I thank the House for giving me the opportunity to introduce this legislation in the Seanad. I do not think I will bring a more important piece of legislation before the Oireachtas than this. It is 25 years since the proposal contained in this Bill was first made. Two or three general elections intervened while the legislation was being debated in the Dáil and Seanad. I hope this is not an omen of a further general election during the passage of this Bill. I hope it will pass both Houses before the summer recess. Its passage will be very significant for the economic development of the mid-west region and of the west and south-west.
Maritime access transport has a crucial role in Irish commercial life, given both the openness of the Irish economy and Ireland's position as the only EU member state without a land bridge to its main markets. Sea transport and port services must therefore be efficient, adequate, responsive and compeititve. Ports need to be competitive and cost efficient by providing reliable and effective user services. They need to address capacity issues and infrastructural needs to service the economy and trade while being fully attuned to safety and conservation matters. They need to be fully accountable to their customers and stakeholders and operate in a spirit of openness and partnership.
In the context of consultations with the chairpersons of Shannon Estuary Ports Company and Foynes Port Company, my predecessor requested an independent and objective review of the Shannon estuary ports. The review focused on whether changes in current operations and management structures might result in significant benefits to port users. You will be aware that the issue of different port structures in the estuary has been discussed and considered on a number of occasions. Various models have been considered with a view to creating a new more dynamic port entity which would be a stronger force in attracting shipping and other business to the estuary by providing a better quality and more efficient service to port users and act as a focus for onshore port related development in the estuary.
I published the KPMG consulting report on 26 March 2000 and I announced that I supported fully and in principle the main findings of the report. The consultants came to the conclusion that the establishment of a new and single port company is the only arrangement that makes commercial and operatonal sense. The company, to be called the Shannon and Foynes Port Company, will be responsible for all of the port related activity in the estuary.
Port companies operate to service the needs of their customers. When I met the customers of both port companies, they were unanimous in endorsing the KPMG conlusion that a single port company was the best operational and management structure for the Shannon estuary.
This is a major development initiative for the Shannon estuary with a range of resultant benefits identified. These include the provision of a single, coherent voice to the marketing of the estuary ports by a more focused management, greater efficiencies and economies of scale allowing a more structured approach to infrastructure development as well as a more rational approach to the best use of terminals and assets. It is anticipated that port charges will be reduced and that the new single port company will be better positioned to address the current and potential business opportunities that the estuary offers for the mid-west region and the State.
The Harbours (Amendment) Bill amends section 43 of the Harbours Act, 1996, to provide that if the Minister is of the opinion that the functions of a company or companies could be performed in a more cost effective and efficient manner by another company or companies, he may establish a new company resulting in the amalgamation of existing companies. The Bill enables the Minister to amalgamate the functions of Foynes Port Company and Shannon Estuary Ports Company. Previously an amalgamation could only be done with the consent of the port companies. It also provides powers to the Minister to establish an implementation board and advisory board or boards to facilitate the transfer. The Bill allows the Minister for Finance to make available to a company moneys to finance capital works and to inject equity for other purposes and to raise the aggregate amount of moneys that can be made available to companies. An amendment is also included to address a deficiency in the original Act in respect of the name and limited liability status of the port companies. Other amendments to the Act ensure continuity on foot of the transition from one company to another.
The implementation structures are designed to be simple, effective and non-divisive. The implementation process should be completed within a 12 to 18 month timeframe. If it is possible to do it quicker than that, we are anxious to do so. The existing boards will, under the proposed legislation, remain in place on an advisory basis until March 2002, when the five year term of office of most of the directors will have ceased and the current director's fees will continue until that date. As the House is aware, I recently announced the establishment of a five member implementation board, on an informal basis initially pending enactment of this legislation, under the able chairmanship of Mr. Proinsias Kitt of Kitt, Noone Chartered Accountants, to initiate the process of overseeing the transition to a new single port company. The other members of the board are Mr. Kieran McSweeney, chairperson of Foynes Port Company, Mr. Michael Leyden, chairperson of Shannon Estuary Ports Company, Ms Susan Bugler, director of Shannon Estuary Ports Com pany and Mr. Kevin Sheehan, director of Foynes Port Company. I am very grateful to the members for agreeing to serve on this vitally important board. There will be a close liaison between the implementation board and both port company boards and their successor advisory boards in order to ensure the smoothest possible transition to a new single port company structure.
The advisory boards, comprising the directors of the Foynes Port Company and Shannon Estuary Ports Company directors, will have a real and important role to fulfil in assisting the implementation board of the new company to pursue the difficult decisions vital to the future success of the company and the development of business in the estuary's port facilities. There will be a serious obligation on the advisory boards to assist in every way in the achievement of the main and subsidiary objectives for which the company is established and to tender any advice sought by the board on matters relating to measures for the management, control, operation and development of the estuary port facilities, the provision of facilities, services, accommodation and lands in its jurisdiction for ships and goods, the promotion of investment in its facilities, the engagement in business activity considered advantageous to the development of the estuary and the utilisation and management of available resources.
I recognise that this role may be onerous and time consuming. For these reasons there is provision in the Bill for the continued remuneration of the members of the advisory boards and a mechanism for the filling of vacancies, should they arise.
I am aware from discussions both with the staff and management of the two port companies and from discussion with members of this House and the Dáil that there is a genuine sense of grievance as to certain comments made by the consultants who undertook the Shannon Port industry review about a number of issues. I am speaking in particular about the comments on the financial position of both ports, the cash flow difficulty at Foynes and the pensions deficit at Shannon. I recognise fully that there are sensitivities here. Perhaps the dedication, service and commitment shown over the years by the staff members of both companies and their predecessor harbour authorities was not given sufficient credit.
Both port companies were set up in March 1997 without any financial support from the State. The balance sheet positions were inherited by the companies and both had to operate within that environment from vesting day onwards. Both companies experienced a lack of supportive investment by the State over the years and still managed to operate their business and service their customers in a hugely competitive environment. It is now time, however, to put the past behind us and move on to a new future for the estuary ports from a position of strength. In respect of Foynes in particular, the report did not acknowledge the fact that Foynes put in a very significant investment and now has a very fine facility. As a result of that investment and the courage shown by the members of the board, they were left in some financial difficulty. Had they not had that courage and invested as they did, we would have a much bigger bill to pay now for development which has been done over the years. That was not fairly reflected in the report.
A capital injection is needed at Foynes Port so that the company can install new handling equipment. They cannot afford to buy it themselves because of their acute cash flow problems, on the basis of what I have said, because they invested some £12. 5 million in the new west jetty extension. They now have the capacity to load and discharge more and larger ships but without the handling equipment,which they have not been able to finance, they are constrained in their current business and cannot trade out of their difficulties and exploit some new business prospects.
Although investment in ports has greatly improved, thanks to EU structural funding, the capacity and quality of port facilities and the level of growth in Ireland's international trade and in port activity mean that continued investment is required which will be funded in the future through the port's own resources, available EU co-funded investment, shareholder's equity, public private partnerships or a combination of these funding mechanisms.
Amongst the tasks of the implementation board overseeing the unification process, which I appointed on an informal basis pending enactment of the new legislation and establishment of the new port company, will be the need to establish the level of equity required to ensure that the new company can trade solvently. KPMG Consulting assesses this to be in the order of £5 to £8 million. The implementation board will be investigating the full extent of the planned capital works at both ports, the restructuring of loans, private sector involvement, port re-organisation and possible disposal of assets surplus to essential core business so that I can have a fully developed and costed assessment of the financial requirements necessary to enable the two companies to unify into one whole and start with a sound balance sheet.
An urgent priority already identified is to address the critical deficiencies in craneage and handling facilities at Foynes, costing up to £3 million. The eventual cost will depend on completion of the procurement process which has just been embarked upon by the Foynes Port Company. Consultation with the Minister for Finance are ongoing on the issue and these discussions will be finalised very shortly. The new single port company will be headquartered at Foynes. The KPMG report recommended that the location of the headquarters of the new single port company should be a matter for the new executive but that operational management should be located at Foynes while Limerick should have the administrative and commercial responsibilities.
Following publication of the report, I, as share holder, decided that certainty was required as to where the headquarters and executive location for the new port company should be. I came to the conclusion that in the combined business of the two companies, the facilities over which the most business influence can be exerted by the new port company are at Foynes. Also, the thrust of Government policy is away from centralisation in the major towns and cities. I explained this fully to the boards and managements of the two port companies when I visited them recently.
While the operational headquarters will be located at Foynes, the new single port company will need to have a presence at other port locations and facilities within the estuary. This matter will fall to be determined by the implementation board following full and detailed consultations with the two advisory boards.
At a very early stage of the review process, my Department confirmed the position in writing to both port companies that all the employment protections as to salary scales and conditions of service guaranteed by the Harbours Act, 1996, for the members of staff of the predecessor harbour authorities would not be affected by any potential changes to management or operational structures and I reiterate that this remains the case. A key remit of the interim implementation board is to deal with staffing concerns or issues. I am on record as saying that there will be no forced redundancies. Where the necessity for staff economies or rationalisation become apparent to the implementation board, a scheme of voluntary redundancy will be put in place.
There are three road projects relevant to the future of the two ports. They are the upgrading of the N69, the construction of the Foynes Harbour access road and the proposed fourth Shannon River crossing. The first two are especially relevant for the development of the port of Foynes while the last concerns the future of the Limerick docks.
The improvement of the N69 is scheduled under the national development plan. Significant remedial works are, I understand, underway currently on the N69. I have had discussions with my colleague, the Minister for the Environment and Local Government, Deputy Noel Dempsey, about the continuation and the provision of further priority to the development of this road.
An urgent priority already identified is to advance the construction of the port access road at Foynes. I understand that the original scheme, for which there is planning permission, was costed at some £1.6 million. Extra works have arisen comprising realignment of the N69 and a level crossing at a cost of some £1 million. The National Roads Authority will provide £300,000 of this, in addition to the grant aid already committed, leaving a requirement for an additional allocation to Limerick County Council of some £700,000. I have initiated discussions with the Minister for the Environment and Local Government on providing the necessary funding, when required, to Limerick County Council, for the purpose of constructing the Foynes Port access road. I fully appreciate the importance of completing the access road, having visited the port and spoken to the local community council.
The proposed Limerick southern ring road will cross the Shannon at a place yet to be decided. The type of crossing, which could be a high or medium level bridge, an open span bridge or tunnel, could seriously impact on the types and volumes of traffic that will use Limerick Port. A low level bridge, for instance, would stop many pleasure vessels with high masts entering the port. To allow all vessels to access the port, a 30 metre clearance will be required.
There is a decision to be made in regard to the type and form of a new Shannon crossing. This must not restrict the development and long-term viability of the Ted Russell docks, not only from a commercial perspective but also as a facility for water-based tourism. The potential of Limerick docks must be recognised, given that its location takes significant bulk traffic off the road. Up to now the facility was hampered by lack of warehousing but this is being addressed in developments planned by Shannon Estuary Ports Company.
I have asked Shannon Development Company in conjunction with Shannon Estuary Ports Company to explore the possibility of establishing a terminal adjacent to Shannon Development Company's land bank near Ballylongford in north Kerry. The lands at Ballylongford and Shannon Estuary have been the subject of a number of initiatives over the past 20 to 30 years, none of which has resulted in a specific industrial project at that location.
More recently, there have been proposals to use this land bank as a location for a container transhipment facility. This proposal has been around for some time and I am determined that it should be urgently and authoritatively explored. While success is dependent on investment from the private sector, the project warrants further exploration. On foot of this, my Department and the Department of the Taoiseach, working with Shannon Development and the representatives of the two ports, and relevant stakeholders, have initiated an intensive evaluation of the viability of such a project. The aim is to develop the concept in outline form and to explore this informally with potential operators. This evaluation will take some months to complete.
As a shareholder it is my responsibility to ensure that the State's port industry assets are deployed to best effect and that the business is competitive, responsive to customers' needs and operates on a sound financial footing. Above all I want the estuary ports industry to be a focal point for development of the estuary as a whole and deliver to the best extent possible on its potential. While the Shannon Estuary has long been identified as a deepwater access asset with major unexploited maritime and related potential, the level of progress has fallen far short of expectations.
There is no doubt that the marketing focus needs to be strengthened and the full potential of the estuary ports industry which has a capacity to handle in excess of 22 million tonnes must be realised. I am confident that the new structure with a single voice, reduced costs and strengthened management and marketing capabilities will enable the potential of the estuary to be maximised for the benefit of all.
It is my intention that implementation of the new arrangements will be accompanied by in-depth assessment of new port business opportunities and by a revitalisation of the wider estuary development work of Shannon Estuary Development Ltd. I envisage the new arrangements as a catalyst for the integrated development of the estuary for a mix of activities, including industry, shipping, tourism, aquaculture, recreation and for a harmonised approach to coastal zone management and environmental issues. This unification will provide a focused and dynamic development structure, not just for the ports industry in the Shannon Estuary but also for the Shannon and mid-west region as a whole.
Foynes and Limerick have the potential to become the premier ports in Ireland. We are all agreed that too many of our imports and exports pass through ports on the east coast, particularly Dublin Port, where there is a huge build up of traffic. I am anxious that this development should give Foynes in particular, because it is a deep water port, the ability to attract traffic from Dublin. I have said this to Dublin Port officials and, therefore, I am not saying anything behind their backs. The Shannon Estuary ports will become premier ports, not just in Ireland but in Europe. There is no doubt that the estuary is our most important natural resource. It is seriously underdeveloped and has not fulfilled its potential and contributed to the economic life of the west, mid-west and south west. I am satisfied it can become the cornerstone of development. The development of the ports will bring about a significant increase in industrial activity in the estuary hinterland. I look forward very much to the implementation of the legislation.
I welcome the members of the Foynes board and staff who are present. I thank them for their co-operation, understanding and constructive contribution to the debate since I took office. I reiterate what I have stated both in Limerick and Foynes. This legislation is not an attempt to coerce anybody into anything. We are undertaking this initiative in a spirit of partnership on the basis of trying to agree the way forward with the people involved. That is my intention as we go through this process. During the debate in the Dáil I hope to spell out in more detail the financial arrangements which I will hopefully reach with my colleague, the Minister for Finance, and the composition of the new port company which is to be established.
The Department wants the new port company to be up and running as quickly as possible. We want the implementation board to be in place only for as long as it needs to undertake the specific job it has been given. In the meantime the most crucial role is that of the two existing boards which will act in an advisory role. It is essential that they adopt a hands on approach to this development and that they are consulted, are the main advisers in terms of the implementation board and are the catalyst for action as we go forward. I intend that the two boards will be asked for a great deal of advice in the context of the implementation board's work. I have been assured by the new chairman that he will consult and be advised by the two boards on an ongoing basis.
I appointed a Galway man as chairman because it is absolutely vital that he has an impartial view and listens to all sides in the debates so that at the end of the day the Shannon Estuary and the counties of Kerry, Limerick and Clare will be the beneficiaries of this initiative. I commend this legislation to the House and hope we have a constructive debate. I am quite anxious to take on board the views of Members of both Houses as the legislation is processed.