I understand from what we were told at the Joint Committee on State-Sponsored Bodies that the Verolme people will not quote a fixed price contract and, consequently, it is not possible at this stage to know what the ultimate cost of this ship will be. Guestimates can be made, but the Verolme people will not quote a fixed price. I should like the Minister to be specific with us as to whether there will be a limit on what Irish Shipping will have to put into it. Will it be a figure appropriate to the amount for which they could buy a ship abroad? Will there be a limit and, if so, what will be the limit they will be asked to pay on top of that, (a) by using the extra capital, and (b) by using the extra borrowing facilities?
Irish Shipping Limited (Amendment) Bill, 1980: Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
The exact finished fixed price will be known when we are in the final negotiations. World market prices are fixed in relation to fluctuations in currencies. If we are talking about a quotation from a Japanese yard, we are talking about the value of the yen. Are we talking about a price from a Korean yard or a price from a different yard?
Which price was talked of?
We are talking about them all. Irish Shipping will get the benefit of the prevailing world market prices on that particular day. Let me assure the Senator that the Irish Shipping people are the best negotiators in relation to the prices of ships today. The Senator need have no doubt that, in carrying out and finalising negotiations with Verolme Cork Dockyard they will ensure that they get value for money, and that what they sign for on the day will be in their own interests. They will protect their own interests fully. We have been looking at prices from a Japanese yard and from a Korean yard which, of course, are in US dollars. There are fluctuations in currencies. Irish Shipping are requesting extras to be included in the plans of this new ship. There will be no interference and no over-weighting in relation to what the commercial accounts of Irish Shipping can bear. Irish Shipping are quite satisfied.
May I repeat my question to the Minister? Is the contract being offered by Verolme to build this ship an open-ended contract or a fixed price contract?
When they have the price finally worked out, Irish Shipping intend to sign a contract. I have every confidence in their commercial judgment. They will protect themselves.
The Minister could help us by clarifying the matter a little further. He says that Irish Shipping will be charged the world economic price. Does that mean that the amount of capital they will require is just that sum? Will they not require that sum plus the £10 million extra which it will cost them to buy it from Verolme? Does it really mean that, while they will be paying out £25 million, let us say, as against the £15 million it ought to have cost them, the Minister will arrange their finances by giving them free equity capital of £10 million so that, in effect, they only bear the capital charges on the £15 million which is the world economic price? I should like the Minister to clarify that matter.
The financing arrangements are that Irish Shipping will get half the price which it is going to cost them — their price, the world economic price — half in equity and half in loans. The balance will be made up by subvention from the Department of Industry, Commerce and Tourism. It will be direct to Verolme and not to Irish Shipping or channelled through the accounts of Irish Shipping.
Does that not mean that they get half the price they have to pay to Verolme?
No, half the cost to them. If the cost to them is £12 or £13 million that is all they will pay direct to Verolme, that is all that will go through Irish Shipping accounts and whatever subvention is involved, whatever the final figure is, will be paid as a subvention by the Department of Industry, Commerce and Tourism direct to Verolme.
On the Minister's hypothesis that the world market price is £12 million——
I did not say that.
As a hypothesis: I am not saying that that is the price at all. May we take it from what the Minister has said that the £12 million which Irish Shipping have to find is to be provided to them half in equity and half in borrowings to be made by them?
Half in equity and half in borrowings.
And the balance due to Verolme will be paid by the State.
It will be paid by way of subvention from the Department of Industry, Commerce and Tourism.
If Irish Shipping would not normally need this extra equity and would just do some borrowing for their portion of it, why could the State not increase the subvention direct to Verolme in ease of Irish Shipping's balance sheet?
Is the Senator suggesting that they be given a ship for nothing?
No, give it to them for what they would normally borrow.
I do not follow the logic of that. They are getting a ship at the world market price and the financial rates have been clearly outlined.
I think they are doing well.
Maybe I got the wrong impression. I understood from the Irish Shipping representative that the total contribution they would have to make was £5 million and that Irish Shipping in doing this deal were going into a contract which was open-ended, that Verolme would not quote a fixed price. The question that is puzzling me is at what stage is the final liability of Irish Shipping going to be determined?
The final liability for Irish Shipping will be determined on the world market prices when the extras have been worked out. In relation to the financing of this arrangement as regards Irish Shipping, and they are involved in it, I do not follow what confusion exists in the Senator's mind in relation to what somebody in Irish Shipping may have said in some particular case. I made it clear that if the figure is £12 million or £13 million, 50 per cent of it will be by way of State equity into Irish Shipping and 50 per cent of it will be by way of borrowings by Irish Shipping. It is straightforward, and the balance is made up by subvention from the Department of Industry, Commerce and Tourism to Verolme.
That deals with the open-ended element.
Question put and agreed to.
Sections 3 and 4 agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
On this Stage, I just want to take up one point with the Minister. He gave the impression that Irish Shipping were very happy with the arrangement that has been made with them with regard to the purchase of this ship. I would like to put it on record that the information to the joint committee is that they are not happy with this arrangment, that they did not want it.
I take what the Senator says but I would also like to put it on record that yesterday I received a letter from the chairman of Irish Shipping to say that he has been misquoted in the national press in relation to his comments to the Joint Committee on State-Sponsored Bodies and I have no reason to believe otherwise.
Question put and agreed to.