people who are trying to make a living who are its customers. If for any reason it is not able to supply a service at a price that the consumer can afford that would be the day it would go off track.

I welcome the opportunity to speak on the Bill. Deputy Jan O'Sullivan is in the Chair. If some of the energy that was clearly on show in Thomond Park last night in her home city could be tapped into, we might not need to spend so much money on Bord Gáis. The Bill is timely and it is important from Bord Gáis's point of view that it pass all Stages in both Houses of the Oireachtas before the end of the year because it has an ambitious programme of investment over the next five to six years. The Bill will increase the statutory borrowing limit for Bord Gáis Éireann from its existing €1.7 billion to €3 billion. I am glad it does not simply give acarte blanche to BGE. The Minister for Communications, Energy and Natural Resources in consultation with the Minister for Finance will have a serious input into any of the expenditure BGE will embark on. When the Bill passes all Stages it will have the ability to access funds to deliver on its strategic plan to 2012 and beyond.

As we all know Bord Gáis Éireann was established in 1976 and was given a mandate at that stage to develop and maintain a system of supply for natural gas that was both economic and efficient. Given that it was established at the time of the Kinsale gas field find, I was disappointed recently to read a report that only 9% of the gas supplied to domestic customers now comes from Irish gas fields. It is all the more important that we should continue to explore for new gas sources off the west and south coasts in particular. A recent seismic study of our coastline conducted by the Geological Survey of Ireland has indicated that geologically Ireland has the possibility of holding major deepwater reserves of oil and gas, which is encouraging. This is particularly so for blocks off the west coast adjacent to the current find in Shell's Corrib gas field. The study states that the south coast has proven reserves of both oil and gas in the Helvic and the Seven Heads fields. It is good to know those reserves are there. The problem of tapping into them in such deep water will prove difficult for the gas and oil exploration companies.

Representatives of the gas and oil exploration companies recently made a presentation to the Oireachtas Joint Committee on Communications, Energy and Natural Resources. It was very clear that the cost of exploring for gas off our coasts can in some cases be prohibitive. In today's debate some Members suggested that as a sovereign State we are giving too much away to oil and gas exploration companies when they find gas. It is important to remember that when they were exploring for oil and gas in the North Sea, their expectation was that for every three drillings made, they would hit oil in one. The experience in Ireland over the past 20 years has been one hit in 40 or 50 drillings, which would seriously discourage any international oil exploration company from taking a chance on drilling off the Irish coast.

Based on the report from which I have just quoted, reserves do exist. Perhaps as the oil and gas supplies internationally gradually diminish, it will become more economical for companies to consider Ireland as a place worth exploring for those gas and oil reserves. I understand it costs approximately $400,000 to $500,000 a day to bring on these rigs to explore for oil and gas. As time goes on perhaps more interest will be shown in developing Irish gas and oil fields and we can build on the network that has been put in place since 1976. We now have a sophisticated network running through the country. Some 18 counties are served by Bord Gáis. Presumably when funding is put in place and when the time is right the other counties will be in a position to access domestic and industrial gas from Bord Gáis.

Carlow was one of the first towns to benefit from Bord Gáis supply. While the gas line did not come through Carlow, because of the presence of the sugar factory in the town, which would have been a very big energy user, it was found to be economic to run a spur from the main line to service the sugar factory which was one of the biggest users of natural gas during the sugar campaign season which ran from September to January. That spur coming into the town allowed a domestic supply network to be installed and many of the developers who were building housing estates in the town were able to put in a service for those new houses, which has proved very successful. We have been very fortunate in being able to avail of the gas supply when it came on stream in 1976.

From small beginnings when the original borrowing limit for BGE was €25 million, its recent financial report showed that last year it had a turnover of, I believe, €1.2 billion, with significant profits also. This has benefited the Government as a stakeholder. Bord Gáis has more than 600,000 customers. As the network expands into other counties, that customer base will clearly increase. The Sustainable Energy Act 2002 increased the borrowing limit for BGE from €700 million to €1.7 billion, which was a vast increase at the time and catered for most of BGE's expansion and capital investment needs. It now finds that due to the ongoing investment required and the significant cost of capital and labour-intensive investments, that requirement must be increased to €3 billion.

In the past ten years the network has been transformed with the construction of a number of new pipelines. There is one to the west, which goes from Dublin to Galway, and a spur from this goes to Limerick. There is the South-North pipeline which provides a security of supply for Northern Ireland and a gas supply to many of the towns on the way. The Mayo-Galway pipeline will facilitate the delivery of natural gas to a number of towns along that route, which is very helpful to many towns in Galway and Mayo. It will also facilitate transportation of the Corrib gas to the Irish market in due course.

One of the issues indicated to us by a number of international companies is that the supply of a terminal in Mayo for the storage of gas may encourage other international exploration companies to come on board and consider Ireland as an area to explore. Unlike oil, gas must be stored on land and the costs involved are significant. Now we have one company prepared to invest in and supply the terminal, other companies may be able to avail of the facility if gas is found off the west coast.

In announcing its annual results Bord Gáis unveiled details of an ambitious corporate strategy for the company up to 2014. The company published at the time the results for the year ending 31 December 2007, which showed a significant increase in profits. Among the strategic highlights was the entrance into the residential electricity market by the company, which is good because it will provide competition in a sector which had a monopoly until now. Both domestic and commercial customers will welcome that.

The strategy also highlighted the transformation of the company to a full service energy company supplying both gas and electricity. Customers North and South will be given a real competitive choice. The company has a €2 billion investment in existing and new business and has championed energy sustainability by investing in renewable power as part of the electricity generation portfolio. I am glad to see it is being proactive in doing so. It is hoped to extend the customer base to the 1 million mark, establishing Bord Gáis as the leading dual energy supplier on the island of Ireland.

Among the financial year highlights was group turnover, which increased by 10% to €1.215 billion, as in 2006 it was €1.1 billion. There was growth of 29% in profits before tax to €166 million, compared to €129 million in 2006. Gross sales increased by 8% to €763 million, compared to €710 million in 2006. Gas transportation sales increased by 8% to €169 million, a slight increase on the 2006 figure. Electricity sales increased by 18% to €239 million.

The company is set for a period of major growth and development as it establishes itself as a leading energy supplier on the island of Ireland, with plans to double its value and growth in customer base to over 1 million by 2014. While natural gas will remain the key part of Bord Gáis Éireann's business, the company looks forward to developing a diverse portfolio of assets within the Irish energy sector. It is to be welcomed that it is not just a single product company. Of the €2 billion investment earmarked to 2014, €1 billion will be set aside for investment in new business areas, which is also welcome.

In his statement about the corporate outlook, chief executive John Mullen indicated Bord Gáis "is confident of its prospects in the coming years and this confidence emanates from an already exceptionally strong business space and from the roll-out of the company's ambitious corporate strategy, which will benefit shareholders and business alike". That is positive.

Indigenous gas supplies accounted for only 9% of the total gas demand during 2007, a percentage which will decrease in the absence of further landings of gas. This is the reason it is critical for us to encourage, in whatever way we can as a country, international exploration companies in seeking new sources of gas off our coast.

Ireland may not be recognised as a major player in international gas and oil exploration but it is important to acknowledge we have a number of companies, some of which — like Tullow Oil — are very successful. Despite the fact that the company is registered in London, it is seen as one of this country's biggest successes in the oil and gas exploration industry. It has 120 operation licences in over 22 countries. Other companies operate across the globe in a variety of capacities in resources development and exploration. They include Petroceltic, which is in Europe and Africa; PetroNeft, which operates in western Siberia; Dragon Oil, which has offshore fields in central Asia and petrol resources in the Middle East; AMEC in the US, Africa and Asia; and Pan Andean Resources, which operates in South America and the Gulf of Mexico. We have an interest in the oil and gas exploration area and even to encourage them to return to explore off our coast would be helpful.

Bord Gáis Éireann's requirement for an increase in the statutory borrowing limit has been brought about by the continued growth in the scale of its business, which we have seen since the establishment of the company. It will reach its current statutory borrowing limit by 2009, which means we must have this legislation on the Statute Book for it to avail of increased limits for borrowing. Such an increase in the borrowing limit is required to allow Bord Gáis continue to fund its capital expenditure programme over the next five years. This programme includes the ongoing expansion of its core gas business as it develops as a major energy company.

It is essential the Bill is passed by the Houses before they go into recess for Christmas and Bord Gáis Éireann's strategy is to develop as a dual fuel provider in the energy market, bringing about competition in both gas and the electricity sectors. It contributes to security of supply in both and makes a significant contribution to environmental sustainability through investment in renewable and alternative energy projects. It has proven its commitments in that regard, which is welcome.

An increase in the statutory borrowing limit does not givecarte blanche to Bord Gáis Éireann to borrow to that limit. The Minister for Communications, Energy and Natural Resources, in consultation with the Minister for Finance, will have a significant input into what it spends the money on and when it does so. The proposed increase being debated in Bord Gáis Éireann’s borrowing limit is in line with similar broad increases for other State energy companies.

The last amendment to Bord Gáis Éireann's statutory borrowing was in 2002 when it was increased from €700 million to €1.7 billion. Since then, a number of projects have been completed by Bord Gáis. The construction of a second gas interconnector to secure the supply of natural gas was completed in 2003 at a cost of €300 million. A ring main pipeline from Dublin to Galway to Limerick was completed in 2003 also, at a cost of €400 million. The north west pipeline from Belfast to Derry was completed to serve the ESB-owned power plant located there, which facilitated the later development of a gas distribution network to five towns along the pipeline route. That was completed in the following year, 2004, at a cost of €100 million. These projects demonstrate that Bord Gáis has been proactive in developing its business. I am happy to support the Bill. I hope the success we have seen with Bord Gáis in recent years will continue.

I am pleased to have an opportunity to speak on this important Bill on the necessity of extending the provision of gas connections nationally. Bord Gáis is a good company under its chief executive, Mr. John Mullins. It is an essential part of our infrastructure and it has a good future. We need alternative fuel sources to oil. It is important that we explore all the options in terms of alternative energy and support the work that is ongoing in that regard. I am pleased the Bill is before the House and that there is an opportunity to contribute to the debate on how it affects us.

The Bill is intended to extend the Gas Acts 1976 to 2002, and to use capital to develop an energy company, which will provide gas network services and the procurement and supply of natural gas and electricity, gas transmission and distribution network, including conventional generation, and renewables, investment in gas storage for security of supply, and development of the electricity supply business.

The oil price rise in the past year has had a significant effect on many businesses throughout the country. The escalating cost of electricity was brought home to me in particular following the wet summer, which resulted in the need to dry grain after the terrible harvest. The cost of energy required to dry the grain affected co-operatives and private merchants. We cannot sustain high energy costs. We must bring the gas that is off our shores to land. I cannot understand why people object to the work of Shell in bringing natural gas to land. Perhaps the matter was not handled properly but the natural gas we have in abundance off our shores must be made available to us.

It is important that Bord Gáis would make Tipperary town a priority for connection to gas in 2009. The nearest lines to Tipperary town are the Limerick line, which is located at Ballylanders, and the Cashel gas line, which will be completed in the next few months. I have had many representations from large employers in the area indicating that the increased cost of fuel, as well as EPA directives about heavy oil usage, mean that switching to natural gas is a priority for them. I refer to creameries and private merchants among other employers. The connection of a gas line to Tipperary would ensure that such people could can stay in business and that would guarantee that jobs would stay in the town. We are experiencing a time of recession, and nobody has the answer as to when it will end.

What we, as public representatives, have to do is highlight what will improve our communities. We must examine what will make our country better for people, what will make young people stay on the land in a time of depression, what will nourish and sustain them in the coming years and what will prove to be a far-sighted and worthwhile investment in Ireland's future. It is most important that we make a worthwhile investment in the Ireland of the future. From time to time we debate in the Dáil about what we should do. When we invest in the future we are doing something that is worthwhile for the generations to come.

Small and medium-sized business are struggling beyond belief at present. Every Deputy in this House can see that in the course of his or her week's work. One of the best things that we can do for the future is to provide sustainable, reliable energy resources in which employers can have faith and that will provide them with their requirements. By giving people a direct connection to gas, we are preserving manufacturing in Ireland in the future, by providing a reasonable, clean fuel directly, and one which is much cheaper than oil and also complies with EPA directives.

I cannot stress sufficiently how valuable it is for Ireland to have as many fuel options as possible. Extending the gas supply across the country must be a priority, as it would give people options about the fuel choice in their homes, thereby increasing fuel efficiency, while creating competition in the market and, accordingly, making fuel costs lower. That would mean there is a fuel available to compete with oil, the cost of which is exceptionally high at present, which would help both industry and individual households to save money in both the short term and the long term.

Having a gas line to supply both individuals and businesses would be a great achievement for Tipperary town. It would also serve to attract further investment to the area, as many overseas companies consider a gas line is essential infrastructure in the same way as roads or broadband. Tipperary will be considered in the coming months as one of the towns coming under phase 3 for connection in 2009. I have the support of businesses, home owners, and the chamber of commerce in the area for that move. With increased oil prices and instability in the oil market it would be a positive development to have an alternative fuel source directly in Ireland and in Tipperary. While the investment is large, it is of vital importance that we make it because in order to save money on energy costs in the long run, we must put the best technology in place. We need an electricity and energy grid that works in tandem with all the energy providers of which we can avail, and gas is only one of those. While we cannot do so through this Bill, we need to create an energy grid that can utilise fully all the different energy media, thereby lowering the cost of resources and making us as independent and competitive as possible.

I referred to the considerable number of businesses around the country that are on their knees. They have failed to be competitive not because of their own activities but because of difficulties forced upon them. Jobs will be lost in many businesses. In my constituency, the small parish of Knockavilla and Donaskeigh, nor far from which the Minister has relations, has three major employers. Gerkros Heating Technology in Donaskeigh is now in financial difficulty and an examiner has been appointed in respect thereof. This company has been very much to the fore in the alternative energy industry. It has employed 60 to 70 people in a small rural area and has expanded greatly but it is now in examinership. Up the road in Dundrum, O'Dwyer Steel, which was founded by Mr. John G. O'Dwyer some 60 years ago and taken over by workers, has given protective notice to all its staff simply because it is not competitive. These companies are in a small rural parish. If we do not remain competitive, this story will resonate in every county in the country. It is vital to remain competitive. I hope every Member supports this Bill to ensure our energy sector will remain and become increasingly competitive.

I wish to share time with Deputy John Browne.

Is that agreed? Agreed.

I welcome the chance to speak about Bord Gáis and pay tribute to its management and staff on the handling of the Gaswest project. I have been listening to comments, including those of Deputy Tom Hayes, on the need for gas in various counties. We are lucky that the Gaswest project is providing gas to 12 towns in Mayo and Galway. The management of the project on the part of John Mullins and his team has been extremely professional. The impact of the project has been minimised through proactive working relationships with local authorities, both officials and elected members, and with various business organisations in the area. The project is an example to other State organisations of how to roll out complicated infrastructure.

The Gaswest project depends on the passage of this Bill. It involves an investment of €40 million in 12 towns in Mayo and Galway, thus enhancing our economic potential and offering businesses and domestic users a choice in a very competitive fuel market. Given the increases in fuel prices in the past two years, piped natural gas is important to the region.

The Gaswest project would not be possible without bringing the Corrib gas ashore. I welcome the initiative of the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, and the Minister for Communications, Energy and Natural Resources, Deputy Ryan, in setting up the north-west Mayo forum. I appeal to everybody to use this forum to air their differences and concerns regarding the project, thereby allowing us to reach agreement and complete the project as soon as possible.

The Gaswest project is being rolled out but there are outstanding applications with the regulator and Bord Gáis from various towns in the area. I speak on behalf of the east Mayo towns of Swinford, Foxford, Kiltimagh, Ballaghaderreen and Charlestown, all of which serve a key economic area in the country and are being outpaced by gas developments in adjoining towns. This area of Mayo is home to Ireland West Airport Knock, which has the potential to be an enormous driver of industry in the area in the coming years. A gas supply would be a key element in finally allowing the airport to fulfil its potential.

There is an outstanding gas application from Belmullet, the capital town of Erris. It is the home to the Corrib gas field and also to all the controversy and trouble associated therewith. There is thriving industry in Belmullet but recognition should be accorded to the difficulties that have been faced in the area. I hope this matter can be addressed by the forum and the regulator in the coming weeks and months.

The operations of Bord Gáis and its embracing of new alternative energies in recent years serve as an example to other companies. We are lucky that both Bord Gáis and the ESB, our two main power and energy companies, are embracing the need to change their methods of business to respond to the challenges of climate change, and to consumer demand as consumers become educated on climate change and alternative energy.

The investment flagged in this Bill will allow Bord Gáis to further its work in this area and increase the options available to its consumers to provide energy-efficient and energy-friendly products. The board of Bord Gáis was appointed by the Minister. Credit is due to it on its foresight in respect of the advancement of the company in recent years. It has been transformed from a single-utility operation into an energy company that not only provides gas but also provides electricity. When considering this Bill, it is timely and appropriate for the House to acknowledge this transformation.

I welcome the Bill and the Minister's intention to expand the borrowing limits. Bord Gáis Éireann was established in 1976 with a mandate to develop and maintain a system for the supply of natural gas nationally. The original borrowing limit in 1976 was €25 million. Since then the company has provided a vital role in the growth of the Irish economy through the development of the gas network, which comprises almost 12,500 km of pipeline and serves more than 600,000 customers. Eighteen counties in the Republic and four in Northern Ireland are now connected to the natural gas network. Bord Gáis has an ambitious capital investment programme amounting to €2 billion over the next five years and it has a view to becoming a competitive dual fuel supplier in the Irish market.

The Government's energy policy framework document covering the period to 2020, Delivering a Sustainable Energy Future for Ireland, supports the sustainable development of the State energy companies. Competition and environmental sustainability are key pillars of that policy and Bord Gáis will continue to meet its emergency response standards and pipeline safety standards.

In recent years, Bord Gáis has entered the retail electricity market. While its present customer base is mainly in the industrial-commercial sector, I welcome the fact that it intends to enter the domestic retail market in 2009. This will obviously provide welcome competition in this sector. Owing to its retail gas business, Bord Gáis already has the necessary customer service and billing systems in place to support a domestic electricity retail service.

The development of the gas network over the coming five years will include adding 1,500 km of pipeline to the network, the connection of 150 new customers, the replacement of the remaining cast-iron network with polythene pipes and investment in new systems and technology to provide the customer with a better service.

This brings me to my point on my county and that of the Leas-Cheann Comhairle, which we have been representing for some years. It is in respect of Wexford that I criticise Bord Gáis and different Ministers severely. Sometimes I wonder whether Ministers realise Wexford in the sunny south east is actually part of Ireland.

We will be down for the weekend.

Counties Waterford, Kilkenny, Carlow and Wicklow all have gas supplies, yet Wexford, which they surround, has none. On many occasions we asked Bord Gáis to consider extending to Wexford and were told this would happen after its next review. Those reviews came and went and so did the following ones. Less than a year ago I was told that extension might happen on the next review but that one has also come and gone. Bord Gáis claims that bringing supply to Wexford is not justified.

It is neither fair nor equitable that Wexford should continue at a disadvantage to other counties in respect of attracting new industries and supplying and maintaining those already there. There is a great opportunity. The ESB station at Great Island has been sold to a Spanish company which obviously has plans for the future. Experts tell me that the quickest, cheapest and easiest way to bring gas to Wexford is from Waterford, via New Ross, supplying Great Island and the other industries there and extending into the greater Wexford area.

Wexford has significant industries. As Deputy Hayes said, many of them are currently under pressure with fuel, high energy and other related charges. It is very important that Wexford be considered in this major €2 billion expansion programme by Bord Gáis Éireann. There are many ways of extending the pipeline. I suggested the Waterford route but it might equally come from Arklow or Carlow which both border County Wexford. There are a number of ways of extending the pipeline to Wexford at a low and reasonable cost. It would be a great advantage in supporting the industries already there and would help them to expand. More important, it would be a cornerstone in attracting new industry to the county.

I ask the Minister to consider seriously the suggestion I made about extending the line to Wexford. We need this now and have been fobbed off by Bord Gáis for years, despite repeated promises from the company. The Minister for Communications, Energy and Natural Resources, Deputy Ryan, is a very fair man and he will want the people of Wexford, businesspeople and consumers alike, to have the same gas supply enjoyed by almost every other county. Eighteen other counties have supply as do a number of counties in Northern Ireland. I have no problem with that but it is the right time to extend supply to my county, which is also the Leas-Cheann Comhairle's county. If the Minister can do that we will say he has done a good job in his Department.

I welcome the opportunity to speak on this Bill which is very important. Deputies have the chance to highlight the good work done by Bord Gáis in recent years. Most other speakers have welcomed the publication of the Bill which will provide for the increase in the statutory borrowing limit of Bord Gáis from €1.7 billion to €3 billion.

The introduction of this legislation is a tribute to Bord Gáis. The company is a great example of what can be achieved in the State sector. The commercial State body was founded in 1976, employs more than 770 staff and now has a pipeline network of over 10,000 kilometres. There are two main businesses, namely, networks and the energy supply. The gas distribution network includes two sub-sea interconnectors to Scotland, a spur line to the Isle of Man and two pipelines to Northern Ireland, in addition to a network of distribution lines throughout Ireland. Bord Gáis made a considerable profit last year but needs the money badly. Its profits before tax were €166 million.

As a Deputy from County Clare, I have seen at first hand the work that Bord Gáis and its contractors do. Much of the pipeline that was extended from the west to Galway and into County Clare across the Shannon came through my own parish. It came through my own land and I facilitated Bord Gáis in that. This was a huge project, as I am sure the Minister will acknowledge. It was carried out by an Italian contracting company and involved much work, particularly with regard to safety, which is most important. Bord Gáis is in the process of replacing its cast iron pipes, with approximately 94% of these now replaced by PVC pipes. Last year 177 kilometres were laid down throughout the country. It is necessary to have these pipes at a very high standard for reasons of safety.

I saw at first hand the intensive work done by the contractors and the way in which gas is distributed in a very safe manner in these pipelines. Inspections of gas lines regularly take place. I wish to mention the terrible accident that happened last year just a mile from my house. A helicopter that was inspecting the lines crashed and a Bord Gáis employee was killed. I paid tribute to him, a man from Dublin who gave a lot of time and work to the company. People in the parish were very saddened by that incident.

The company is also an energy supplier. Bord Gáis supplies most of the residential gas market in this country. This market was open for competition in July 2007. In 2001, the company entered the retail electricity market and now enjoys a growing market share. In 2006, it had 8% of the Irish electricity supply. It has 575,000 natural gas customers and will have more than 600,000 by the end of the year, an increase of 5%. Bord Gáis has been doing a good job in an efficient way, selling gas products. It held 37% of the total gas sales market in 2006. It is a very successful company and I commend it for its foresight and for the way in which it has adapted to the ever evolving needs of our changing environment.

I welcome the Minister, Deputy Ryan, to the House and I am delighted he has stayed to hear the debate. I also commend him for his first national energy efficiency action plan 2007-20. It is important we have the plan in place in order that, when our resources come on line, in particular the Corrib field, they are used as efficiently as possible. In that way we can become almost self-sufficient in gas.

Bord Gáis has invested and is committed to playing a very important role in delivering competitive energy to the Irish industry. Only recently it announced the purchase of a 30 MW wind farm development in the west. Deputy Connaughton spoke of this earlier. It has invested approximately €50 million and the development is expected to be in operation by 2011, supplying 10,000 homes. That shows the foresight of the company.

Earlier this year Bord Gáis announced a €1 billion investment in new business areas. The company is already building a 445 MW gas-fired power plant at Whitegate in County Cork which will cost approximately €400 million and it is pursuing other general power development opportunities, both conventional and renewable.

Most speakers mentioned climate change and the effects this will have on generations to come. I am delighted climate change is at the top of the agenda for Bord Gáis. There are fewer carbon emissions from natural gas than from any other fuel. It is cleaner than the alternative fossil fuels and contains less sulphur, an important factor for air quality. It is more environmentally friendly. Energy experts cite natural gas as an important energy bridge for the next decade in contributing to a decrease in Ireland's CO2 emissions.

On 14 November last Bord Gáis, in conjunction with EnviroManagement Services, sponsored a climate change conference in Cork entitled Partnership for Change. Attended by more than 300 environmentalists, climate change activists, NGOs and policy officers, the conference heard Dr. Rajendra K. Pachauri, chair of the United Nations Intergovernmental Panel on Climate Change, express hope and optimism for the future. In particular, Dr. Pachauri asked young people to harness the power of their generation for change and to meet the challenge presented by climate change.

This morning I consulted Bord Gáis's user friendly website and there is no doubt the company is responding to the climate change challenge, contributing to lowering CO2 emissions and limiting the effects of climate change. As I indicated, Bord Gáis supplies natural gas to more than 500,000 households and serves up to 1,700 small businesses. The company has extended the supply of gas into various towns and villages in the west and now supplies natural gas in 18 counties. In 2002, for example, 322 km of pipeline was laid to supply various towns and villages in County Clare. The pipeline in County Clare was routed from Limerick via parts of Mellick to Cratloe and Sixmilebridge, from where it was routed through parts of Bunrattyen route to Shannon town. Since then, it has been extended further to Clarecastle and Ennis as well as Killaloe in east Clare.

Those with access to natural gas are satisfied with the product, which is clean, efficient and controllable. Since the 1980s, an increasing number of people have been won over to natural gas because it remains the most cost effective fuel on the market. We should try to ensure it is made available to every town and village in the country. Unfortunately, in County Clare the gas pipeline which was extended from Limerick and Sixmilebridge does not serve everyone in Bunratty. People living on the Hill Road and Low Road areas of the town are crying out to have the natural gas pipeline extended but have been advised by Bord Gáis officials and local councillors that it would not be cost effective to do so, even though the pipeline is routed along the main Shannon to Sixmilebridge road, which is less than one quarter of a mile away. As someone who promotes natural gas and greener energy policies, I urge the Minister to examine this issue. The position is similar with regard to new sewerage schemes which will only be operational in the main parts of Bunratty and will not be extended further. The Minister should explore ways of extending the gas network to ensure our rural towns and villages reap the rewards and benefits of this valuable energy resource.

The development of natural gas infrastructure is essential in assisting County Clare to maintain its competitiveness. I urge Bord Gáis and the Government to examine whether gas pipelines could be extended to cluster areas around villages and towns. Price is the primary reason more and more customers are being won over to natural gas. Recently the Commission for Energy Regulation published the Bord Gáis submission document on natural gas pricing. The company has confirmed it will apply for a final average increase of 3.5% on natural gas bills for residential and small business customers in January 2009. While wholesale gas prices have fallen worldwide in recent weeks, they remain approximately 50% higher than they were at this time last year. The increase requested by Bord Gáis would add between €3.50 and €5.60 to an average household gas bill.

Last July, the Commission on Energy Regulation approved a 20% increase in the price of gas charged to households and small businesses. The increased rates came into effect last month, adding approximately €13 to the average domestic bill. The ESB, which supplies electricity to 1.7 million households, also expects an increase in the price of electricity to be approved. These price increases will have the greatest impact on low income families who spend 13% of disposal income on energy and do nothing to encourage consumers to switch to natural gas. Energy affordability is crucial for lower income families and industries throughout the country, many of which are experiencing serious strain as they try to ride out the current crisis.

Deputies are aware of the value of gas and oil resources. In 2006, for example, a conflict arose between Russia and Ukraine when the former threatened to withdraw oil supplies to the latter. In Russia and the south Caucasus region, where pipelines traverse different national territories, problems can arise when such threats are made. Russia's decision to seek from Ukraine a fourfold increase in the price of gas triggered a major political crisis, including in western European countries such as France, Italy, Austria and Slovenia, all of which are heavily dependent on Russian oil supplies. The potential crisis was eventually settled this year after a series of tit-for-tat actions by both sides. As a result, energy supplies to Europe are now much more secure.

Figures on worldwide energy consumption in 2006 show that we are heavily dependent on oil, which accounts for 36% of overall consumption. It is followed by coal, gas, nuclear energy and hydro-energy, which account, respectively, for 28%, 24%, 6% and 6% of global energy consumption. The share of natural gas in worldwide consumption has increased from 16% in the 1970s to 24% in 2006. With a decrease in the use of coal expected, gas consumption is anticipated to rise to approximately 30% of overall energy consumption.

I welcome Bord Gáis's commitment to contribute €2.4 million to enable the expansion of Sustainable Energy Ireland's warmer home scheme to more households, with half this amount to be expended this winter. The scheme aims to improve the efficiency and comfort conditions of homes occupied by lower income families. To qualify for the scheme applicants must be in receipt of a social welfare fuel allowance or disability allowance. Any scheme which helps lower income families to afford a warmer home is welcome.

The introduction of the gas smart meter is another way of controlling energy costs. The chief executive officer of Bord Gáis claims that the real advantages of smart card metering arise from customers being able to control energy consumption costs. Consumers can decide how much they want to spend on energy and pre-pay by purchasing a smart card. This is a welcome development.

While a proportion of Ireland's gas requirements come from the Kinsale Head field, where a storage agreement is in place with Marathon Oil, much of the gas consumed in Ireland is pumped via Scotland from the North Sea producers based in Norway. I understand gas from the United Kingdom accounts for approximately 90% of Irish gas consumption.

A recent problem in one of the pipes through which the gas flows has highlighted the importance of ensuring a constant supply is available. When the supply from the UK was curtailed, the price increased. Natural gas accounts for 25% of primary energy demand in Ireland, a share that is in line with both worldwide and European averages, at 24%. The economy is highly dependent on imported energy sources. We have all witnessed the effect of the hike in world oil prices on the economy in recent times. We have a high dependency on oil. Some 58% of Ireland's primary energy is oil, as compared to 36% worldwide and 41% in Europe.

In 1978 gas was first produced in Ireland at Kinsale, and while it continues to produce gas, the output of this field and its satellites will be exhausted in the near future. As I have indicated, some 93% of our gas is sourced from the UK. Further developments both in Shannon LNG across the Shannon estuary, in my constituency, at Ballylongford, County Kerry — Deputy Deenihan spoke of that today — and Corrib gas in County Mayo, are important sources for Ireland. It is estimated the Corrib gas field will produce 60% of Ireland's demand for gas on an annual basis and that is very significant. These projects should secure our demand for energy resources for the foreseeable future. The Shannon LNG company has entered an option to purchase agreement with Shannon Development as regards 281 acres of the 600-acre site between Tarbert and Ballylongford. This will become the site of a major liquefied natural gas import terminal. Some people have concerns in relation to the development of the project and I hope these matters will be resolved in the near future.

LNG is produced in locations where reserves of gas are discovered, but often too far from markets to economically transport the gas by pipeline. LNG export sources include Algeria, Egypt, Malaysia, Qatar and Trinidad, while LNG imports are planned from a number of other countries, namely, Norway, Russia and Venezuela. Industry sources believe our neighbours in the UK will be importing half their natural gas needs by 2011 from remote fields in Russia and Algeria. In 2007, 93% of the all-Ireland gas demand was sourced from Great Britain and in the short-term it will continue to play a very important role in complementing the Corrib gas field.

To chart the future Bord Gáis needs to be in a position to explore new growth areas and develop its gas network. To complete this journey it needs to be in a position to increase its statutory borrowing limits and I certainly support the Bill.

I welcome the opportunity to make a contribution. I do not believe I have ever seen a shorter Bill before the House. Nevertheless, it is of major importance and I welcome the fact the Minister has outlined most of the debate. Bord Gáis, unlike many of the State agencies, has set about, through the provisions of this Bill, expanding the distribution and network of natural gas throughout the country. The list of counties with access to the network will include all of Leinster bar County Wexford, which Deputy Browne mentioned earlier, all of Munster bar County Kerry and only two in Connacht, Galway and Mayo. I believe Galway and Mayo have been included because the link from east-west to connect with the Mayo line going towards Limerick cuts through County Galway. Nevertheless, we see the importance of that in terms of the most recent development and extension to the electricity network, that is, the construction of the gas power station at Tynagh, Loughrea, County Galway. When one reflects on the controversy generated by the proposal to bring gas onshore in Mayo, it must be very profitable for Shell to pursue this development, distribute the gas throughout the country and sell it to An Bord Gáis. It is ironic that Tynagh has become the source of the most recent generation, because it was one of the first places where the natural resources, lead and zinc, were found in the past. A very attractive deal was provided by the Government of the day to the people who developed that mine and it yielded enormous profits to them.

It is important that the west achieves parity with other areas throughout the country, and hopefully because of the basic network that now exists, many towns in County Galway will benefit. We are told there are 12 towns in Counties Galway and Mayo in terms of connection, but there are other towns that have the potential to be connected provided Bord Gáis sees fit to develop such as Loughrea, Gort and Athenry in particular, as well as Ballinasloe. The opportunity should be given for this important infrastructure to be developed there, to give an added advantage, few as they are, for attracting industry to the area.

Bord Gáis has had a 28% increase in profit after tax in the last year. It must be acknowledged that it is one of the few State agencies able to report such a level of profitability. The Bill, given the proposed increase in capital investment, is important and likewise the urgency of this must be acknowledged to allow Bord Gáis to continue. The most attractive aspect of this investment for me is that it will allow Bord Gáis to diversify from the single resource of gas and become involved in renewables. One thinks of the difficulties that have arisen over the last decade, some genuine but others spurious, that stagnated the production of electricity from renewables. I think in particular of the great difficulties many projects have had to face in terms of the delays and additional costs incurred as a result of objections in the planning process. Individuals and bodies such as Dúchas, in the past, have objected to many worthy projects, which had they been put in place would now provide a major advantage given the high cost of oil and fossil fuel energy used in the generation of electricity. There were difficulties and the Minister, his Department and the Government had to react to the situation that arose in Derrybrien. On that hill another major project received planning permission but because of the likelihood that rare hen harriers were nesting in the area the project was delayed for two years at a high cost to the developers until it was allowed to go through. As a consequence, the profitability of the technology changed and there is huge additional expense even before the project gets off the ground. Many complained about the planning process for strategic infrastructure, but it was welcome insofar as it allowed meaningful projects to go through rather than having unnecessary and unjustifiable reasons for delay. The initiative of Bord Gáis which adopts a hands-on approach to all its developments can be seen in a positive light in the manner in which it approached the issue of entry onto lands, completed idts work and then got out without any hassle.

I have asked on numerous occasions about the original project at Tynagh which was developed by Gama and then sold to Tynagh Energy Limited but have never received a satisfactory answer. It has been reliably reported that the cost of generation per unit of electricity at Tynagh is very attractive; that the contract is irregular in that it pays for full capacity of output, regardless of drawdown. I have asked many times if this can be confirmed. If that is the case, it is no wonder we have such a high cost of electricity. I ask the Minister to clarify this matter because it seems to be an unusual contract. We are discussing the advantages of the Bill in bringing competition to the energy market but the contract at Tynagh rules out real competition.

Many have mentioned reliability of supply. Deputy Breen has mentioned that we find ourselves on the periphery of western Europe in the context of the difficulty which arose between Ukraine and Russia some years ago. If it had developed, we would have been the first to have our supply line cut off. The Bill provides for the storage of gas which will eliminate some of the difficulties that may arise in the future. It is possible that gas stored can used to supply rural towns.

Few agencies have provided or proposed to provide a network into sparsely populated or rural areas, unlike Bord Gáis. Recently we have seen, as a consequence of the budget, that the Government and the NRA have decided that some of the road network that was to be in place by the end of 2016 in the west is to be abandoned. We do not know when work will recommence on these much needed projects which form part of the Atlantic corridor or east-west network. We have the potential in the Bill to provide additional funding for the development of infrastructure for the supply of gas in the west.

When we discuss conventional generation of electricity, I hope we will move away from oil and coal supplies. If one is downwind of Moneypoint at Killaloe, County Clare there is ample evidence of air pollution, dust and other emissions. I hope there will be a step in that direction to reduce our dependence on heavy fossil fuels such as coal and oil.

What will happen in the midlands regarding the use of peat? I hope the Minister will give a clear indication from his Department on the generation of electricity using peat. There have been concerns about the loss of employment and the future of established traditions in the production of electricity in the midlands. It is important that the Minister clearly indicates his policy on the continuation of the production of electricity using peat in central Ireland, particularly in view of the escalated prices charged for oil and gas. Thankfully, they have now returned to more reasonable prices. There were suggestions Bord Gáis would have generating stations in the midlands to complement those traditionally established. Many hope the Minister will clearly indicate his ideas in this regard.

I will finish with the issues of competition and the cost of electricity. Some three or four months ago everybody realised oil was expensive and that it was necessary for the ESB to increase its prices. However, despite the increase allowed and although oil has reduced in price, the ESB is now seeking an additional increase. While it is important that the Minister encourages competition, as intended with the resources being provided through the provisions of the Bill, he must also make the ESB aware of the difficulties a further increase in prices would create for many industries and small businesses which are at their wits end in their efforts to survive. If it is necessary for subsidies to be provided, they should be considered as a matter of urgency.

I thank Deputies for their contributions and the indication of general support for the provisions of the Bill. As Deputy Burke says, it is a short but critical Bill that will provide Bord Gáis Éireann with the ability to increase its capital base from the current level of €1.7 billion to €3 billion.

Deputy Burke's last comment related to the cost of energy in the economy and the clear recognition that in order to have a competitive advantage we must ensure our prices are competitive and as low as they can be, given the variation in and volatility of international fuel prices. In the past year we have seen volatility in gas, coal and oil prices which has caused difficulties for all players in terms of the price of energy in the market.

With regard to gas supplies — this brings me to the point made by Deputy Coveney — I hope the significant reductions we have seen in recent times will mean that the price increase signalled may not now take place. We should be into the realm of reductions such has been the consistent reduction in the price of gas. However, this is a matter on which the energy regulator must decide and adjudicate. The apportioning of fuel costs and the models used are in the hands of the regulator and it is up his office to bring down the cost where possible.

The need across the economy for us to have a low-cost competitive energy supply frames my response to the number of Deputies who raised the possibility of the gas network being extended to a range of new towns. I fully understand the impetus behind each Deputy's request, including for Wexford, the Leas-Cheann Comhairle's county. I understand the reason counties and towns seek the extension of the gas network as it may facilitate the development of other industries in these areas. However, the primary responsibility of both the regulator and the companies involved is to be competitive and keep prices as low as possible. In that regard, any decision to extend the network must be based on an economic case that demonstrates dthat there is cluster demand and a viable business case in terms of the increased cost involved in extending the network.

Deputy McManus asked about the implications the Corrib project may have for gas prices. The project should have an effect in reducing prices, but this will be marginal because we are, ultimately, connected with the UK gas markets which are, increasingly in turn, supplied by Norwegian and more distant gas supply sources. I hear from people who have a knowledge of the market and how it works that an increased supply to a market where supply is constrained has the overall effect of dampening down prices. Such a gap between supply and demand in recent years has driven prices higher. Therefore, anything that helps to increase supply gives a cushion between supply and demand. Even if it only has a marginal effect in terms of overall supply, it has a much more significant effect in terms of price reductions. The availability of gas from a number of supply sources, including the Corrib gas field, would have an effect beyond the actual flows with regard to the overall market in reducing prices. This is a factor on which all parties in the House are of a common mind. We agree that we need to develop our natural resources, in this case our gas supplies.

Deputy McManus asked about the taxation of any such gas supplies. It was made clear in August 2007, when I was able to obtain Government approval for a change in the tax terms on profits from our natural resources, that the new tax rate that would apply — up to 40% on the most profitable fields — would only apply to new licences. The arrangements for existing licences remain as they were when granted. The State does not revoke or change contracts halfway through. To do so would have significant implications for the reputation of the State across a range of businesses. Even ordinary householders would understand this, as the conditions would be similar in the domestic environment. If a householder made a contract with a builder to build an extension or a new house and then changed the terms half way through the process, their reputation would be damaged. I was glad, on behalf of the State, to be able to increase the taxation terms in order that any future licence arrangements we enter into would give a greater return to the country.

Deputy Coveney raised a number of points with regard to the development of Bord Gáis. I agree that in its history it has shown itself to be a well managed and effective company which has made proper strategic investments. I also agree with him on the number of new strategic directions that are appropriate. As Minister, I support them. The development of its capabilities as a dual fuel supplier where it may bring competition to the supply sector, be able to provide householders with billing and other arrangements for both electricity and gas supplies and bring about efficiencies brings real benefits to the householder. This will benefit the electricity and gas markets and is something I very much support.

I support the ongoing expansion of Bord Gáis Éireann into the electricity area and its ambitions in that regard, particularly in the development of new renewable technologies, which I believe provide a real opportunity for expansion in our electricity system.

I also agree with Deputy Coveney that the development of the company on an all-island basis was a strategically correct decision. It allows the company to achieve greater efficiencies and to derive some of the cost benefits that arise from operating on an all-island basis. Moreover, the gas and electricity markets here now are determined increasingly by east-west relationships. Our two-line interconnector with Scotland is a crucial item of infrastructure and highlights our utter dependence on the UK market, because more than 95% of our gas is imported from that supply source. Moreover, the UK in turn has gone from being a gas exporter a mere four years ago to being a country that this year relies on imports for approximately 40% of its needs. Consequently, we must recognise, when considering any gas future, how dependent we are on international markets and must protect our position accordingly. I also agree with Deputy Coveney regarding the broader strategic points he was making. It is important that Bord Gáis Éireann and other parties here should develop their gas storage facilities, which will protect us from any future gas supply shock.

I also agree with him it is appropriate not to limit the development of this new energy future in respect of renewable generation to the generation side only. There is great potential for us to develop our transport system in a way that accommodates and benefits such a renewable electricity sector by using electricity as a primary fuel supply in addition to gas-powered and other vehicles. I look forward, as the Minister with responsibility for energy, to working with the Minister for Transport to turn Ireland's transport system greener as we switch to sustainable long-term fuels.

This will require strong companies in both private and public ownership. I perceive publically and privately owned companies to have similar flexibility and ambition in respect of how they manage their affairs, which is appropriate and correct. The Minister's job is to set the overall policy context and then to leave management and boards to use their own skills and expertise to develop business opportunities that will benefit the people in the long run. I have given clear direction that the development of energy efficiencies and renewables constitutes the crucial energy policy direction I wish this State to take. I look forward to companies from both the private and public sectors taking up the challenge to supply the energy needs of the Irish people. I commend the support from both sides of the House for this Bill because I believe that by providing proper borrowing limits for Bord Gáis Éireann, Members are helping it to achieve these two crucial objectives.

Question put and agreed to.