I move amendment No. 2:
In page 5, before section 2, to insert the following new section:
2. (1) The following section is hereby inserted after section 10 of the Act of 1976:
‘10A. (1) Where a person requests the Board to make an offer to him to transmit on his behalf through pipelines under the control of the Board a quantity of gas that is not less than the minimum quantity of gas prescribed for the purposes of this section, the Board may make such an offer to that person, including an offer to transmit a quantity of gas that is greater or less than the quantity to which the request relates (but not less than the minimum quantity aforesaid).
(2) (a) An offer referred to in subsection (1) of this section shall be made on such terms as the Board considers reasonable and specifies in the offer.
(b) If any dispute arises between a person and the Board as to the reasonableness of terms on which the Board has made an offer aforesaid to that person, the dispute shall be referred to the Minister and, if the Minister, or a person nominated by him for the purpose ("the nominee"), considers those terms or any of them to be unreasonable, the Minister or the nominee, as the case may be, shall give a direction to the Board requiring the Board to make a further offer of the kind referred to in subsection (1) of this section to the first-mentioned person on such terms as the Minister or the nominee specifies in the direction and the Board shall comply with such a direction.
(c) For the purpose of considering a dispute referred to the Minister under this subsection, the Minister or the nominee may request the Board or the person who requested the making of the offer concerned to supply to him such information relating to the dispute as he considers necessary, and the Board or the said person, as the case may be, shall comply with such a request.
(d) The reference in paragraph (b) of this subsection to the terms on which the Board has made, or may be required to make, an offer shall be construed as including a reference to the specification in the offer of the quantity of gas to be transmitted on behalf of the person concerned.
(3) An agreement entered into by the Board in consequence of an offer made by it under this section (including such an agreement as subsequently varied by any lawful means) may be carried into effect by the Board in accordance with its terms.
(4) This section is without prejudice to the powers of the Minister under section 11(1) of this Act.'.
(2) Section 11 of the Act of 1976 is hereby amended—
(a) by the substitution of the following subsection for subsection (1):
‘(1) (a) The Minister may, from time to time, give the Board such general directives concerning the transmission on behalf of another person by the Board of gas through pipelines under its control as he considers appropriate (other than as respects the pricing policy of the Board in relation to that matter).
(b) The Minister may, from time to time, with the consent of the Minister for Finance, give the Board such general directives concerning—
(i) the pricing policy of the Board as to the sale or supply of gas or the transmission on behalf of another person by the Board of gas through pipelines under its control, or
(ii) the financial objectives of the Board, as he considers appropriate.',
(b) by the substitution of the following subsection for subsection (3):
‘(3) In performing its functions the Board shall—
(a) comply with any direction under this section,
(b) comply with any directive under this section concerning—
(i) the transmission on behalf of another person by it of gas through pipelines under its control (including any such directive concerning its pricing policy in relation to that matter), or
(ii) its pricing policy as to the sale or supply of gas,
(c) have regard to any directive under this section concerning its financial objectives.',
(c) by the insertion in subsection (4) after 'a particular case' of 'or in relation to the transmission on behalf of another person by the Board of gas through pipelines under its control in a particular case',
and the said subsection (4), as so amended, is set out in the Table to this section.
(4) Nothing in this section shall be construed as enabling the Minister to exercise any power or control in relation to a price to be charged by the Board in a particular case or in relation to the transmission on behalf of another person by the Board of gas through pipelines under its control in a particular case.".
In my Second Stage speech I stated that I was considering the possibility of including a provision in the Bill on Committee Stage to allow Bord Gáis Éireann to provide third party access to a gas network. I have examined that matter carefully in the meantime and amendment No. 2, which involves adding a new section to the Bill, reflects my proposals.
The purpose of this amendment is to provide a statutory basis for the introduction of a system to allow BGÉ to transmit gas owned by another party through the natural gas network at a charge to be negotiated. BGÉ owns and operates the gas network, including transmission and distribution pipelines. At present, all gas that flows through the gas network is purchased by BGÉ. The vast bulk of the gas is purchased by BGÉ from Marathon Petroleum (Ireland) Limited, the producer of gas from the Kinsale Head-Ballycotton field and more recently a small amount of gas from the UK, which is transmitted through the newly built gas interconnector.
In 1992, the Government decided the recommendations of the Moriarty Committee Task Force on the Culliton report on the granting of third party access to the BGÉ network should be implemented. A draft EU directive dealing with common rules for the gas industry, which has yet to be examined in detail by the council, proposed the introduction of third party access for large gas consumers to gas networks. The Ireland-UK natural gas interconnector is now operational and BGÉ is importing gas through it as required.
The Kinsale Head-Ballycotton field will not be depleted for another five years or so but in the meantime BGÉ will have to import increasing amounts of gas to meet its requirements. IBEC has been making representations seeking the introduction of a third party access regime for industrial gas consumers.
Gas purchase prices in the UK have fallen sharply with the result that the ESB and other large gas consumers might wish to purchase their own gas supplies in the UK and to have it transmitted through the BGÉ network. Of course, while gas purchase prices are now at an unusually low level, there is no guarantee that this situation will continue.
My first priority is to ensure that, in the context of the development of the gas industry, BGÉ remains a vibrant and progressive State body with adequate financial resources providing a first class gas supply to its customers. The provision of the Ireland-UK gas interconnector at a cost of £265 million entails significant borrowings by BGÉ. BGÉ now has to reduce its high remaining debt level of £210 million to manageable levels to prepare for the challenge of having to import all its gas requirements in the years ahead at world market prices. There will, therefore, be a pressure on BGÉ to maintain its profit making record.
I have carefully considered the representations made by IBEC and other interests to permit BGÉ to negotiate third party access to its network. I am fully satisfied there can be no question of granting unlimited third party access to the BGÉ network as this could cause serious damage to BGÉ itself and the gas industry in general. Accordingly, I have decided that BGÉ should have discretion in regard to the extent to which it will provide third party access to its network and that only applications in respect of gas volumes in excess of a specified threshold will be entertained.
This amendment will set up the necessary legislative framework for the granting of third party access to the gas network. It involves the insertion of a new section 10A in the Gas Act, 1976, and amendments to section 11 of that Act.
The amendment will give a threefold role to the Minister. First, the Minister will specify a threshold above which BGÉ may grant third party access. The annual threshold in the draft EU directive is 25 million cubic metres or approximately nine million therms and I am considering this figure as the threshold under the new legislation. Including ESB and NET, there are fewer than ten gas users above this threshold. Second, in cases where BGÉ and the application for TPA fail to agree on terms, the dispute shall be referred to the Minister for resolution. The new section 10A will provide for these roles. The third role for the Minister will be to issue general directives on TPA, including pricing.
The granting of TPA facilities will represent a major change in the development of the gas industry. At present, Bord Gáis Éireann is the only body that purchases gas direct from the producer. To cater for the operation of TPA, my Department is already developing its expertise. It recently advertised for consultants to advise it on the charging methodology and other conditions relating to the granting of TPA. Tenders have been received and these are being considered. We hope to be in a position to announce the appointment of the successful consultants shortly.
Bord Gáis Éireann is a highly successful State body which has performed very satisfactorily since its establishment in 1976. It supplies a varied market, including industrial and commercial users, the ESB and NET. Domestic, industrial and commercial users account for 35 per cent of gas sales and 61 per cent of revenue. Gas deliveries to the ESB account for 42 per cent of total deliveries while deliveries to NET account for 23 per cent. In terms of revenue, the ESB contributes 31 per cent and NET 8 per cent.
Bord Gáis Éireann has developed the gas industry so that gas now contributes 17 per cent of our total primary energy requirement as against 6 per cent in 1980. It also contributes 26 per cent of the fuels input to electricity generation. Domestic customers have increased by an average of 9 per cent per annum over the last three years and now stand at some 233,000, representing over 30 per cent of all Irish homes. Bord Gáis Éireann plans to have natural gas available to 40 per cent of all Irish homes by the end of this decade, which will be the equivalent of 75 per cent of all homes within the area of the gas grid.
All this progress has been achieved without the need for any State investment in Bord Gáis Éireann. On the contrary, the Exchequer has benefited by a total of £394 million in contributions from Bord Gáis Éireann. Not only gas consumers but indeed the whole economy have reaped the benefits of Bord Gáis Éireann's success. This success story is due, in major part, to the expertise and resourcefulness of the Chairman, Dr. Michael Conlon, the board, its chief executive, Mr. Philip Cronin, and the management and staff of Bord Gáis Éireann.
Bord Gáis Éireann is a lean, clean outfit. It is highly profitable and efficient and has achieved all of this from the chaos and debris of a collection of failed private sector gas companies, including Dublin Gas. I am surprised that we are now seeing a proposal driven mainly by Deputy Molloy, and coming from a new right wing position for the Deputy, that would have the effect of destroying——