I would like to thank you for giving me permission to raise this matter on the Adjournment, that immediate arrangements be made for the provision of natural gas in the Limerick area as a matter of exceptional and extreme urgency. I am delighted as a member of the Limerick City Council to do this and to do so not alone on my own behalf but on behalf of my colleagues on the city council who requested me to do so on this occasion.
Since 1978 deputations from the Limerick City Council have been received by five Ministers for Energy. Firm commitments have been given that Limerick would receive an appropriate allocation of natural gas. All of these deputations from both the city council and the Limerick Gas Company have stressed that unless an allocation of natural gas is made available Limerick Gas Company would continue to lose substantial amounts of money and customers and would have to close, with the imminent and immediate effect of putting 40 people out of work, men who have served the Limerick Gas Company and the people of Limerick for over 100 years. This would mean also that approximately 6,000 consumers of 24,000 people in all would be left without any means of cooking. Such a closure was imminent in 1980, as can be seen from the city manager's report of that year. This closure was deferred by Limerick Corporation when the Government announced their intention to extend natural gas to areas such as Limerick. Since 1980 Limerick Corporation have persevered with the operation of this gas undertaking, an undertaking which has become a very serious financial liability.
The magnitude of the task facing Limerick City Council and the Limerick Gas Company can be seen from the fact that the purchase price of naphtha, the feedstock that is used by Limerick Corporation and the Gas Company, has risen from £14 per tonne in 1973 to £320 per tonne in 1983. That represents an astonishing and unparalled increase of 2,200 per cent in a period of ten years from 1973 to 1983. This has meant that the accumulated cash liability of Limerick Gas Company — and of course it is a mere subsidiary of Limerick Corporation — is now in excess of £2 million. It will continue to lose £1,000 per day unless there is conversion to natural gas.
In addition, since 1980 Limerick Corporation at the behest of the Department of Energy have spent over £150,000 by way of consultancy fees on independent studies, all of which confirm that Limerick Gas Company could operate successfully, with profits, if given an allocation of natural gas, an allocation which is already available to over 1,000,000 people in Ireland, in Dublin and Cork. A crucial deputation was received by a former Minister for Energy on 30 August 1983. He confirmed and insisted that natural gas would be made available to Limerick, but he also insisted and informed us that certain conditions would have to be fulfilled before BGE would be instructed to proceed with the construction of a pipeline to Limerick. These conditions included proof of a viable market for natural gas; the setting-up of a new company with proven competence and with management and technical expertise. The project, he insisted, must not depend totally on public funding and the transitional arrangements for the transfer of the affairs of the existing undertaking to the new company would have to be satisfactory.
On 12 July 1984 the assistant secretary of the Department of Energy, on the direction of the Minister for Energy, wrote to the Limerick city manager in which he stated that "within the context of continued public ownership" the Minister wished to be advised whether a private minority participation was considered and with what effect or result. The letter continued, "Such minority shareholding would not be inconsistent with continued public control".
All of the conditions that were specified by the previous Minister for Energy have now been met, and a proposal to set up a new company to run Limerick Gas has been negotiated. The new company would consist of Amgas with 40 per cent shareholding; Limerick Corporation, 40 per cent and BGE, 20 per cent. Negotiations were undertaken by Limerick Corporation and BGE during the summer of 1984. An agreement has been reached on the terms of a supply contract and Amgas are agreeable to the terms negotiated. I am informed by the Limerick city manager that no further business remains to be transacted between Limerick Corporation, BGE, Amgas and the Department of Energy at official level. What is now awaited is a Government decision on these proposals. Limerick Corporation and Limerick City Council favour the implementation of these arrangements negotiated with Amgas over any other arrangements as to ownership and control of the gas undertaking for many reasons.
The new company, with Amgas involvement, would bring to the Limerick Gas Company the strongest available expertise in the gas distribution business particularly in the area of marketing. Amgas itself consists mainly of Calor Teoranta with 50 per cent; Irish Life with 10 per cent; McMullan Brothers, 20 per cent and Tedcastle McCormick 20 per cent. There is also the commitment to social policy considerations in the Amgas-Limerick Corporation proposal. These considerations are reflected in the gas development plan, by providing, for example, for the supply of natural gas to both public and private housing developments and housing schemes not alone in Limerick city but also in its environs.
No financial burden is sought to be imposed on the State in respect of this project other than the cost of the transmission pipeline — which is the duty of BGE — and the cost of conversion of the existing system to natural gas. On the other hand, provision is made for the immediate recoupment of all present corporation indebtedness in the gas division. The corporation are entitled to 40 per cent of the profits on a continuing basis. The arrangements with Amgas are capable of immediate implementation as soon as Government approval is received. This has the decided advantage for Limerick Corporation of curtailing the continued build-up of losses in the existing undertaking, presently running at the rate of £1,000 per day. The loss of customers continues relentlessly. Further losses are threatened unless a supply of natural gas is made available immediately to Limerick.
Amgas have indicated that if a clear decision is not forthcoming soon they will have to consider alternative arrangements for development of their financial and manpower resources. In this connection, in the absence of Amgas as partners, Limerick Corporation is unaware of any other private sector partner who would be available to undertake the project jointly with them. Therefore, it is quite clear that it is imperative that an immediate decision be given by the Government to enable natural gas to be provided in Limerick during 1985-1986 and to ensure that a satisfactory distribution company will exist by approving of the agreement between Limerick Corporation and Amgas, or at least approving of an alternative proposal which will be equally good.
Therefore, on behalf of my colleagues in the city council, on behalf of the city manager and all the employees of Limerick Gas Company I am urging the Minister for Energy, who has a very special knowledge of and interest in Limerick, and the Government to give the green light for the provision of natural gas to Limerick and to authorise BGE under section 8 of the Gas Act, 1976 to proceed with the extension of the transmission pipeline to Limerick.
I am grateful for the opportunity to raise this matter here this evening. I would like to thank the Minister for coming here to hear the case I have presented on behalf of my colleagues in the city council and on behalf of some of my colleagues who are particularly interested in this problem of providing natural gas for their own areas.
