Dáil Éireann Debate, Thursday - 14 July 2016
20. Deputy Bríd Smith asked the Minister for Communications, Energy and Natural Resources his plans to spend any savings as a result of the privatisation of the national broadband plan; the portion he expects to spend on climate change mitigation and prevention; and if he will make a statement on the matter. [21591/16]
View answerOn 5 July 2016, the Government selected the Commercial Stimulus Model as the optimum ownership model for the network that will be part-funded by the Exchequer. The Government considered two ownership models, having narrowed the options down last December, from five models. The two models are: - Commercial Stimulus where the private sector finances, designs, builds, owns and operates the network, with contractual obligations to the Department.
- Full Concession where the private sector finances, designs, builds and operates the network with contractual obligations to the Department. In this model, those assets funded by the State are handed back to the State after 25 years; commercial assets that support the NBP infrastructure would however remain in private ownership.
Both Models will deliver the same network, with the same service specifications and controls, for 25 years. In both models, the winning bidder(s) will be subject to stringent contract provisions to ensure that the network delivers quality, affordable high speed broadband to all parts of Ireland that cannot access services.
The Department has completed detailed costings, down to every individual premise in the Intervention Area and, on that basis, has modelled the likely cost of each ownership model. It would not be appropriate to publish the expected cost of building the network or the likely cost to the State while a major public procurement process is underway. I do not intend therefore, to indicate the overall estimated Exchequer funding parameters. Ultimately, the costs will depend on the price that bidder(s) quote in the tender process. I can however confirm the following based on the cost modelling completed to date:
- The Full Concession Model is estimated to cost 50 – 70% more in nominal terms that the Commercial Stimulus Funding model;
- In the Full Concession Model, the full cost of the project would be likely to go on the Government’s Balance Sheet, and the commercial sector input would likely be regarded as Government debt;
Having the entire project on the Government’s Balance sheet would impact the general Government deficit by approximately €1bn more than the Commercial Stimulus Model. This would also reduce the available capital spend for other key investment projects by up to €600m over the next six years.
In choosing the Commercial Stimulus Model, up to €600m now can be potentially allocated for other priority projects over the next six years. It is a matter for Government to determine the appropriate use of additional capital funding that may be available having regard to the Programme for Government commitments, including those commitments in relation to climate action.
