I welcome the representatives from Bord na Móna, namely, Mr. Gabriel D'Arcy, chief executive officer, Mr. Gerry Ryan, company secretary, Mr. Pat Downes, head of regulatory affairs, Mr. Tom Walsh, head of resource recovery and Colm Ó Gógáin Uasal, director of strategic infrastructure and thank them for their attendance. I draw their attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I now invite Mr. D'Arcy to address the joint committee.
Clean Water, Energy and Air: Discussion with Bord na Móna
Mr. Gabriel D’Arcy
It is a privilege and an honour for me and for my colleagues to be present and to be afforded the opportunity to give a presentation to the joint committee. I will introduce some members of my senior team. Mr. Tom Walsh is our head of resource recovery, which encompasses our waste business and so forth. Mr. Colm Ó Gógáin is our head of strategic infrastructure, Mr. Pat Downes is head of corporate affairs and Mr. Gerry Ryan is our head of land and property, as well as doubling up as company secretary. The clerk informed me some minutes past that instead of having an hour in which to give my presentation, I have been allocated 15 minutes. Consequently, I will cut to the chase and am sure members will be quite happy with that.
Bord na Móna is 75 years old and is one of the less than 5% of companies globally that were around 75 years ago and which still are around today. To give members an idea of its transition in the recent past, once upon a time Bord na Móna was a 100% peat company that was 100% regulated. By the year 2000, the percentage had fallen to 60% and by 2020, it will be down to 30% of its activities. As some members may be aware, the company yesterday announced its results up to the end of March for the year 2010-11. Our earnings increased by approximately 12.5% on the prior year, profit after tax increased by 23% to €12.9 million at a fairly stable turnover of €382 million.
There was some commentary about dividends and I am sure members will be interested to learn of the company's dividend to the State. On the basis of the results published, we will pay a dividend of €4.3 million that will be payable within the next couple of months. For members' interest, we also pay corporation tax of €3.8 million and the company has in excess of 2,000 employees with a pay bill of approximately €100 million. At an income tax rate of approximately 35%, we pay approximately €35 million in income tax. The organisation's total value to the State in terms of taxes and dividends is of the order of €43 million to €44 million for the year under review.
I will now talk about some of Bord na Móna's key competencies. I hope many members can associate with them, as many of them represent constituents in our heartland. We have an experienced and proven commercial management team. It is a blend of relatively new blood and experience. I have been in the organisation for three years and in the Kerry Group for 19 years, most of which time was spent abroad. As for the senior team present, one member, Colm Ó Gógáin, who is an engineer, has been in Bord na Móna for his entire career thus far. The other members of this group have been in the organisation for less than five years. Similarly, the rest of the management team comprises a blend of experience, that is, Bord na Móna members who have been there for their careers, and new entrants, that is, people like me who have come in from a fairly strong commercial background.
We have an experienced and proven commercial management team. Our results reveal this to be the fifth year of year-on-year earnings growth, notwithstanding the challenges we face in Ireland and internationally because we export a great deal of material. We are the largest single-volume exporter out of the country and have businesses in North America and the United Kingdom where we capitalise on some of our key technologies. We have a strong balance sheet and the capability to access international markets, which is very important. We raised $200 million, and over the past four years have raised $350 million, on the United States' private placement market. These debt providers were very encouraged by Bord na Móna's capability to manage itself. We are self-financing, profitable and growing which is reflected in our balance sheet. It is important because it gives us the ability to invest in our plans and implement our strategies. We also have the capacity to adapt to changing challenges. The company is still in operation after 75 years and expects to be for another 75.
Bord na Móna manages a diverse portfolio of businesses, having much experience in renewable energy generation in wind and biomass. Bord na Móna was the first company in Ireland, and even in western Europe, to build, own and operate a commercial wind farm. It has the longest line of clean data of any company in the British Isles.
Bord na Móna has an ability to deliver on large capital infrastructure projects with its own in-house engineering, planning, financing, procurement and operating capabilities. We have built and managed the largest engineered landfill site in the country, as well as being the largest volume exporter. Another unknown fact is that Bord na Móna owns the largest private rail network in Europe and which is even larger than that of Iarnród Éireann. It also manages a large land bank, 80,000 hectares.
Most importantly, Bord na Móna is a trusted neighbour and corporate entity with a good reputation built up over many years. In this day and age, trust is the scarcest commodity and an important attribute.
Clean energy for Bord na Móna is biomass and renewable energy sources. We have a pedigree in wind generation having built and operated the first commercial wind farm in the country. We got planning permission for what was in its day the largest onshore wind farm in western Europe, in north-west Mayo. Thankfully, we have announced a joint venture in expanding this facility. Planning permission and grid offers are in place for 120 MW wind farms in the midlands. This will open up opportunities in clean energy. In the past, wind farms tended to be in areas with good quality wind such as offshore sites or just inshore on the coast. In midlands bogs where peat extraction has ceased, and with modern technology, there is a real opportunity to build renewable energy projects which can be immediately connected to the grid.
There are three peat-fired power stations in the midlands with 378 MW of installed capacity. With some modifications, these could be switched over to biomass, a sustainable feedstock. Biomass capacity would also be the equivalent of a 1 GW wind farm. The Irish Academy of Engineering has pointed out biomass is the cheapest renewable electricity generation. We see energy crops as a key indigenous component in a range of biomass materials. Our target for our power station is to supply 100,000 tonnes of energy crops, primarily short rotation willow, by 2020.
It is hoped the Department of Agriculture, Fisheries and Food will continue its bioenergy scheme. Last September, Bord na Móna launched its farming energy from the land programme which offers growers long-term contracts and grant-matching finance for establishment. In June 2011, the Minister for Agriculture, Fisheries and Food announced a suspension of further applications for the agricultural modernisation schemes which included grant support for energy crops amounting to €1 million. Energy crop growing is employment intensive and it provides the real opportunity to generate a significant number of jobs. We see opportunities for up to 900 jobs in energy crop growing and production in the areas around the three power stations I referred to earlier if the switch is made to biomass. It makes perfect business sense to switch these plants over and would assist in meeting Ireland's 2020 greenhouse gas reduction.
Mr. Tom Walsh
Bord na Móna is one of the three largest waste management businesses in the country with 9% of market share. The fact that it is one of the top three with such a low market share indicates the degree of fragmentation in the industry, which in itself is an issue. We service the domestic waste management requirements of approximately 70,000 households, largely in the Leinster and north Munster area, and 4,000 commercial businesses nationwide, from corner shops to large multinationals. It is a unique context for a waste management business.
One of the significant differences to our competitors is that we are co-housed with a growing media product, such as Growise, and energy business. Much of the waste we manage on behalf of our customers ends up being valuable raw materials in other parts of the Bord na Móna business. For example, the Kilberry green waste compost facility in south Kildare has a licence to handle 100,000 tonnes of green waste material. This material, which otherwise would have ended up going to landfill, instead ends up, following a compost process, in our retail compost products. It is completing the cycle of recovery of the product.
We have a focus on ensuring organic and food wastes are kept out of landfill, an issue associated with the landfill directive, through an extensive roll out of brown bins to commercial and domestic customers. Approximately 77% of our domestic customers are in receipt of a brown bin. To process this material, in October we will open the largest brown bin composting facility in Drehid, north Kildare. It will replicate our green waste facilities. It will take otherwise carbon dioxide emitting wastes when they go to landfill and convert them into a saleable product.
In 2010 Bord na Móna will open the largest landfill-gas energy generation unit in the country in Drehid, north Kildare. Three large generators will be connected to the national grid to provide 5 MW. This is another good example of the synergy brought to bear through the waste management business being co-housed with growing media and energy products.
Even though it owns and operates the largest landfill in the country, in the medium term, Bord na Móna has the specific and challenging corporate goal to make this asset redundant. By 2014, we aim to have 80% of the waste materials we lay our hands on kept out of landfill. At present, that percentage stands at 56% and our proposed development of a large scale mechanical-biological treatment, MBT, plant at our waste facility at Drehid in north County Kildare represents a major step in our journey to 80%. For those who are not familiar with the technology, MBT involves the segregation of domestic black bin waste into its synthetic and organic components. The synthetics are converted into clean fuel for use in the cement industry and the organics are composted to mitigate the harm they can cause when sent to landfill.
Apart from our target of 80% landfill diversion by 2014, we are also participating in a phase of consolidation involving the wider Irish waste management industry. Members may be familiar with the waste generated as a result of the fragmented nature of our industry. All of us can tell stories about housing estates in various parts of the country which are serviced by multiple refuse collection vehicles, RCVs. This is unnecessary and we will co-operate with the Minister for the Environment, Community and Local Government in his roll-out of a new waste strategy to deal with the issue. However, we also expect the private sector to address the issue through the normal process of industry consolidation. I thank members for their time and attention.
Mr. Gabriel D’Arcy
I will now speak about the issue of water, which has received a great deal of attention over several years. I shall make a few general points before Mr. Colm Ó Gógáin speaks about the plans and projects in which we are involved. From an international point of view, we are beginning to realise the strategic importance of water.
I was involved in marketing Irish food products internationally for 19 years. The real advantage for Irish food is our moist climate, which enables us to grow a rich crop of grass every year. We also have an ideal climate for growing certain types of biomass, such as willow, and that can give us a disproportionate advantage in energy production over other countries. Mr. John Sweeney, who is professor of geography in NUI Maynooth and probably Ireland's most eminent climatologist, highlights the fact that as climate change progresses the eastern part of Ireland will become drier while the midlands and the west will be damper. This might not be helpful from a tourism point of view but it could be advantageous from other perspectives. It can, for example, offer significant advantages in terms of foreign direct investment. I have discussed with the IDA the potential for bio-pharma, information and communications technology and our indigenous food industry, all of which need large quantities of water. The head of corporate affairs for Intel described the importance of water as follows:
as a resource, it's important to plan. Water is an important competitive advantage for a country. There's definitely a compelling need for water security. Kildare County Council are very good business partners[.]
He also noted that water is a specific resource that US companies put on their checklist of needs. A recent conference organised by Midlands Gateway Chamber and Atlantic Corridor drew together 80 company leaders across all sectors to see what we could do to build confidence and generate business and employment in the midlands. The ICT group, which was chaired by the ex-general manager of Intel, Jim O'Hara, highlighted the delivery of a water project as offering the biggest opportunities for ICT investment.
I will ask Mr. Colm Ó Gógáin, our head of critical infrastructure, to speak in more detail about our future plans in this area.
Mr. Colm Ó Gógáin
Water is a critical issue for us. In 1996, the Department of the Environment forecast water shortages in the greater Dublin area by 2016. In 2004, Consultants were engaged through Dublin City Council and they spent the following six years, until 2010, evaluating as part of the strategic environmental assessment process all options to determine the optimal solution.
In any solution, the word "sustainable" is critical and sustainability of supply and demand has to be ensured. Leakage on the demand side currently stands at approximately 29% but it is planned to reduce that figure to the European benchmark of 20%. The average across the rest of the country is approximately 60%. The reduction of demand from domestic consumers through metering and usage charges will also be factored in so that water will not be wasted.
To ensure sustainability of supply, ten different options were considered ranging from desalination and groundwater to various options on the Shannon. The question arises of how one guarantees supply in period of drought. Records are available on flows on the Shannon since Ardnacrusha was commissioned in 1929 and the most severe drought experienced over that time was during a two month period in 1996. If sufficient volumes of interim water storage can be provided between place of extraction and delivery point, sustainability of supply could be provided.
The preferred option for Dublin City Council and the Department of the Environment, Community and Local Government incorporates interim storage and the extraction of water from the north of Lough Derg during periods of high flow. The rate of water extraction would be proportionate to flow in the Shannon and stored in interim storage facilities built on our site at Garryhinch Bog. We can outline this proposal in more detail to those members who visit Garryhinch. The bog, which comprises approximately 1,500 acres, has been a sod peat operation for several years and it is nearing the end of its life. It is proposed to flood approximately half of the site by constructing a reservoir to store 15 million cu.m. so that during drought periods it would not be necessary to extract water from the Shannon. The distance between the Shannon and Garryhinch is 65 km. Garryhinch lies between Portarlington and Mountmellick. The water will be treated as required and pumped onwards to the supply area.
The potential supply area was originally the greater Dublin water supply area comprising the four boroughs, and Wicklow, Kildare and Meath. Supplies must now also meet demands from counties Westmeath, Laois and Offaly. Effectively, ten local authorities can be supplied from this new source. As it is a man-made reservoir we can design it to incorporate an eco-park based on water sports and the other features we have built into Lough Boora parkland. People are living longer and healthier lives and they need activities to occupy their time. This type of outdoor leisure activity will be compatible with that objective. The project is in its infancy. The first stage of planning is the strategic environmental assessment in which one declares what one will do and the preferred option. Then, one prepares a planning application. In the preparation of a planning application, an environmental impact assessment followed by an environmental impact statement are critical because environmental issues are raised in extraction, storage and through the network. Potential environmental issues must be factored in, assessed and mitigated against. An integral part of planning is consultation. Much consultation has taken place to establish the preferred option. A significantly higher degree of consultation will take place as the project develops because it will be focused on one rather than ten options. The next stage of the process is preparation of the planning application after which it will go to An Bord Pleanála for adjudication.
At present, we are on a knife edge with regard to demand. Dublin City Council has issued water alerts. I have never seen the bottom of the reservoir near Drogheda, but one can almost do so at present. We are very close to the drought conditions of 1996. Demand is increasing. At best, it will take until 2020 to put this in place so it needs to be progressed fairly quickly.
As a requirement of the EU-IMF financing arrangements with Ireland, the Government has been asked to examine how water services are delivered with a view to consolidation in the waste industry, as Mr. Walsh mentioned. At present, 34 local authorities service the water needs of the economy. As Mr. D'Arcy explained, Bord na Móna is well-equipped with the competencies to take on this mantle.
The Department has two options. It can consider a greenfield concept and establish a new quango or State company to do this. This would mean a new team of people would be put in place who would have to learn to work with each other and manage this transition at a time when supplies are very tight and one cannot afford to get anything wrong. Another part of the island had a bad experience last winter when it hit the first difficulty. Alternatively, what Bord na Móna proposes is that with the competencies we have, our track record and the trust placed in us, we can take on this challenge and deliver. At present, the economy is not in a healthy state. It would not be easy to raise €400 million or €500 million for a project such as this. Bord na Móna has demonstrated its capacity to raise money in private placement markets. Off-balance sheet money can be raised for this. We are equipped, ready and willing to take on this challenge on behalf of the State.
Mr. Gabriel D’Arcy
I thank the committee for listening to us. The integrated nature of our business is one of the main thoughts with which I would like to leave the committee. We are the only company which has a waste company with a horticultural business associated with it. Of that, the vast majority is exported through Dublin Port and elsewhere to the United Kingdom where we are the biggest player in packaged growing media. We are one of the few companies to have the range of capabilities we believe is required and can be deployed in some of the critical areas of infrastructure in Ireland, including the provision of clean energy and clean water.
A number of members have indicated they wish to speak and I assume other members also wish to do so as there are more than 20 of us here. As with other meetings, I propose to take members in batches of four or five in the sequence in which they indicate to me. I call Deputy Noel Coonan.
I thank the representatives of Bord na Móna for coming before the committee. I do not like speaking with people behind my back but as it is Bord na Móna I feel safe. I thank the witnesses for their presentation. A huge amount of issues are raised and I will not take up the committee's time by dealing with all of them. Instead, I will raise a number of specific issues.
It was stated that peatlands are on their way out. What will happen to the revered peat briquette, bearing in mind that they are manufactured in my constituency in Littleton, County Tipperary and Derrinlough in Birr? The important and significant role played by Bord na Móna in the economy was also mentioned. Most of us, if not all of us, appreciate this. However, the number of people employed by Bord na Móna was not mentioned. How many people are employed at present compared with how many were employed in the past?
I am concerned about the proposal to bring water to the water park in Garyhinch and then to Dublin. Consultation was mentioned as was a selection process and a preferred option. The preferred option was Lough Ree but the water will be taken from Lough Derg. There is a lack of consultation with the people in this area. I am not stating I am against the proposal but anybody who has voiced concerns and objections has been shot down by the consultants, Bord na Móna and others. Due consideration should be given to the people in the area. Will the witnesses give me an indication of what is in it for the area and for these people? They are concerned about the environmental effects of taking water from the Shannon in the area. The people of North Tipperary want to be treated equally and on a par with the people in other parts of the country affected by this project.
The witnesses mentioned the damp climate. The weather at present is depressing and what was depressing about today's presentation was the statement that the depressing weather will continue. The witnesses offered no hope to the people for a bit of sunshine. With regard to the loss of water in Dublin, that real problem is wastage and the witnesses did not outline their proposals on how they will solve this. It does not matter from where the water is pumped without having a proper way to get it to where it should go and preserving it.
I will abide by the Chairman's instructions to keep it short and I presume we have the right to speak again later.
Yes, if members keep their commentary short. I will allow as much engagement as possible.
I will also try to keep it short. I should probably say "happy birthday" to Bord na Móna as it is 75 years old. It has made a huge contribution to Ireland, particularly through job creation in rural Ireland. Sometimes this is not appreciated, so well done.
The witnesses gave good information on the dividends, particularly the €4.3 million this year in corporation tax. Will they provide the committee with a record of dividends over the years? For any future investment, a strong balance sheet is very important as at present, it is very important to be able to borrow money. An interesting point was made on wind farms and energy already connected to the national grid and we know about the controversy over this. The point on offshore developments not being able to connect to the grid is also important.
Witnesses touched briefly on mechanical biological treatment, MBT. What tonnage does Bord na Móna envisage putting through MBT? How will a balance be worked out with incineration if we go down that road? This is important for planning for the future. It was interesting to hear Bord na Móna has 9% of the market share of the waste management business. This shows how diverse the market is. I was surprised because I had not heard this figure previously.
I very much welcome the potential to create up to 1,500 jobs by 2014, which is in the delegation's document but which the witnesses did not mention. This is very important in today's economy.
Like Deputy Coonan, I also wish to discuss the extraction of water from Lough Derg. I strongly agree with Deputy Coonan's point, in that there is need for local consultation and, where extraction is concerned, local gain. These are important elements. In terms of consultation and building trust, if water is only to be taken from the Shannon during a flood period, the commitment must be backed up and explained to the local community. Although this is being done, Bord na Móna has not pressed the message home fully. If the figure is to be approximately 2% at flood, is there a mechanism whereby extraction could be placed under local control so that people might feel confident that only 2% is being taken? Legislation exists, but it is important that there be trust within the local community. Whether one is from Dublin or Donegal, the River Shannon has a special place in one's heart. For many reasons and not just its tourism potential, it is of the utmost importance that we protect the river.
The idea of creating a reservoir in the centre of Ireland was mentioned. Rutland Water undertook a similar project in the UK. Given that it received more than 1 million tourists last year, significant job creation in the middle of Ireland is possible in terms of direct and knock-on employment, for example, accommodation, restaurants, and so on. This is an important element of the project.
The eastern region was referred to briefly. That some 40% of the nation's population will be serviced by this project is an important consideration.
Intel was cited. We all know how many people it employs, but our main competitors for further investment from that type of industry are the likes of Israel. Our tax rate might be 12.5%, but water will play a more important role in developing industries.
I thank the delegates for their presentation. They might address the issue of leakage. The Dublin region experiences leakage of approximately 28%. All of the pipeworks were replaced in one area, yet leakage of more than 20% on private property still occurred afterwards. With our low pressure water system, the best leakage rate we will ever get is approximately 20%.
I thank the delegation for its impressive presentation. For many generations, the drainage of the River Shannon was the preserve of parish pump politics. It faded into the background, but our guests have succeeded in bringing it to the fore following rather than prior to the election. That notwithstanding, I am opposed to any proposal to take water from Lough Derg. There has been an effort to spin the project as being of potential benefit in terms of the creation of jobs and tourism amenities in the midlands. This spin hides the true nature of the project, which could have a negative effect on the river's existing infrastructure. It is also a repackaging of another project, one aimed at Lough Ree, that needed to be shelved due to the adverse public reaction in the Athlone area.
The impact on the amenity that is Lough Derg could be negative from the points of view of boating, angling and recreation. When one considers that the lake is a tourist attraction, I do not know how anyone could suggest that, by transferring the benefits of one lake to Garryhinch, one would create a major tourism attraction. I do not buy into the notion that Ireland Inc. will benefit in any real way. Instead, water, tourism potential and jobs will be taken from the west. The project's jobs potential is short term and the potentially significant loss in the Lough Derg region would have a greater impact, given the dispersed nature of the population.
Have our guests considered investing in a continued upgrade of the network in the Dublin area as a way of reducing the rate of loss? While I take Deputy Humphreys's point on board, a loss of 20% of treated water is too high and cannot be considered the best standard. The quality of the workmanship and the equipment used must be examined.
I can understand how our guests came to this project, as it fits Bord na Móna's landbank and infrastructure. If Bord na Móna is to move into water, as our guests have stated is their desire, it must consider desalination as an option. What are our guests' opinion on this suggestion and on an examination of the pipe network and infrastructure to bring about a reduction in the necessity for treated water? I have not come to this meeting from the west to say, "Hands off Lough Derg". Rather, Bord na Móna should look towards the resources beside it on the east coast.
Our guests indicated that, in the short term, Bord na Móna will be able to extract water when the Lough Derg basin is in flood, store it in Garryhinch and feed it on to Dublin as required. We are all mindful that the demand from other parts of the east coast for water will also increase. I assume Bord na Móna is not investing in providing water for Dublin alone and has considered north and south of Dublin. I am concerned that a relatively insignificant amount of water taken from the lake at the instigation of the project will become a significant drain on Lough Derg's water flow, thereby impacting on the area's ecosystem and economy. I am putting our guests on notice that I will object to this proposal every step of the way.
Mr. D'Arcy mentioned the modification of peat stations. Does this include turning them into incinerators, which is some people's concern? I do not know whether it is feasible, but the subject was raised. Perhaps Mr. Tom Walsh can answer.
Bord na Móna will move from 56% of its waste being diverted from landfill to 80%, a figure it will reach by adopting mechanical biological treatment, MBT. While I am delighted by this, what will Bord na Móna do with the MBT's leftovers? Is it planned to use refuse-derived fuel, RDF, to incinerate the remnants in a converted fire station? After diverting waste from landfill using MBT, recycling, and so on, is the plan to move towards a technology that is called "clean fill" in Nova Scotia? Using this technology, residual waste left over after MBT would be landfilled. It is called "clean fill" because there would be no problems with leachate or vectors such as rats, seagulls, and so on. I would be interested in knowing whether this is the plan.
The other topics I was going to ask about have been touched on by other members.
I invite Mr. D'Arcy to respond to the first four questions.
Mr. Gabriel D’Arcy
The future of the peat briquette is a very noble issue. This year, for the first time, we will market a product pictured in our presentation, which is a 40% peat diluted briquette. It is diluted with biomass. We have approximately 200,000 acres of land, and we are no longer extracting peat from a significant portion of that. There is potential to extract peat from some of this but we have decided not to open those bogs. Where some bogs have been opened, we have shored them up and returned them to the local community. Abbeyleix is an example of that. In Oweninny in north-west Mayo we had the largest reclamation project of its kind in Europe. The process, where we worked with UCD to get sphagnum moss to grow again, has won a number of awards. There has also been rehabilitation of the biodiversity.
Deputy Coonan asked about the future of the peat briquette. As our peat resources decline, and we are not acquiring more land or opening bogs, there is an environmentally sustainable way of dealing with the currently exposed bogs that have been drained. According to Dr. Hans Joosten, an internationally recognised expert, they should be harvested as expeditiously as possible and the product burned in peat stations as fast as possible. With exposure and drainage, oxidation occurs, albeit at a slower rate. The future for the briquette will be as a biomass-type product. We have a number of products, including a 100% biomass briquette, although that is still in the development phase. We have some issues, including a technical water absorption difficulty, that will be worked out in our innovation process.
The number of people employed in Bord na Móna has been quite steady, with the average at 2,200 or 2,300. It is more or less in line with the previous year, which was an increase on the year before. The main thrust of our contract with nature is three-pronged. We must be economically sustainable; we must be profitable and grow while we are socially sustainable. We cannot work at the expense of the communities we serve and the people we employ. We must also work in an environmentally sustainable manner. There are three legs to the sustainability stool, and that is enshrined in our contract with nature. That contract is not about environmental sustainability at the expense of economic and social sustainability or other elements.
Our aim in the current environment is to optimise, which is difficult because we are competing in international markets. We had to take tough decisions in our horticultural business two years ago when we closed a factory and made people redundant. That happened because the business was losing money. We turned the business around, it is making money and we are now employing again in that sector. Most of the produce is destined from the UK market, so there was also an effect from the decline in sterling. Deputy Humphreys spoke about job creation and dividends. Last year, as reported in our results, our dividend was approximately €3.5 million, and this year it will be €4.3 million. Before that it was €5.3 million, although there were two years of dividends in that figure.
I will make a quick point about Rutland Water, which is the largest reservoir in Europe. It is a built reservoir that supplies Lincolnshire and Leicestershire, and it has the largest inland sailing school in Britain. It also has the largest managed fishery in Britain and has a significant number of visitors. It is run under the auspices of Natural England, and it is a very interesting model. If the level of the reservoir is to be raised or decreased, authorisation comes from Natural England. If there are to be environmental consequences, there would be cost offsets for an ecosystem that may be damaged.
Mr. Ó Gógáin will deal with some of the points, including the issue of desalination. Deputy Flanagan spoke about modifications but I assure him we will not replace peat with some other output from the waste business. We are merely looking to replace peat with biomass or material allowed under our integrated pollution prevention control licence. There is a set range of materials allowed in this respect, which does not include municipal waste or derivatives from mechanical biological treatment. I will ask Mr. Walsh to deal with some of the other issues on the waste side before Mr. Ó Gógáin can deal with the water side.
Mr. Tom Walsh
Deputies Flanagan and Humphreys dealt with waste-related issues. Refuse derived fuel, RDF, can come from mechanical biological treatment, MBT, and as Mr. D'Arcy mentioned, there is no ambition to convert that to energy in peat stations. There is a significant number of technical reasons that would not be done. Any material that is a waste material under the auspices of the EPA could not be used as a fuel for those plants without significant and probably economically unfeasible upgrades to the emissions management systems of the plants.
Cleanfill comes within the range of potential outcomes but we would like to be more ambitious with regard to material. It is potentially a last resort. The two outputs from MBT, in simple terms, are RDF and bio-stabilised organics. With RDF the principal route is as carbon fuel displacement in the cement industry or dedicated fuel plants, for which there is a Europe-wide market for the material. For stabilised organics we would prefer to see the material being reused within our compost and growing media business but we recognise that waste can be a difficult material. Having the option of reject material treated as cleanfill is an important part of the equation.
Deputy Humphreys asked about volumes. Arising from our initial discussions with An Bord Pleanála, the project in question will be submitted under the auspices of the Planning and Development (Strategic Infrastructure) Act. A plant capable of handling up to 250,000 tonnes of material is envisaged. The principal and cheapest competition to the plant will be landfill but fortunately former Ministers and the current Minister responsible for the environment have been sufficiently far-sighted to ensure that landfill is levied to the point where other options, such as MBT, become feasible. Regarding incineration, Ireland's first MSW incinerator will start accepting waste in approximately two months' time. We do not see that being a barrier to MBT. Regarding further developments in integration, we see MBT being competitive but we need to be careful about the waste feedstock. There are approximately 1.5 million tonnes of waste in Ireland for plants like ours. If there is a surplus competing capacity for the material it is an issue for us proceeding with the project.
Mr. Colm Ó Gógáin
In view of time constraints, my briefing on water did not address the technicalities. A question was asked about leakage reduction and Deputy Humphreys referred to a figure of 28%. It is decreasing with the significant programme of investment. It was 29% the last time I looked at it. A significant chunk of the water services investment programme is spent on leakage reduction. Approximately €400 million, the same as the water project itself, will be invested in leakage reduction in that region. The aim is to get it down to 20%.
The water sector in the UK has been privatised for more than 25 years and the best they can achieve is 19%-20% because they have low pressure systems. I refer to the introduction of domestic metering, where consumer leakage is identified. One can fix all the pipes but if there is a tap running in a house or a tap is leaking, the local authority and the State cannot control it. If it is metered, people become aware of it and the concept of metering and charging is being deployed to reduce waste on the consumer side.
Desalination is the option of last resort. The capital cost of desalination is 50% higher than the projected cost in this case. The projected operational cost of desalination is approximately €15 million a year when running at 4 m3 a second and the equivalent with desalination is €60 million a year. It is also a high CO2 emitter because it is a high-energy user. The volumes proposed to be taken out of the Shannon are 4 m3 a second out of an average flow of 180 m3 a second. That is limited by the capacity of the pumps we install. We can install pumps that will take 10 m3 a second but if we install pumps that can only take 4 m3 a second, that is all that we can take. That is what can be permitted in the planning application. We cannot ramp up from 4 m3 a second to 10 m3 a second without changing something.
Regarding local consultation, there has been consultation through RPS during the process in the SEA phase 1. Bord na Móna has been involved with Dublin in the latter part of the process. We consulted the people in our community with regard to Garryhinch. It has not been in our brief to engage with people around the area of the Shannon. We have done so indirectly and, pending being given the opportunity to deliver this project as a partner with Dublin City Council, we will then commit to engage fully in that. We must do it because it is the critical part of the preparation of the planning application. The history of planning at Bord na Móna has been very successful because we listened to the communities we work with and we take their concerns on board and factor them into our designs. When the designs go to planning, the level of objections received is exceptionally low and any objections made are addressed. We plan to do as we have done in the past.
Other members must be allowed to contribute and some of the points can be returned to later.
Mr. Gabriel D’Arcy
I want to make sure everything is comprehensively covered. I am from Ballinamore, County Leitrim, in Deputy Luke ‘Ming' Flanagan's constituency. It is on the Ballinamore-Ballyconnell canal that links the River Shannon to the River Erne. I went to school in Ballinasloe, County Galway, and the first people I met when I joined Bord na Móna three and a half years ago were part of a deputation from the area asking what Bord na Móna could do to alleviate the perennial problem of flooding of the Shannon. The Shannon is flooded for eight months of the year. The last time I was here, I was part of a review of the flooding and the different agencies involved. At that time we estimated that we stored 35 m3 of water over a five-day period in the area that was used as a floodplain. That is three times the capacity of this reservoir. To put it in context, there was no issue when it concerned a floodplain and, quite rightly, in consultation with Offaly County Council, Bord na Móna was considering storing some of this water, treating it and disseminating it at a time when it was being used as a floodplain. We started the thought process about this matter. It is not something that has come around because of a need. I consider this to be a midlands project and I would take an investigative approach to any proposal that will have a detrimental effect on the River Shannon. I share the concerns of committee members. I am from that area and many of the Bord na Móna people are from that area. From the community gain point of view, it must be considered by the authorities if and when this comes to pass.
I welcome Mr. Gabriel D'Arcy and his team. He provided a wonderful outline of the history of Bord na Móna and referred to the trusted company it is. It has provided much needed employment in south Longford and parts of Westmeath, such as Coolnagcun. As devil's advocate, I must point out that much of the raw material was purchased cheaply from farmers in the area. My late father sold land to Bord na Móna at a price of £1 per acre. It was by way of compulsion at the time and many jobs were created afterwards.
In the 1970s, Bord na Móna purchased the Killenaugh bog group in the Edgeworthstown area. It said that it would open no more bog groups. At the time it was purchased from the people in the area, there were promises of jobs. During my 19 years on Longford County Council, I tabled many notices of motion with regard to creating jobs and opening up that bog. To date, it has not happened and perhaps our guests can elaborate on this and indicate whether they will give it back to the farmers from whom it was taken at the time. A number of farmers did not sell at the time and Midland Irish Moss Peat came in and established a company that provided worthwhile employment in the area.
The delegates referred to 2,300 people in employment at Bord na Móna. Are they full-time employees or are they seasonal workers?
On the project on offer from Bord na Móna, the view locally is that to draw water from the River Shannon would be a gross violation of an obligation to the people of the midlands and the users of the River Shannon. Bord na Móna is very well aware that the Shannon Protection Alliance was set up in the vicinity of Lough Ree several years ago. A former Deputy, Ms Mary O'Rourke, was the president of that alliance and she said that Bord na Móna would not rape the water of the midlands under her watch. I think that was her quote on several occasions.
During flood periods and periods of flash flooding surface water could be extracted and sold to Dublin City Council. There is nothing for nothing nowadays. Deputy Kevin Humphreys is looking at me in amazement. There are benefits for a small county, such as County Longford or County Leitrim, with a low rate base compared to that in the Dublin City Council. I would like to see a financial gain for those smaller counties.
Has Bord na Móna looked into the possibility that drawing vast amounts of water could trigger lawsuits under the endangered species legislation and overturn the protection of listed protected species in the River Shannon? If not, we risk causing serious environmental damage and it could be an ecological disaster for the River Shannon area.
I said last week that Dublin City Council is firing the first shots in the water war with the midlands, and Deputy Kevin Humphreys took issue with my comments. The environmental damage could be much worse. The Government, Bord na Móna and other agencies have done little or nothing to allay fears, as mentioned by Deputy Noel Coonan. The precautionary principle should apply until the Government and Bord na Móna give guarantees on the environmental impact of this project.
Deputy Kevin Humphreys referred to-----
I did not give this presentation.
-----26% or 29% of water in the Dublin City Council area being lost through leaks.
No. The Deputy should try to be accurate.
Have those leaks been repaired since last winter's cold spell?
That is an issue for Dublin City Council. I ask the Deputy to summarise-----
I am not finished yet.
I ask the Deputy to direct his comments to the Bord na Móna guests and not to Deputy Kevin Humphreys.
Can I just say-----
No. The Deputy cannot-----
I would like to see greater efforts being made to conserve water supplies in the Dublin area.
I am aware of serious problems with the arterial drainage scheme over the years, in particular in regard to the River Inny and its tributaries, where many of the feeder streams dried up as a result of the drainage. It was a very welcome project at the time but it had consequences. We lost a very fine lake in which I fished in my younger days. Lough Erne was also threatened. What guarantees are there that further damage will not be inflicted on the River Shannon and its tributaries?
The River Inny provides almost all of County Longford with its water supply. The map in Bord na Móna's presentation did not show any benefits to County Longford and I would not like to see its source of water being depleted. I remember at time when one needed a boat to cross the River Inny at several locations. Today one could cross it in a pair of wellington boots. I farm land close to the River Inny and I know at first-hand the effects of the drainage scheme, although it was welcome.
Bord na Móna is a semi-State company but if, as is happening in the United Kingdom and other places, the water supply is privatised and owned by an outside company, we will not have much control in regard to its source, supply and management. We are in the EU but I have raised the number of contracts from Ireland which go to Northern Ireland and elsewhere. It is having serious consequences on employment in this State. Perhaps our guests will elaborate on that.
We referred to the flooding problems on the River Shannon. In The Irish Times on 24 July 2010 it was conceded that the reservoir would not solve flooding problems during periods of flash flooding and heavy rainfall. We all agree with that. I have repeatedly called for the establishment of a River Shannon authority to manage the River Shannon. As Deputy Timmy Dooley said, politicians have talked about draining the River Shannon since the foundation of the State but that is not possible. However, proper management of the River Shannon is of the utmost importance because there are farmers in County Longford and County Westmeath whose properties are still being flooded because the sluice gates are not being opened. Many of them are of the view that it is intimidation to force them towards the viewpoint that it is time to get rid of water to this reservoir which is supposed to be constructed in the Laois-Offaly area to provide a water supply to Dublin. The only way we can have proper control over and management of the River Shannon is not through the OPW but through the establishment of a River Shannon authority for which I have called time and again in the Seanad, in the Dáil and at committee meetings. That is the way we should approach this. We should have one authority responsible for the River Shannon and should bring all the agencies together. More than 40 agencies have some claim over the River Shannon.
I welcome the chief executive and his senior staff. I am a former employee of the company and my family has a long association with it going back to the late 1940s. My father was involved in supervising the laying of many of the railway lines in Ballydermot, in the Cul na Mona group of bogs and in Garryhinch in the early 1950s. I wrote to Bord na Móna many years ago about the need to join up waste management with peat being cut away. Horticulture was what I was most familiar with in more recent years. With the reduction in the amount of peat available and the increase in the amount of organic waste, I floated that idea. I spoke to Mr. Phil Coonan, a former manager, about it at the time.
If the Garryhinch project is constructed, how many jobs are we talking about? We need to be realistic about that. Large figures are being mentioned. It does not do the project justice to inflate the sums of money required for this project. We should be realistic in setting out the maintenance and operating costs as well as what it will generate from its tourism and amenity potential. It is estimated that the complete project from Coolbawn on Lough Derg to Dublin city will cost €400 million to €500 million. Is that correct? I understand that wind generated energy will pump the water to the city. Where will this plant be located? Does Bord na Móna see itself as the Irish water authority? Will it deliver, manage and finance this project? How will Bord na Móna finance it?
I welcome Bord na Móna to the committee. While Deputy Dooley is emphatically opposed to the project I am equally supportive of it. I commend Bord na Móna on its foresight and vision. If other State bodies had shown such foresight, we might not be in our current position. I agree with my constituency colleague, Deputy Stanley that it is important that this project is well grounded in practical and realistic expectations. I take Bord na Móna at its word that there is no dividend to it to over egg the pudding and to exaggerate the job creation potential of the construction phase, or of the management and tourism phases. I too am familiar with the Rutland Water Nature Reserve. While there may not be boundless opportunities, there are great opportunities in eco tourism and in the management of the reserve and what it will generate in leisure amenities for visitors. I hope a broad brush will be taken at the planning stage of the project to factor in all its potential uses. The last thing we need at this time is a quango or authority to examine the project. We have more than enough chiefs. We need people who know their remit. There is strong synergy between what Bord na Móna proposes and the outcome the State needs. I concur with Deputy Humphrey's views on the environmental concerns of communities along the Shannon basin. I would oppose it vehemently if I thought it was not environmentally sound, economically sustainable and that the ecology behind it did not stand up to vigorous scrutiny. I presume that will be addressed in the most transparent way during the environmental impact study and in the rigorous planning process. The communities with legitimate concerns should have them addressed at the earliest possible opportunity. The realisation of potential community dividends should be factored into the proposal.
We are told that Government does not create jobs, but it is impressive that a well established semi-State company that is 75 years old has 2,300 people employed. That is a big dividend to those communities where they are employed, including County Kildare.
I hope this water project will not lead to a row between the west and east of the country. Not only do 40% of the population live in the greater Dublin area, but significant industry which will drive economic recovery is based in the region. If we do not have water, we will not be able to see the expansion of Intel, which is in the town in which I live. It gives hope to people when they see a company recruiting staff. It is a realistic proposal in delivering the quantity of water needed, but I am concerned that there should be good communications with the local community.
The Kilberry green waste compost facility which is the biggest in the county and Drehid landfill are in my constituency. We were a bit of a dumping ground for another major landfill. One of the beneficial aspects of that project was the setting up of a community fund. Is it intended that this kind of approach would be taken to the delivery of the water project? How can one allow water sports and yet maintain the quality of the water. I know at the dam that feeds into the Fingal plant, there are petrol interceptors on the road and no motorised boats are allowed on it. How will the conflict between water quality and amenity use be managed?
The Drehid plant is licensed by the EPA. What is the level of complaints to the EPA, not taking the Kerdiffstown dump into account as that is a separate issue? How did Bord na Móna handle those complaints. I know it would not have been one of the most sought after projects by the local community, given that people do not want to live beside a landfill, but the reputation of Bord na Móna has been helpful in minimising the people's concerns.
If we are to spend €400 million to €500 million on this water project, how do we get a return on the money? Will it be recovered through water pricing or will it be down to industry or individuals paying for the service? I note that wind energy will be used to pump the water, but it will be difficult to hide the wind turbines in the flat landscape of the midlands. Beauty is in the eye of the beholder, but I do not think wind turbines are particularly beautiful structures and I see them as a negative feature on the landscape.
I thank Mr. D'Arcy and his colleagues for their presentation today. Will the new biomass peat briquette continue to be produced in the existing factories, a number of which are located in my constituency? Some of the employees raised concerns about a change in the location of factories? I welcome this product diversification. I know Bord na Móna has a good business in producing compost for the British market. How will the move to peat free gardening affect its business? We were shown a map of the Shannon with a proposal to take water from one of two options, Lough Ree or Lough Derg. Were there technical reasons for the change or was it as a result of the lobbying that took place? In regard to water management, what kind of relationships will be built with the people who already have an impact on the water management. There are so many players that it is difficult to know who is responsible and everybody runs away from it when there are flooding incidents. Like others, I would like if one agency dealt with this issue. I reject completely Deputy Dooley's comments in respect of those of us who lobbied for work to be done on the Shannon as a result of flooding. If he was in my constituency and saw the awful impact of flooding he might look differently at this proposal. That leads to the question of whether it will really have much of an impact on flooding. On the one hand it appears as if this would be a great solution to the flooding which is now twice a year instead of once. We now have summer and winter flooding whereas it used to be just winter flooding. Will it really have much of an impact?
I agree with what Deputy Murphy said about dividing the country. We are a small country and we have finite resources. I do not like to see a rural-urban divide. I live near the Shannon and I have seen the impact of it but if there are people not too far away from us in the country who need water we should give it to them with a heart and a half. I have to caution and say I do not want any damage caused to any of the existing tourist and recreational activities that may require it. How much research has gone into the project and can one be certain there will be no negative impact upstream?
In regard to the proposal at Garryhinch, if it has anything like the success of the project in Lough Boora, I look forward to it. For those who may not be aware of Lough Boora I urge them to go and look at it. This project was developed by Bord na Móna in partnership with the local authority in Offaly, the arts community and the angling community. Not only is it an environmentally friendly and protected area, it is a wonderful arts feature and is one of the hidden gems. If Garryhinch is developed along similar lines, obviously it will not be same and we do not want competition, I would have great hopes for it and look forward to learning more about it.
It is interesting that the presentations started by making the point about the small number of companies globally that have survived as long as Bord na Móna. It is a tribute to the semi-State mode when one considers that this company, like Aer Lingus, is a model which should be strenuously defended. That is a debate we will have in the coming months but it has been a huge contributor in the sense of not just the dividend but, relatively speaking, quality employment and important services. In terms of the diversification and, particularly, in regard to the water project, unless I missed something it is striking that a number of the questions posed should more properly be put to the Government or to the new Irish water authority. Unless that decision has already been taken that Bord na Móna is responsible for the security of our water supply, which is not yet the case, then I suggest many of the questions are off target. Is this a touting exercise that it is bidding for that decision? How does Bord na Móna see it linking in with the local authority?
There is little point in taking water from the Shannon when it has to travel more than 100 km to Dublin given that in some parts of the country 50% of the treated water supply ends up in the ground wasted because of the archaic water infrastructure network. It strikes me when we speak about securing the supply of water that it has to start with the pipe network and conservation measures where water is used inside properties. While it may be that the leakage level in Dublin City is 28%, in other parts of the country the level is much higher. The best local authority is South Dublin County Council which has the leakage level down to 21%. Best practice in the UK is 20% and internationally it is about 16%. That the installation of household meters will save, at best, another 5% while there is 10%, 20% and 30% extra leakage in other parts of the country, does not add up. How does Bord na Móna see itself fitting in with the big picture? Is this a touting for that project in the event that it comes on board?
Before I invite Mr. D'Arcy to respond I will make a few comments. There is a joke in Cork about two guys returning from a football match, crossing the North Gate Bridge or the South Gate Bridge. One said to the other who was crossing to the north side of the city that he should hold on to the bread until they got to the North Gate Bridge to feed their own birds. In the same context there is a discussion here as to who owns the water being shipped across the country. When the clerk or a member places an invitation before me as to who will come before the committee, the first question I ask is "what do they want?" I usually get an explanation and I usually respond by asking "what do they really want?" That is the question I put to the delegation. There are two different discussions taking place in this room.
There is a hole in the ground in the midlands and Bord na Móna wants to fill it with water from the Shannon and to transport it to Dublin. That is the first proposal and that is what we will look at tomorrow when we visit Bord na Móna in Portarlington. I do not have an extraordinary level of understanding of what is happening in Rutland but what I know of it is very impressive. I understand that what the organisation proposes to do in the Portarlington area is based on the Rutland model, which will probably be the largest infrastructural programme that will be developed in this country for the foreseeable future. It is a massive project. I look forward to the opportunity being afforded to the committee tomorrow to see the details of what is being proposed.
What it is that Bord na Móna really wants is what I am trying to flesh out. The presentation consisted of two different slides, one of which was about a balanced portfolio. The existing portfolio of Bord na Móna is fairly impressive. It has several companies, fuels production, there is an environmental aspect to the company, refuse collection, land and property and bio diversity amenities. It would appear the company wishes to broaden that portfolio and make Irish Water, which is a concept included in the programme for Government, an extended part of its portfolio. Is it Bord na Móna's intention, as stated in the programme for Government, to make a pitch for Irish Water or is it considering making a pitch?
I will return to what is being proposed in the midlands. Has an environmental impact study been carried out and, if so, what impact would it have on the Shannon with regard to fauna, wildlife, fish and other aspects of the environment if this quantity of water were to be removed from the Lough Derg region? How is it being quantified at 2%?
When the delegation appeared before the committee some time ago we looked at flooding incidents. The measurement to water is strange. Are we talking about removing 2% of water from the entire length of the Shannon to the midlands or 2% of the water on deposit in Lough Derg at any given time given that they are two different significant amounts of water?
With regard to providing water to the greater Dublin area, what level of demand can Bord na Móna meet? More than half of the water consumed in Ireland is consumed in the greater Dublin region. With this project how much of that demand would Bord na Móna be able to meet in domestic and business terms? Perhaps it can give the committee a description of the type of businesses it would target with this resource coming into the Dublin region. Whom would we invite into Ireland as a result?
As this is also a significant infrastructural project, has the concept of grey water been considered? A massive pipe will be built from the Shannon across Dublin. We do not use grey water here; we flush the same water down the toilet that we put into electric kettles. Is it possible to introduce grey water systems to houses as part of this project? It is like building a trench on the side of the road. One does not get the same opportunity to do it again. Will grey water be included in the trenches that will be built across Ireland?
On the point made by Deputy Corcoran Kennedy, what risk analysis has been done on the flood management implications of this project? I refer to the Portlaoise project. I note Irish Water has a great deal of expertise. I agree with Deputy Daly that Bord na Móna has been a model of what semi-State operations should be. It is ambitious in the best sense of the word and is always forward-looking. I understand, based on the comments of the delegates and putting aside the value judgments as to whether they are right, that is a good thing.
In terms of becoming a utility company rather than a semi-State company, which it currently is, has it commissioned a study or a business plan as to how it would become Irish Water? Has it been in negotiations with the Department of the Environment, Community and Local Government with regard to pitching for or becoming Irish Water?
The presentation referred to pitching to become Irish Water. One option referred to the creation of a green field site for Irish Water and another referred to a brown field site, which includes Bord na Móna. The presentation stated that the company has access to capital markets and that there would be an off State balance sheet aspect if we took the Bord na Móna route. I ask the delegates to further develop those points.
Mr. Gabriel D’Arcy
Thank you, Chairman. There is a range of questions. Some concern environmental issues. Mr. Ryan will address those, inter alia, on the water side. Some concerned resource recovery and there were some general points. While my colleagues are getting the information to deal with particular questions I will try to address other questions in chronological order if possible.
Deputy Bannon referring to the acquisition of land. All of the land owned by Bord na Móna was subject to compulsory purchase orders down through the years. The compulsory purchase order process is a legal process which involves due process. I will not argue what the prevailing rate was at the time. I or anybody else would have had little influence on it. I can only presume, based on hearsay, that Bord na Móna paid a fair price. The land has been subject to compulsory purchase orders without restrictions. It has not been subject to such orders for a particular purpose.
I will return to the questions on environmental matters. The Deputy also referred to a senior Member of the House in the last Administration who used a great deal of emotive language. Therein lies the responsibility we all have. We have a country with a population approximately the size of the greater Manchester area. I may be corrected on that. In the greater Manchester area there is one local water provider, two or three waste providers-----
Mr. Tom Walsh
There are four and also some bogs.
Mr. Gabriel D’Arcy
They are on the outskirts.
The point I am trying to get to is that I, the chief executive, and most of the employees and people in Bord na Móna have connections to areas. Different representatives are concerned about different areas. We live in the areas in which we work and do not set out to do anything to destroy or harm those areas, in terms of the environment, amenities or anything else. Bord na Móna is part of our DNA. We are considering economic as well as social opportunities.
Many of the employees of Bord na Móna are sons and daughters of former or retired employees, as a Deputy noted. There is a future for the midlands which will have to be based on one of its unique strengths. The midlands have many strengths. I referred to infrastructure. It is one part of the country that is crisscrossed with grids. An inter-parliamentary delegation from the UK Parliament visited some weeks ago and talked about the opportunity for Ireland to export renewable energy to the UK via the interconnector that has been sanctioned and is being built. It is a key strength. The region is crisscrossed by motorways, roads and infrastructure such as canals. Members spoke about flat areas.
One of the great things about Bord na Móna areas is that they are very isolated, not heavily populated and out of visible range. Over many years the view of some of the terrain has effectively collapsed. Many of our areas are under the water table. We use many pumps and energy in an area in Longford, which Deputy Bannon represents, just to keep the water off the bogs as we continue to harvest. One day the pumps will be turned off and the bogs will be managed wetlands. I am glad Deputy Corcoran Kennedy highlighted Lough Boora Parklands, which she will be invited to visit tomorrow.
People have to take positions based on informed opinion and expert advice. This can be a very emotive and divisive issue if one wants to break it up between east versus west. This involves Ireland and is an opportunity for the midlands and north midlands. I see many job, investment, eco-tourism and construction opportunities over the foreseeable future.
There is a long term opportunity in playing to the strengths of the midlands above other parts of the country such as the south west, north west and east. Whether we like it, the east midlands and eastern seaboard of Ireland will be the driver of economic growth. I am sure Cork will contribute as well, as will the south and north west. That is a fact and there are reasons for it.
All of us who, at one time or another, have gained employment on the eastern seaboard have come from the west, the north west or other areas. We need to shed more light and a little less heat on the debate. Using emotive arguments is not helpful. It behoves all of us, business leaders and political leaders, to shine a light on this. People should not take ill-informed positions. People should get the information. Bord na Móna is not in the business of hoodwinking people.
My colleagues will speak about many of the other points raised. I take Senator Whelan's point about vision. We will talk about the environmental concerns he has raised. Deputy Catherine Murphy spoke about the employment opportunities and highlighted the issue of the development of the midlands and the local communities. A question was asked as to who will pay. I spoke about the turbines. In answer to Deputy Corcoran Kennedy - a biomass product will be produced. Bord na Móna has a significant innovation process and structure. We are in the business of innovation not the invention business. We have great contacts with universities and third level institutions and any amount of projects which are ongoing in the area of conversion of cash into ideas. We are in the business of converting those ideas into cash. This is what innovation means in Bord na Móna. The intention is to produce other things from existing resources.
A question was asked about the move to peat-free products. This is a big issue. The UK Government has set a target that by 2020 all compost for retail sale in the UK will be peat-free. This is a very significant challenge. Bord na Móna processes about 60,000 tonnes of green waste in Kilberry We take all the green waste from the greater Dublin area. We apply really good technology to turn it into a very fertile and award-winning compost which is then exported and gains export euros for the Irish economy and supplies gardeners in the UK.
We have an issue with trying to source other sources of compostible green waste. There is a gap in supply. We have a plan to deal with that but this is certainly a concern. There has been much debate in the UK market from organisations such as the Royal Society for the Protection of Birds and others. We hope to be able to deal with this issue.
Mr. Ó Gógáin will deal with the questions about water management. Flooding will not have an impact. We spoke at another meeting about the different organisations with an interest in the Shannon. It has been debated and there needs to be some political consensus on a decision as it is an issue.
Deputy Daly asked about the semi-state model. The McCarthy report was unequivocal that Bord na Móna should be sold, should be privatised. This is an issue for the Government. There will be some outside influences, unfortunately. My job as the chief executive officer of Bord na Móna is to prepare the organisation for any eventuality. I want this company to be successful, to be considerate of its social agenda but also to grow and be profitable and strong. Whether that resides in private ownership or public ownership is a matter for the shareholder rather than the management.
Mr. Ó Gógáin will speak about the leakage. The Chairman asked about the ownership of the water. I am addressing the committee representing Bord na Móna as a commercial State enterprise. Until the shareholder decides otherwise, that is the way it shall remain. As to the ownership of the water, there are various models. The water project is one issue and it has been so for quite some time. Mr. Ó Gógáin has outlined the next stages. A separate issue has arisen about the concept of an organisation called Irish Water which would incorporate all the local authorities. At the moment these are related but separate issues. The matter is being considered by the Department of the Environment, Community and Local Government. The Minister has appointed consultants who are PwC, assisted by McCann Fitzgerald. They are to report back by September on a modus operandi for Irish Water. Bord na Móna will contribute to this report.
I did not come to the committee to look for anything. I am here to inform a strategic and rational debate about a critical issue of great importance to Bord na Móna because of our locations, our land-holding, our skills and capabilities. It is also an issue of vital national interest and there is a huge opportunity to assist in the transformation of Ireland incorporated. This is the reason I am here today. I am very gratified that all the members took the time to listen to us. We are here to inform the debate and we will contribute to it. The shareholder - the Government - will decide the role Bord na Móna will play but we will look to play a robust role in the redevelopment and the rebuilding of Ireland. It is about the midlands. I acknowledge that Dublin has many issues to deal with. My colleague will talk about Dublin City Council which is regarded internationally as one of the most successful and leading players in tackling water leakage and metering technology. We work in partnership with Dublin City Council on the project.
I will ask Mr. Tom Walsh to deal with some of the waste management queries.
Mr. Tom Walsh
Deputy Catherine Murphy had a query about waste. Drehid is one of 25 MSW landfills in the country. It is at the bottom end of the scale in terms of the volume and nature of complaints to the EPA. In large part this is as a result of the Bord na Móna legacy and local trust. The Deputy referred to the situation at Kerdiffstown. This erupted about six months ago. We are comfortable that we did the right things for the right reasons. Probably where we fell down was in our communications with the local community. We have recognised this and we are dealing with it. The result is generally accepted within the community and our progress is referenced in some of the local media this week.
Mr. Colm Ó Gógáin
Deputies Murphy and Bannon asked about the concept of community gain. This is a feature under the strategic infrastructure planning process and they made this decision in Drehid. We have a levy of €1.27 per tonne and this goes into the community. The more tonnes we get the more the community receives. It has worked to the satisfaction of the community there. I would not be surprised if this project evolves, An Bord Pleanála will make decisions on community gain in some shape or form.
Deputy James Bannon spoke about ensuring an environmental impact assessment is done. An Bord Pleanála is the regulatory body in that regard. Whatever is put forward to planning will have to withstand the regulations that are in place, including the water framework directive. It is incumbent on whoever will put forward the planning on this project - and we hope it will be us - to ensure the environmental impact assessment is done thoroughly. There is no point in taking a short-cut because that will only lead to failure in the long run.
Deputy Brian Stanley asked about the number and quality of jobs that will be created. We are looking at a process from abstraction, which involves quality monitoring and so on, through to operation of the reservoir, involving the operation of the storage and treatment facilities and the management of the different pump stations into the various networks. One must also take into account the eco-tourism activities. We expect the new facility to be as good as that at Lough Boora, but it will be different in that it will have a water aspect - water one can use, including for non-motorised uses - whereas in Lough Boora, it is used mainly for fishing. Our estimate of between 100 and 150 jobs is quite realistic. Most of those jobs will be sustainable, but there will also be more short-term jobs on the construction aspect and so on. The plan is to build the facility over a three-year period and to commission it in the fourth year. We predict that there will be 1,000 jobs involved in that. It is easy to envisage because we are talking about the laying of 125 km of dual-line piping across the country, the building of pump stations and the construction of the reservoir itself.
Deputy Stanley also asked about wind farms. We have full planning permission to develop a wind farm on Mount Lucas, which is 10 km to 12 km north of the reservoir site. The Garryhinch side is within the same wind atlas and wind regime and we propose to incorporate the wind farm on that side. When we talk about an eco-park, we are using the term "eco" in its fullest sense.
Deputy Catherine Murphy asked about threats posed by water sports. First, there will be no motorised vessels on the water. Second, the water will be taken from the reservoir, treated and directed into the networks. There will be full security and protection. In Ballymore Eustace, the best test on water is using either salmon or trout; if they keel over, one can conclude the water is not good.
A question was asked about the recovery of the capital costs of the project. These types of projects can be financed off balance sheet. The model we would use in this instance involves an availability charge. As I mentioned earlier, we will have operating costs of some €15 million when running at full capacity of 350 million litres a day. An availability charge will be used to write off the capital cost of that, which is normally done over a 25-year period.
Deputy Marcella Corcoran Kennedy asked about the move away from Lough Ree. The reality is that the flow rates at Lough Ree and Lough Derg are totally different. The latter has the rivers Brosna and Suck feeding into it, with some 30 km of land distance between the rivers, so there is a much more significant flow of water there. Given that the area of Lough Derg is approximately 126 sq. km, it is a very significant storage facility in itself, while the other facility would be a subset of that. My colleague, Mr. D'Arcy, touched on the impact of taking water out. Taking 4 cu. m out of an average of 180 cu. m equates to approximately 2%. If one is flooding at 500 cu. m to 800 cu. m, taking out 4 cu. m will offer no tangible alleviation.
On what is involved in our environmental impact process, a basic assessment was done on the ten different options we looked at. The ecological aspect of any assessment is just as important as the economic assessment. When we zone in on one recommended option, we do a full, detailed environmental impact assessment, which takes 12 months and incorporates all the requirements under the habitats directive in regard to flora and fauna and so on. That has already commenced, through a third party, on the Garryhinch side. I would urge that it start as soon as possible on the Shannon site because it takes 12 months. All of the data must be gathered before putting pen to paper or even formulating the planning application.
Deputy Clare Daly asked about leakage reduction. The bulk of the €1.8 billion allocated under the water services investment programme 2010-2012 is being spent on leakage reduction. In Dublin, for example, we have seen a rapid reduction as a result of a €120 million investment programme. As one travels around the city or even the suburbs, one can see complete zones being re-piped. That is how those reductions are being achieved.
Mr. Gabriel D’Arcy
I invite our head of land and property, Mr. Gerry Ryan, to talk generally about the environmental aspect. It is something we are obliged to take seriously because of the nature of our land holdings and the range and breadth of activities in which we are involved. We do business and win business, particularly in the United Kingdom, because we have a strong environmental record, including in respect of biodiversity. This is a key constituent for customers who also have a sustainability agenda to their brand.
Mr. Gerry Ryan
I will deal with the environmental aspects of the water project and our general approach to environmental matters. My colleague, Mr. D'Arcy, mentioned that our vision, A New Contract with Nature, incorporates the three P's - people, planet and profit. On the planet side, we take a proactive approach to all of our environmental responsibilities. For example, we have a team of ecologists who look after the environmental requirements in regard to the flora and fauna that are plentiful on our lands. We have undertaken several initiatives in co-operation with communities on local environmental projects, such as the restoration project at Abbeyleix, County Laois. We are also working with the National Parks and Wildlife Service on several projects to do with cultivating rare species. The best example of these is in Boora, which was the only remaining habitat in Ireland for the native grey partridge. As a result of co-operation between Bord na Móna and the National Parks and Wildlife Service, the population of Irish grey partridges has increased from some 20 mating pairs to more than 900 in the latest census. We are also involved in various initiatives with BirdWatch Ireland in regard to the restoration of bird species on all of our cut-away peatlands and operating peatlands. For instance, we are working with a local community group on a project in Ballydangan in County Longford for the preservation of the Irish red grouse.
Mr. D'Arcy mentioned the restoration project in Oweninny in County Mayo, which is recognised as one of the foremost examples of its type in Europe. Scientists travel from many countries to share our experiences in regard to the environmental gains that have been made there and the developments that have taken place in north-west Mayo over some 6,500 acres of land. All of our operations are done under the control of licences issued by the Environmental Protection Agency and we have an outstanding record of compliance, the details of which are published in our sustainability report on an annual basis.
To summarise, we take a very proactive stance in respect of our environmental responsibilities. That approach will be carried into any work we do on water projects, as with all our projects. As my colleague, Mr. Ó Gógáin, said, we have just commenced a year-long environmental assessment of the site at Garryhinch, even though we cannot commence work until we have secured planning permission, which will not be for at least another 12 or 15 months. That process will create a strong record of the environmental impacts in Garryhinch. We urge that the same job be done in the Shannon region. If we had responsibility in this regard, work would already have commenced.
We take an extremely proactive stance in respect of environmental matters. We regard this stance as one of the fundamental planks of our reputation. We place great store and trust in that reputation and we would not do anything to jeopardise it. To do so would represent an extremely retrograde step. In that context, we take our environmental responsibilities extremely seriously.
I will ask Mr. Ó Gógáin to conclude before I take supplementary questions from members.
Mr. Gabriel D’Arcy
We are trying to deal with all of the queries that have arisen. The Chairman and one of the members inquired as to what the term "off-balance sheet" means in the context of debt financing. Basically, Bord na Móna is a public limited company, plc. The State is the majority shareholder and owns 95% of the issued share capital. The other 5% is owned by the employees through the employee shared ownership trust, ESOT. Part of the reason for this was to enable Bord na Móna to be dealt with by means of a hands-off approach in the context of how it is considered. The company is not deemed to be an integral part of, for example, the Department of Finance, which would ultimately be seen as being the shareholder. When we raise capital on international markets, it arrives on our balance sheet. It does not appear on the State's balance sheet in the context of the national debt. Whatever the national debt at this point, it does not include Bord na Móna's debt. We have built up a reputation in international markets and investors have seen the value of investing in Bord na Móna. This gives rise to the opportunity for the State to fund major infrastructure projects such as that under discussion. However, it does not do so in the context of its own balance sheet in respect of which difficulties are currently being experienced.
An interesting point was made in respect of grey water, rainwater harvesting, and so on. This is one of Bord na Móna's areas of expertise and we have some extremely interesting technology which we deploy in Ireland, the UK, Europe and North America. Bord na Móna has rainwater harvesting systems. Our head of innovation has just launched into the market a technology whereby sinkwater can be diverted for use in lavatories. This removes it from the household system. We are very much involved in the wastewater system. We own a brand, Puraflo, in this regard. I accept that in our discussions we did not deal with the area of wastewater treatment systems, odour control, and so on. From an Irish point of view, there is a major issue with groundwater pollution. Part of this is due to septic tanks that are failing and so forth. Bord na Móna has a solution. If I sought anything from the committee, it would be to see whether we could move forward in the context of dealing with this issue. It must be dealt with because if it is not, Ireland will soon be obliged to pay pretty stiff fines from the EU.
We have expertise in the area of grey water. The proposed water project is not a magic bullet that will provide a solution to all our problems. It will certainly increase our capacity to capture all of the water that is falling from the skies over Ireland, to store and treat it and then to distribute it for the benefit of the people. This will have a knock-on effect in respect of foreign direct investment. That we might proceed, existing systems will have to be upgraded, the leakage rate will have to be reduced and other technologies will have to be introduced.
Mr. Colm Ó Gógáin
One of the members inquired as to the percentage of the water supply the Garryhinch project could deliver. The capacity at Garryhinch is 350 million litres per day. The maximum sustainable capacity of the Liffey, when Leixlip, Vartry and other reservoirs are included is 627 million litres. Therefore, Garryhinch can provide approximately one third of the overall supply.
I compliment our guests on the answers they have provided. I have attended many presentations but I have never come across delegates who went to such lengths to answer everyone's questions in - as far as I can see - the most honest manner possible. There is no question of an east-west divide in respect of this matter. The country is far too small for that. Everyone has a major fondness for the Shannon. If what is proposed was to damage the river, it would not attract much support from anyone. In the context of the EIS, we must ensure that there will be no damage done. Regardless of whether it is the project in question or another which services the relevant eight local authority areas, it is important that we move forward quickly because the nation's economic recovery will be based in those areas. Well more than 50% of all taxation is raised within the areas for which the eight authorities to which I refer are responsible. We must, therefore, exercise our minds in respect of this matter. I accept Deputy Catherine Murphy's point regarding language. We must consider this matter in the context of what is best for the west, the midlands and the eastern region and work our way through the process as best we can.
I again thank our guests for their contributions. I look forward to tomorrow's visit so that members might see the results of the work done to date. There is a certain degree of urgency in the context of finding a solution to the problem. Many people state that we should fix the leaks. In the greater Dublin area, there are 8,000 km of water mains and these contain 27 million joints. As a result, there will always be a certain number of leaks. Regardless of whether the rate of leakage is 16% or 20%, fixing leaks will not resolve the issue. I accept that we must make an enormous investment in the context of reducing the rate of leakage. However, a major infrastructural project - if not that under discussion then another one - is required to provide adequate water supplies to the relevant areas.
What do our guests propose to do in the coming months to allay the fears of the Shannon Protection Alliance, the relevant local authorities and the people who live in the midlands? Do they intend to organise a presentation? As our guests are aware, some 18 counties have frontiers which abut the River Shannon. What is the position regarding the area of bogland near Edgeworthstown which Bord na Móna purchased some years ago and which has not been developed in the interim?
Mr. Gabriel D’Arcy
In the context of Edgeworthstown, the company owns 200,000 acres of land and there are hundreds of bog areas within that. I apologise that I do not have the detail relating to the Deputy's particular query but I will communicate with him further on it.
Mr. Gerry Ryan
I do not have any information on it either.
Mr. Gabriel D’Arcy
We are not engaging in any obfuscation. I do not know the detail regarding the bogland area to which the Deputy refers. I could discuss other bogland areas in great detail but not that one. I will revert to the Deputy on the matter.
I will ask Mr. Ó Gógáin to deal with the Deputy's point on communication. We discussed the environmental issue referred to and communication.
Mr. Colm Ó Gógáin
The first stage of the planning process involves completion of the strategic environmental assessment, SEA. The next stage involves a much higher level of consultation. It is Bord na Móna's experience that if one consults broadly and properly, if one listens to what is being said and if one can address concerns, one tends to be successful in planning. That is our track record. That is what we have done in the past and it is what we intend to do in the future.
Mr. Gabriel D’Arcy
I might augment that by stating that the project is not a Bord na Móna project. This project started off as an investigation by the Department of the Environment, Heritage and Local Government examining the needs of the greater Dublin area, which includes Meath, Kildare, Wicklow and so forth, over the next 50 years. It retained Dublin City Council to do a study on it. I presume it could have been Meath County Council but in any event it was Dublin City Council, perhaps because of its size and scale but I do not know that. It then appointed consultants to do much of the investigation and examine all the options. It was through that process that Bord na Móna got engaged via the consultants. Our interest was considering what we should do. First, there was all the flooding on the Shannon. We have many cut-away bogs now. We are making plans and provisions. We have a plan for every acre of our land bank and we are bringing together our thinking in terms of what will be a viable use for those areas as flood plains, habitats, wetlands and so forth. We have that plan in place. It was in that context that we got involved.
The consultants imported our thoughts into their consideration and they came to the option. During that process, which covered-----
Mr. Colm Ó Gógáin
Six years.
Mr. Gabriel D’Arcy
That six year process, the past years of which has been intensive, was open and consultative. I understand there were 11 different options from desalination to looking at other sources and so forth, including a number of different options pertaining to the Shannon, and eventually they decided on this option as the preferred one. For instance, the member mentioned Lough Ree versus Lough Derg and so forth but it was not because of political interference in the process that this route and option were deemed to be the most appropriate. It was for other good, largely technical reasons, as Mr. Ó Gógáin pointed out. There was a great deal of opportunity for the general public, local communities and representatives to engage in the process.
Bord na Móna, particularly Mr. Colm Ó Gógáin and his team, has been very active in communicating with local communities. I do not know how many meetings he has had with different people. We will go anywhere to explain the background of it. However, we do not have that authority until a structure is put in place to deliver it.
The next stage of this process will be the formation of some kind of structure such as a joint venture between Dublin City Council and Bord na Móna or whatever. There is a variety of options but that is a decision for the Minister for the Environment, Community and Local Government. All I can say is that we will contribute. I hope that answers the question.
I will make a general point on rural versus urban Ireland or east-west divide. It is not helpful to go down that road but it cuts both ways. To give one example, I appeared on "The Frontline" before the election and one of the arguments as to the reason we should have neither hospitals nor schools or a pair of shoes on our feet in rural Ireland was because of all we cost this State, and a graph was displayed showing that we cost thousands of euro more and contribute thousands of euro less than people in urban areas. I do not know how true that is but one thing is sure, if we are providing water to Dublin, which we should because it is a small country and it makes sense, can we kindly see an end to the argument about what we ever did for Ireland to deserve anything because we never give anything?
All the employment is in the east. All the big companies and our GDP is based mainly on what happens on the east coast but when this happens, and inevitably it will, can we recognise that nothing would happen on the east coast if it was not for resources taken from the centre of Ireland? It should be done but the next time people are trying to close down a hospital, I ask them not to use as an argument that we do not provide anything to the State. We provide quite a good deal to the State.
I want to return to one issue and introduce a new one. Mr. Ó Gógáin said that PricewaterhouseCoopers is currently engaged in a process of determining who Irish Water will be. It has been commissioned to determine what will be the entity of Irish Water.
Mr. Colm Ó Gógáin
The role of the consultants, in this case PwC, is to prepare a proposal to the Department of the Environment, Community and Local Government and it has been given guidelines in that regard. It has been asked to examine whether it will be an investment company. It is fairly clear that it will be State owned, not privatised and as to whether it will be an investment company or a full-blown utility, it has to make that decision and that recommendation within a matter of weeks. It is currently carrying out a consultation process with different stakeholders. The Department of the Environment, Community and Local Government has requested us, as a team, to meet it this Friday. We will meet and consult it and put our best foot forward, about which the Chairman asked Mr. D'Arcy earlier. The second phase it has to undertake involves the preparation of an implementation plan. In other words, if it is to be model A or model B, how will that work in terms of A to Z? Its role is not necessarily to say who it will be.
Bord na Móna obviously has an opinion on that because it is calling to see it on Friday. What will Bord na Móna bring to the table that will deliver better services than what is currently being delivered by 34 separate local authorities?
Mr. Gabriel D’Arcy
I will take that question. If the 34 local authorities system and financing of water was deemed to be perfect we would not be discussing it. Somebody believes it is not, but it is not for us to make a judgment call on that. There is a view that this business of water will require substantial investment in the future and that we need to get a company or some part or division of a commercial entity focused on this in a unified manner. There are eight river basins in the country. Water has to be looked at differently from the traditional way it was in the past. We must look at it on the basis of river basins, where the water is located and how it can be extracted economically and environmentally. In terms of what Bord na Móna brings to the table, we are a commercial entity. We have a proven track record as a commercial entity. We are State owned. We are capable of raising capital, and we have approximately €180 million - it varies depending on working capital - on our balance sheet. We generate €50 million or €60 million of free cash on an annualised basis. We bring a great deal of financial clout to the process. Our reputation is measured by the Reputation Institute and so forth. Unbeknown to us a survey was done whereby Bord na Móna was seen to be the most trusted energy company in the country. We consistently rate very highly and when people knock on doors, whether it is to do with utility management or waste management, Bord na Móna will be invited in because we are trusted. Our infrastructure capability, our engineering prowess and so forth are what we would bring to the process but other things will be brought perhaps by the local authorities if they are to be subsumed into this entity. This will be a partnership with the local authorities, Dublin City Council and the other county councils in terms of their engineering capabilities and technical expertise. This will be a new entity and a new way of doing business.
On the water issue, the message I want to leave the members with is that Ireland is a great source of opportunity if we pulled together and manage it in a sustainable manner from an environmental and a social and economic point of view.
That concludes our consideration on this topic. I thank Mr. D'Arcy, Mr. Ryan, Mr. Downes, Mr. Walsh and Mr. Ó Gógáin for assisting us in our deliberations. They might note that the committee has its own work programme and water services is one of the areas we will examine in the autumn. In that regard we will review the transcript of today's meeting. I look forward to the publication of the PricewaterhouseCoopers report to see where this is going but I thank the delegates for their attention and open responses to questions put to them.