The principal purpose of this Bill is to confer additional borrowing power on Bord na Móna. Section 1, which relates to long term borrowing, empowers the board to borrow money which it requires for its functions from sources other than the Central Fund, subject to the approval of the Minister for Industry and Commerce and the Minister for Finance. The amount which it is proposed the board should be authorised to borrow from these sources is a maximum of £2,000,000. Another section which relates to short term requirements provides that the board may borrow temporarily from any source for the same purposes and subject to similar approvals.
The main provisions of this Bill are complementary to Section 1 and deal with such matters as State guarantees, the underwriting of securities of the board, the establishment of a sinking fund for the redemption of the board's securities and for the investment of any surplus money which the board may have in hands from time to time. Since Bord na Móna was set up 11 years ago —it was established in 1946—its capital requirements have been provided mainly by way of repayable advances from the Central Fund and, to a much lesser extent, by the application to capital purposes of part of the amounts provided by the board for the depreciation of its assets. The board is empowered to borrow sums from the Superannuation Fund set up for its employees. That fund was set up only recently and it could provide only a small part of the board's capital needs at the present time.
The Central Fund is likely to continue to be the main source of finance. The statutory limitation which existing legislation imposes on advances to be made to the board from the Central Fund is £14,000,000. Up to the end of the last financial year, the total amount which had been advanced to the board was slightly over £10,500,000. There is approximately a balance of £3,500,000 available to the board and it is estimated that should be sufficient to cover the board's requirements during the next few years. Any borrowings which the board may make from sources other than the Central Fund, provided by Section 1, will count towards that limit of £14,000,000. Other legislation will be required at some stage to raise that limit, but it is felt better to leave that as it is now and to require the Government to place further legislation before the Dáil and Seanad and give the Oireachtas an opportunity of examining what has been done or is proposed.
The Acts which I have quoted relate to two development programmes which were authorised and, when they were prepared, it was estimated that a total of £20,000,000 would be invested in these activities. The decision to limit the statutory authority to £14,000,000 was to ensure that the Oireachtas would have an opportunity of considering future development when that stage had been reached. The first development programme was designed to obtain 1,000,000 tons of sod peat by 1960. There was also certain provision for the production of turf briquettes and peat moss, but later it was decided that a further development programme should be initiated, the main objective of which was to produce milled peat, rather than sod peat, and utilise it in the new stations contemplated by the E.S.B. which were designed to use milled peat. The effect of that extension of the programme was to alter the targets which the board was directed to attain by 1960 to a total of 900,000 tons of sod peat and 2,500,000 tons of milled peat. It was estimated that 2.3 million tons of milled peat would be utilised in the electricity generating stations contemplated in the E.S.B. programme, and the balance of the milled peat was for briquette production.
The whole programme for sod peat and milled peat was related to the development programme of the E.S.B., the details of which were set out in a White Paper which was circulated to the Oireachtas early in 1954, prior to the enactment of the E.S.B. Act of that year which authorised the E.S.B. programme. It is known that the E.S.B. have since revised that programme and consequently Bord na Móna had to revise their programme also. The White Paper of 1954 was based on the assumption that the growth in the demand for electric power would continue in the future at the same rate as in the past and that would involve an annual increase in current of about 13 per cent. That expectation has since not been realised. Indeed, in the course of the past year, the growth in the demand for power was only about 8 per cent. over the previous year.
In view of that trend, the E.S.B., in March of last year, revised their programme. The revision involved a reduction in the generation capacity contemplated by 1961 from 1,022 megawatts to 728 megawatts. The revision of the E.S.B. programme involved the postponement to some indefinite date—certainly a date after 1960—for the provision of capacity totalling 180 megawatts which was to be based on milled peat and, of course, that postponement affected all the milled peat programmes of Bord na Móna.
The generating capacity which it was intended to install in the station planned for Boora was reduced from 100 megawatts to 60 megawatts, and that in the station planned for Derrygreena, from 80 megawatts to 40 megawatts. Other stations were postponed indefinitely. Up to the date of the revision of the E.S.B. programme, Bord na Móna was proceeding with its part of the project, on the assumption that the output of milled peat from the various bogs would be required at the dates set out in the White Paper published in 1954. The provision of an alternative outlet for the milled peat which the board was not likely to require until some time after 1961 was, therefore, a matter of importance. That brings us to the reason why this Bill is needed now.
I mentioned that in the original programme an increase in the production of briquettes by Bord na Móna at its Lullymore factory was contemplated. That factory was established before the war and, of course, the capital cost of briquette production there was therefore very low. There was no difficulty in selling the briquettes produced at Lullymore at a price fully competitive with other fuels and it secured a ready demand for them. Around 1953 and 1954, in the light of the evidence that the demand for these briquettes was greater than the supply, an examination was made which showed that the establishment of a new factory to duplicate the Lullymore production would involve very considerable capital outlay and production costs which would make the briquettes difficult to dispose of in view of the then price of coal. By 1955, the price of coal had increased considerably and Bord na Móna reopened the question of the possibility of expanding briquette production. At that time, however, the E.S.B. 1954 programme was still in the field. A suggestion by Bord na Móna to divert to briquettes one of the bogs they were developing for the E.S.B. programme—the Derrygreena bog—was countered by the E.S.B. with the argument that if the contemplated milled peat-using station at Derrygreena was not proceeded with, another station, which would have to be designed to use imported oil, would have to be substituted for it. The proposition was therefore turned down.
By 1956, when the board revised its programme and it was obvious that that involved a curtailment in the capacity and consequently the fuel needs of the stations to be established at Boora and Derrygreena, Bord na Móna brought forward a proposition to establish on both of these bogs briquetting plants to use the outlet of the bogs the E.S.B. would not need and that proposition was approved. The erection of these briquetting factories will be begun towards the end of this year. I think there is now no doubt that the fuel output can be sold and will be in ready demand, having regard to the many and substantial increases in the cost of coal which have taken place since. The immediate purpose of the Bill is to authorise the board to raise the capital required for these briquetting plants. It is estimated they will invest £1,800,000 in them. It is, as I indicated, intended that the board will endeavour to procure the whole of the additional sum from sources other than the Exchequer.
I think the Seanad is aware of the sympathetic interest which has been shown in this development by the firm of Messrs. Arthur Guinness and Co. They have undertaken to lend £500,000 to the board for the establishment of the first briquetting factory. The enactment of this legislation is required to authorise the completion of that transaction. It is, indeed, a matter of some urgency to enable the board to accept that offer. I should like to avail again of this opportunity to pay a tribute, in which all Parties in the Dáil participated, to Messrs. Guinness for their offer and to express the appreciation of the Government for the practical assistance they are giving to one of our most important national undertakings. The fact that a firm of the repute of Messrs. Guinness and a firm with such widespread interests is prepared to invest a substantial amount in Bord na Móna is an eloquent tribute to the achievements of that board.
So far as can be foreseen at present, the effect of the revision of Bord na Móna's development programme is that milled peat production by 1960 will be approximately 1,300,000 tons instead of 2,500,000 tons originally contemplated. On the other hand, its target for sod peat production has to be stepped up from 900,000 tons contemplated in 1951 to 960,000 tons. The reason is that the stations which have already been installed by the E.S.B. to utilise such peat have proved to be more efficient than was expected. They are producing a greater output of power than planned and consequently they require more fuel.
The new station at Lanesboro will be coming into operation and it is designed to use sod peat. The rate at which milled peat production will develop in the future will depend very largely on the growth in the demand for electricity. I am hoping that the development of the national economy will require a further revision of the board's programme and that the experience of 1956 will prove to be an unreliable basis on which to plan future development.
I mentioned in the Dáil that the E.S.B. programme is being subject to examination, in any event. It is considered that there may be national advantage, even calculated on a narrow financial basis, in bringing into operation earlier than is now contemplated some of the milled peat stations in the original programme which have been indefinitely postponed—recognising that it may involve utilisation to less than capacity or perhaps even the temporary suspension of operations in existing stations using oil. If that can be justified on financial grounds, the advantage to the country would be clearly obvious. We would have the very substantial employment afforded in the production of milled peat and a considerable reduction in fuel oil imports. Whether it will prove to be practical is not, however, yet decided.
The record of the board since its establishment has been one of steady progress. Its output of sod peat, milled peat, briquettes and peat moss has been increasing substantially every year and there is no reason to anticipate that that increase will not continue. The financial results have also been encouraging. When Bord na Móna was set up, it was given by the legislation which established it liability to repay a sum of over £350,000 which had been advanced from the Exchequer to its predecessor, the Turf Development Board, Limited. That board had been wound up with these undischarged liabilities and the obligation of discharging the liabilities was transferred to Bord na Móna. As a member of the Government at the time, I can say that there was not a great deal of optimism that Bord na Móna would ever be able completely to discharge those liabilities, as well as to meet the new liabilities which were necessarily involved in the extension of its operations.
I am glad to say they have now completely discharged that liability inherited from the old Turf Development Board. They have commenced to repay, upon an annuity basis, the amounts advanced for the purpose of financing the first development programme. In October next, the board will commence to repay, again on an annuity basis, part of the amount advanced in respect of the second development programme. The payment of interest on these advances is, of course, also now undertaken by the board. Indeed, by 31st March last, the board had paid the Exchequer a total of £1,500,000 in respect of interest and capital repayments.
Some aspects of the Bill—the history of the circumstances that gave rise to it—provoked a little controversy in the Dáil. It was not very serious. It was merely rehashing certain arguments that had taken place earlier. I am glad to say the Bill was generally accepted by all Parties in the end and indeed passed through all stages without amendment.