Seanad Éireann debate -
Wednesday, 20 Dec 1995

Vol. 145 No. 17

Energy (Miscellaneous Provisions) Bill, 1995: Committee and Final Stages.

Sections 1 to 6, inclusive, agreed to.

SECTION 7.

Question proposed: "That section 7 stand part of the Bill."

Mr. Cassidy

Yesterday I asked the Minister about the possibility of extending the gas pipeline to the midlands and I especially mentioned Mullingar, which has a population of 15,000. While most other towns of comparable size have benefited from the decentralisation of sections of Departments in recent years, Mullingar has not been included. I presume the main reason for this has been its proximity to Dublin, although principal towns in counties closer to Dublin were fortunate enough to benefit.

Mullingar is the principal town of County Westmeath and the midlands. From that point of view, I ask the Minister if he would undertake a feasibility study in extending the gas pipeline — it already goes to Leixlip and Maynooth — to Mullingar and other major towns in the midlands region. In other words, when he announced yesterday in the House that the line was being extended to Shannon, Ennis and into Galway, it was not highlighted that the ring line could come back into Loughrea, Ballinasloe, Athlone and Mullingar to meet the line from Leixlip to Maynooth. I would ask the Minister to consider my proposal to have a feasibility study done when the line is being put in place in the Clare, Limerick and Galway areas. Maybe this line could be brought back to have its own ring line thus bringing cheaper energy to the region which would entice more manufacturers to the area and boost employment.

Minister of State at the Department of Transport, Energy and Communications (Mr. Stagg)

The criteria BG uses for the extension of the gas network are commercial laid down in the Gas Act which established Bord Gáis. That being said, I have asked BG to undertake a study to establish how, given that criteria, they can extend the network to a number of towns. While I did not mention Mullingar, I would see that town as a primary objective of the study. I thank Senator Cassidy for raising the case of Mullingar with me. I will again convey to BG my desire for them to find a commercial basis for extending the pipeline there. That is not beyond the wit of man. With their excellent record, BG can find the means to fund that and make it a commercial reality. I look forward to the response to that study.

In my contribution yesterday I mentioned a number of towns including Tralee, Ennis, Shannon and Galway. It would be a logical extension for it to come back through the midlands and join up with the Dublin line.

Mr. Daly

This is a very detailed area and I do not wish to pin down the Minister of State on any particular issue. However, he will be aware that on a number of occasions announcements were made about the extension of the gas line to Shannon. Amounts were mentioned and apparently Government approval was given at some stage. There is still grave doubt about whether it is proposed to extend it, even though further studies have been undertaken.

The issue has been going on for some time. Given the necessity for and desirability of industrial development, airport development and the development of Shannon town itself, there is no question this will take place. In spite of the fact that we have had several announcements by various Ministers over four or five years, we still have not seen an indication of any positive proposal to deal with that. Perhaps the Minister can clarify the current situation.

Mr. Stagg

As I said, I have asked BG as a matter of urgency to undertake a study to establish how, within the commercial criteria they are bound by within the Gas Act, they can meet the desire of the House, and indeed of the Government, to extend the pipeline. I cannot put it more strongly than that. There is widespread demand from people currently outside the gas network to have a supply. It means a huge boom to the economy and to the comfort of those who obtain this supply domestically. Commercially and industrially it makes a huge difference to what can be done in those areas. I will certainly take the message from the House and will send it directly to Bord Gáis. As soon as I have word on that report I will convey it to the two Senators who raised the matter.

Question put and agreed to.

SECTION 8.

Question proposed: "That section 8 stand part of the Bill."

Mr. Daly

Can the Minister clarify whether that includes powers to get involved in exploration, especially exploration in the Porcupine Basin?

Mr. Stagg

The section inserts a new section 8 (a) into the Gas Act, 1976. With a few additions, it brings into primary legislation an order which has already been made.

Mr. Daly

Does that involve exploration?

Mr. Stagg

No.

Question put and agreed to.

Sections 9 to 18, inclusive, agreed to.

SECTION 19.

Question proposed: "That section 19 stand part of the Bill."

Mr. Daly

I would like the Minister to indicate the state of negotiations between unions and management in the ESB in relation to rationalisation. There is anxiety among the staff about future restructuring and the prospect of fairly severe job losses. I am particularly interested in Moneypoint. At present 400 to 500 people are employed in Moneypoint, mainly on a full-time basis but with some part-time staff as well. Indications from the negotiations are that the workforce may be reduced to 250.

That that would be a catastrophic reduction in the workforce in an area which is underdeveloped and with few other job opportunities. There is considerable concern among the families of ESB personnel about their future. Many young families have only recently moved into the west Clare area. They now feel threatened because of these new arrangements. I am aware that agreement will be reached between unions and management but there is anxiety in the local community about the effects of the rationalisation. Will the Minister clarify the present state of play?

Mr. Stagg

The section we are dealing with relates to the ESB superannuation scheme. It makes a minor change to the scheme to allow members of the ESB who are elected to the Oireachtas not to be disadvantaged from a pension point of view. However, I take Senator Daly's point. He is probably aware that, by and large, agreement has been reached between the Department, the ESB and the unions through a tripartite system. That process must be completed and unions members must be balloted on it.

If the ESB does not become more efficient, its competitors will beat it on every occasion, it will go out of existence and outside and private operators will take over its operation. The object of the exercise is to make the ESB slim and mean to enable it to meet and beat competition. An EU directive is being discussed today by the Council of Ministers which will open up competition for the ESB not only in generation but possibly in transmission and sale. This will have an effect on the ESB if it is not capable of meeting that competition. The Department and ESB unions and management have co-operated to get a planned change in the company which will allow it to be more effective.

I take Senator Daly's point about the effect of redundancies on local economies. There is a commitment and agreement that there will be no forced redundancies within the system. The redundancy packages will be quite generous and will enable people to set up in alternative areas.

Mr. Daly

So many people will be made redundant that we may well have a Moneypoint candidate standing in west Clare in the next election. The point is constantly made that in the new arrangements to be put in place, quite an amount of the work will still have to be undertaken by private subcontractors. Perhaps the Minister might communicate to me what the impact on Moneypoint will be. I am picking Moneypoint out as the generating station in my constituency where the CCR will have a major impact. It will probably be the worst affected of all the generating plants of the ESB. There is widespread anxiety in the community and among the staff about the final outcome of the deliberations. Perhaps the Minister of State could brief me about the current situation. He could speak to me privately if he cannot do it here.

Mr. Stagg

Money point is the biggest power station within the ESB system, generating 40 per cent of total requirement. Moneypoint can generate a unit of electricity for as cheap as one penny whereas electricity units cost up to 18p in other stations. There is a huge variation in costs within the system. Moneypoint is the biggest station so it is likely to carry its share of the planned 2,000 redundancies under the agreement. The people who work there will be directly involved in making the decision. I will check with my officials and I will come back to the Senator with the detail of how it will be effected.

Mr. Daly

We do not want to labour this point but the Minister of State will be aware that Moneypoint station is very efficient and modern and is capable of being expanded to meet an even bigger percentage of the energy requirements.

Mr. Stagg

The midlands want their share as well.

Mr. Daly

We may be unfairly penalised in south west Clare because of the mad dash of the ESB to make savings elsewhere in far less economical stations. It is not wise to contemplate building a new station when we have a very efficient station which can be adapted to generate a very high percentage of our requirement at a very low cost.

Mr. Stagg

Moneypoint is the jewel in the crown of the generating stations operated by the ESB and I am quite satisfied that nothing will be done by either ESB management, my Department or my senior Minister to adversely affect its efficiency.

Mr. Daly

This is a very serious matter. It is planned to build an expensive new generator which will probably be less efficient. At very small cost the fourth phase of Moneypoint could be put in place and the high level of efficiency and good management already there could be continued. It could reduce the level of redundancies planned there at present. To build a new station at a time when we can easily expand an existing one, is daft.

Mr. Stagg

All new capacity in electricity generation will go to tender. The private sector and the ESB will be free to tender. If we do not slim down the ESB and make it efficient with modern work practices, it will not be in a position to tender. The expansion of Moneypoint is a possibility the ESB will put forward when new capacity is required. Others will tender for that as well. The ESB needs to be in a position to tender successfully. The CCR exercise is to make the ESB efficient so it will win the tender.

Question put and agreed to.

Sections 20 to 22, inclusive, agreed to.

SECTION 23.

Question proposed: "That section 23 stand part of the Bill."

Mr. Cassidy

Will the Minister elaborate on section 23?

Mr. Stagg

Bord na Móna is based in Newbridge which, it must be stressed, is outside my constituency.

Mr. Cassidy

We would not have thought otherwise. I believe it is in Deputy McCreevy's constituency.

Mr. Stagg

To legalise this position, it is required to change the Turf Act to state that the headquarters of Bord na Móna is situated in Newbridge, not Dublin.

Mr. Cassidy

I welcome this provision. It is correct to situate the headquarters of such semi-State bodies in the area where their business takes place and their raw materials are produced. I must give credit to the Minister's predecessor for having achieved this measure.

Acting Chairman

We have gone considerably beyond that stage.

Mr. Cassidy

I was also referring to the Acting Chairman in that regard.

Acting Chairman

Yes. I am very keen to see Bord na Móna situated in Newbridge.

Question agreed to.

SECTION 24.

Question proposed: "That section 24 stand part of the Bill."

Mr. Cassidy

Will the Minister also elaborate on section 24?

Mr. Stagg

The purpose of this section is to copperfasten the shareholders' control in order that the company cannot establish subsidiaries without obtaining written ministerial consent.

Question put and agreed to.

SECTION 25.

Question proposed: "That section 25 stand part of the Bill."

Mr. Cassidy

I wish to ask a pertinent question, from a business point of view, in relation to this section. The taxpayer is making a commitment to provide moneys to Bord na Móna. I spoke in favour of this matter on Second Stage, despite various comments from the other side of the House — though not from the ministerial chair. In the past, Bord na Móna has been handcuffed with debt. The company is forced to pay millions of pounds in interest each year as a result of its overdraft facility. The Minister stated that the amount is somewhere in the region of £20 million.

Acting Chairman

That matter is not relevant to the section.

Mr. Cassidy

We have been very cooperative. When is it envisaged that Bord na Móna will clear this debt? If the matter is not relevant to the section, perhaps the Chair will guide the Minister and me in this regard?

Mr. Stagg

It is proposed to make £120 million in equity available to Bord na Móna to facilitate the clearance of its debt. That debt did not arise from bad commercial decisions taken by Bord na Móna. It arose from bad political decisions taken by a succession of Ministers, none recent, over a long period of time. The debt is an old one. Bord na Móna has been carrying that debt and paying in the region of £20 million interest per year to the private commercial banks. Effectively, up to the present time the banks owned Bord na Móna. The company has always been profitable in its operations and the money from those profits went to pay a debt — which was not of its own making — owed to the banks. In the past, the banks have fared well by receiving in the region of £20 million per year from the profits of Bord na Móna. The company was left with only a small amount to reinvest in its own commercial activities and enterprises.

It is envisaged that the moneys being made available by the Government will be paid to Bord na Móna over a three year period, which will reduce its debt to manageable proportions. Part of the company's commercial plan, presented to the Government, is to convince Government of its commercial viability. That plan shows that the company will be able to manage the remainder of that debt. It will then be selling its produce, in competition with the produce of other companies, to the ESB or anyone else who wishes to buy it, including the owners of the new peat burning station. If anybody else can supply fuels to that station they will be free to do so but Bord na Móna will be competing in that environment. It is proposed that £100 million of the £120 million will be made available now by Government to a special fund and that £30 million of it will be made available to that fund immediately for transfer to Bord na Móna.

Mr. Ross

Can the Minister give the House any projections for Bord na Móna's profits in the coming years?

Mr. Stagg

The actual profit on operations at Bord na Móna for the last number of years has been around £20 million and I envisage that continuing. With the advent of a new market for its produce, the new peat-burning station which will take about 1 million tonnes of peat per year, that profit will expand.

Mr. Daly

Is the Bord na Móna plan freely available or is it only in the Government's possession?

Mr. Stagg

It is freely available.

Mr. Daly

Has it been published?

Mr. Stagg

It is contained in its annual report.

Mr. Ross

I do not think it is freely available. I do not want to disagree with the Minister of State but the annual report does not contain any detailed projections.

Acting Chairman

This has nothing to do with the section in hand.

Mr. Stagg

The Bord na Móna plan which was presented to and accepted by Government is available. If anybody cannot find it, I will provide it.

Question put and agreed to.

Acting Chairman

There are some typographical errors which need to be brought to our attention.

Mr. Stagg

In section 2, there are two commas missing in lines 26 and 27. I ask the Cathaoirleach to arrange to have these inserted in the new print. There is a typing mistake in section 25(3)(d) which should end after "contract". The rest refers to paragraph (a) and paragraph (d) and not just paragraph (d), so it should be aligned with the opening sentence of subsection (3). Again, I ask the Cathaoirleach to have this corrected in the new print.

Acting Chairman

I propose to direct the Clerk to make the corrections mentioned in accordance with Standing Order 103.

Sections 26 to 30, inclusive, agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: "That the Bill do now pass."

Mr. Cassidy

I thank the Minister for answering the various points raised. A lot more could be done to market the products of Bord na Móna, particularly abroad. We saw the enormous success over the last two years of the novel marketing campaign "The beat on the peat" in various cities in the US. I must commend the former Minister for Tourism and Trade, Deputy Charlie McCreevy, who joined the promoters in making this such an outstanding success. I understand the campaign is moving on to Chicago, Boston and San Francisco next year and Birmingham, Manchester, Coventry and London are also involved.

This product is unique to Ireland and a few other countries. The board should look into the enormous growth in popularity of its products. It might not be popular simply as a fuel but because of its value as a collector's item for tourists. There is enormous scope for marketing in this regard. I would like to play a part in a sub-committee of the House to look into this and perhaps help the Minister in this regard.

Ms O'Sullivan

I thank the Minister for the efficient way in which he dealt with the Bill and the questions raised in the House. The boards affected by this Bill are going through challenging times but I am confident it will make them more efficient in dealing with those challenges. I look forward to seeing progress in BGE and we all hope it will be successful in discovering more gas. We look forward to that organisation's future development.

Minister of State at the Department of Transport, Energy and Communications (Mr. Stagg)

I thank Senators for their contributions and particularly for their constructive approach to the debates during the Bill's passage through the House. I emphasise the importance of the energy sector. State investment in energy infrastructure is £5 billion and energy imports represent 2 to 3 per cent of GNP. The final energy demand bill at £2.5 billion is 10 per cent of GNP. Energy policy is important too because energy as an input to industry can significantly affect Irish competitiveness.

The energy sector is a dynamic one where the forces of change are strong. Major developments such as the restructuring of the ESB, the new peat fired power station, the completion of the Ireland-UK natural gas interconnector and EU proposals for the electricity and gas sectors are influencing the shape and structure of the energy sector. This Bill is an important measure remedying a number of defects in existing legislation. It also introduces important new measures. Effective ministerial monitoring of exploration and production as well as safety and the control and prevention of pollution arising from a licence or lease issued by the Minister, will be greatly facilitated. Similarly, the ability of the ESB and BGE to detect theft of electricity and gas will be strengthened through the powers conferred on them as well as by the offences and penalties relating to such theft outlined in the Bill.

One very important measure is the statutory basis provided for the introduction of a system to allow Bord Gáis Éireann to transmit gas owned by another party through its gas network at a price to be negotiated. This marks another milestone in the development of what is still a young and successful gas industry in this country. BGE's customers who are above the threshold prescribed in the Bill for third party access account for approximately 75 per cent of BGE's annual total gas deliveries. A sizeable market is being made potentially available. To enable me to exercise my functions in relation to third party access, my Department is acquiring the necessary expertise and I hope to announce shortly the appointment of consultants to advise me on the charging methodology and other conditions relating to the granting of third party access.

The Bill also provides the statutory basis for an injection of £100 million in equity in Bord na Móna. This is the major part of the £120 million investment approved by the Government. The first tranche of £30 million cannot be invested in Bord na Móna until the terms and conditions specified by the Minister have been satisfied and the investment approved by the European Commission. However, for budgetary purposes, this tranche can be paid this year to a special account and issued from that account when determined by the Minister for Finance after consultation with the Minister for Transport, Energy and Communications.

I thank Senators for their positive approach to the Bill.

Question put and agreed to.