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State-Sponsored Bodies.

Dáil Éireann Debate, Tuesday - 29 June 2004

Tuesday, 29 June 2004

Questions (38, 39, 40)

Dan Boyle

Question:

32 Mr. Boyle asked the Minister for Communications, Marine and Natural Resources the steps his Department is taking to resolve the impasse within the ESB with regard to the establishment of Eirgrid; and if the industrial relations difficulties that have been encountered relate exclusively to executives within the proposed new company or to all the staff due to be transferred. [19306/04]

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Jan O'Sullivan

Question:

71 Ms O’Sullivan asked the Minister for Communications, Marine and Natural Resources the position with regard to establishing an ESB national grid as an entirely separate entity; the reason for the failure to make progress on this issue to date; and if he will make a statement on the matter. [19211/04]

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Written answers

I propose to take Questions Nos. 32 and 71 together.

As the Deputies may be aware, the European Communities (Internal Market in Electricity) Regulations 2000, S.I. 445 of 2000, made in December 2000, provided for the separation of the operation of the transmission system from the rest of ESB into a newly formed independent State owned company. This separate State company, Eirgrid, was formally incorporated in February 2001 but as yet it is not discharging the functions of transmission system operator.

The delay in establishing Eirgrid as a fully functioning and operational entity is attributable to various problems and disputes which arose in the course of the complex negotiations ensuing since the making of the regulations. However, despite the delay, the Eirgrid model, once in place, will be effective and beneficial to all players in the market and I therefore announced my intention, on 10 March 2004 having reviewed the situation, to retain Eirgrid as the independent TSO.

In order for Eirgrid to be able to operate the transmission system, the governing regulations provided that an agreement was to be made between Eirgrid and ESB, which would set out the respective roles and responsibilities as between Eirgrid, in its capacity as TSO, and ESB, in its capacity as owner of the transmission network.

The regulations also provided that the practical arrangements regarding the transfer of staff, rights, liabilities and contracts from ESB to Eirgrid be put in place in the form of a transfer scheme.

My Department has no direct role in the making of the infrastructure agreement or transfer scheme. These are a matter for the companies involved to agree, with the negotiation of both overseen by the Commission for Energy Regulation.

Neither the infrastructure agreement nor the transfer scheme is yet in place. It has been difficult to bring the process of operationally establishing Eirgrid to a satisfactory conclusion in the absence of a chief executive officer of the company being in situ which has been delayed through contractual difficulties.

I hope these contractual difficulties have been resolved and I can advise the Deputies that a revised draft CEO contract is currently with the company for determination subject to my consent and that of the Minister for Finance. I am disappointed that three years after its formal incorporation as a company, Eirgrid is still not up and running as the TSO and, as shareholder, I wish to see a speedy resolution to the outstanding issues. My Department is working closely with the company to facilitate progress. I expect all parties to the negotiations to use their best endeavours to bring this process to a speedy conclusion and to expedite the operational establishment of the company.

Brendan Howlin

Question:

33 Mr. Howlin asked the Minister for Communications, Marine and Natural Resources if his attention has been drawn to the claim made by a person (details supplied) that the Government has given the kiss of death to social services provided by An Post by refusing to address the urgent need for State financial support for the company; his views on the claims made; and if he will make a statement on the matter. [19200/04]

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As the Deputy is aware, under the provisions of the Postal and Telecommunications Services Act, 1983, An Post is a commercial State body with a statutory obligation to be financially viable. Toward that end, the board and management of the company are obliged to tackle the current loss-making situation and return the company to profitability. In October last year, the board of An Post presented me with a recovery plan for the company detailing a change management programme and cost saving measures aimed at turning the company around. The recovery plan is subject to union agreement and negotiations, in this regard, are ongoing.

With regard to the non-commercial aspects of the post office network, in 2001 the Government, with the approval of the EU Commission, agreed an equity injection of €12.7 million to An Post to ensure that a network of post offices could be maintained throughout the State delivering a range of services. In addition, the company has recognised that the best way to secure the future of post offices is to increase footfall by offering a range of services geared towards consumer needs. Significant progress has been made with utility bill payments and banking services now offered via the post office. Clearly the availability of attractive consumer products is the best way of securing a sustainable future for the post office network.

On the letterpost side, the company continues to enjoy a monopoly position in a substantial part of the postal market in order to compensate for non commercial postal services. However, this monopoly will be reduced in 2006 and may be gone altogether by the end of this decade. This only emphasises the need to restructure the cost base particularly in letterpost and this has been recognised by the major stakeholders as evidenced by the continuing discussions under the auspices of the Labour Relations Commission. Offering a high quality, competitively priced service is the only realistic strategy for the letterpost division of An Post.

An ongoing subvention by the State does not represent a long-term viable solution for An Post.

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