Dáil Éireann Debate, Tuesday - 23 May 2017
685. Deputy Lisa Chambers asked the Taoiseach and Minister for Defence his views on whether the former Naval Service vessel, the LE Aisling, was sold too cheaply at €110,000 in view of its current resale price of €750,000. [24064/17]
View answer686. Deputy Michael Healy-Rae asked the Taoiseach and Minister for Defence if he will address a matter (details supplied) regarding the sale of the former Naval Service vessel, the LE Aisling; and if he will make a statement on the matter. [24189/17]
View answer687. Deputy Michael Healy-Rae asked the Taoiseach and Minister for Defence the cost to decommission the LE Aisling in order to prepare it for sale; and if he will make a statement on the matter. [24192/17]
View answer688. Deputy Michael Healy-Rae asked the Taoiseach and Minister for Defence the person or body that valued the LE Aisling prior to its sale; and if he will make a statement on the matter. [24193/17]
View answer689. Deputy Michael Healy-Rae asked the Taoiseach and Minister for Defence the cost of maintaining the LE Aisling from when it was decommissioned to the date of its sale; and if he will make a statement on the matter. [24196/17]
View answer692. Deputy Sean Sherlock asked the Taoiseach and Minister for Defence the market research carried out in advance of the sale of the LE Aisling; the number of officials engaged in the market research element of the sale; the way in which the price the ship was sold for was reached; if his attention was drawn to the market research before the sale commenced; the number of officials engaged in the sale process and the expertise of each for such a sale; and his views on whether value for money was secured. [24332/17]
View answerI propose to take Questions Nos. 685 to 689, inclusive, and 692 together.
I welcome the opportunity to clarify the situation regarding the sale of the decommissioned Naval Service vessel LE Aisling following various media reports and speculation with regard to the resale price. This ship, which had a life expectancy of between 20 to 25 years of age, was withdrawn from service in June 2016 after thirty six years of service. It was withdrawn in the context of the impending entry into service of LE William Butler Yeats, the third ship in the current Naval Service Vessel Replacement Programme.
Following the withdrawal from service of LE Aisling in June 2016, there was a request from Galway City Council for the vessel to be donated to the people of Galway to be used as a local attraction. In this regard I wrote to Galway City Council and indicated that I wished to give the matter the fullest consideration and requested Galway City Council to provide a fully costed feasibility study for the use of the former LE Aisling by the Council.
In the absence of the requested proposal from Galway City Council, and given the pressures on berthage infrastructure at Haulbowline and the cost of maintenance on the vessel, in February 2017 I decided that the vessel would be put up for sale by way of public auction and I instructed officials from my Department to proceed with the arrangements for the sale.
The retention of LE Aisling in the Naval Basin in Haulbowline was creating considerable pressure on berthage space - there is limited berthage in the Naval Basin and operational ships must be given priority for services. With the greater size of the new vessels in the Naval Service fleet, the presence of LE Aisling in the Basin added to congestion and complication of movements. LE Aisling had to be moved 14 times within the Naval Basin, with each move representing a major logistical undertaking as it required the hiring of tugs and the diversion of Naval Service personnel from other duties for the move.
There was no expenditure involved in the decommissioning of the vessel, with no painting works or repairs carried out to prepare it for sale as it would not have been economically efficient. However, I am informed by the Military Authorities that the retention of the vessel led to increased personnel costs in respect of the skeleton crew of between 13-16 personnel assigned to the vessel on maintenance and security duties at an estimated pay and allowances cost of €370,000 for the ten months the vessel was tied up at the Naval Basin. While this crew was posted to LE Aisling they could not be deployed to other operational units.
In addition to the pay costs involved in manning the vessel while in the Naval Basin, costs were also incurred in relation to rations and ship services such as electricity. There were also fuel costs involved running the engines and in moving the vessel to and from her berthage, together with tug hire costs of approximately €10,000. Although the ship was being maintained while at berthage in the Naval Basin, the vessel would also have seen deterioration in condition and consequent reduction in value as time went by.
In this context and in keeping with my Department’s standing policy for the disposal of surplus equipment, the former LE Aisling was offered for sale by public auction in Cork on Thursday 23 March 2017. Due to the berthage constraints at Haulbowline and the associated costs on the State of retaining the vessel, it was imperative that the vessel was sold at an early date. Therefore, a reserve price was not set as if the vessel remained unsold, further costs of retention and disposal would have been incurred.
The public auction was attended by a number of parties, including a scrap dealer, who declined to bid on the day. The vessel was sold for the sum of €110,000 to a Dutch shipbroker, and following the completion of the necessary paperwork the vessel was removed from the Naval Base in Haulbowline on 23 April 2017.
The sale by way of public auction was handled by Mr Dominic Daly, a ship sales broker, auctioneer and valuer with almost 40 years experience who had previously handled the sale by public auction of the decommissioned LE Emer in 2013 and the sale of LE Déirdre in 2001. The auction was widely advertised in specialist national and international maritime publications, including Trade Winds, a global shipping and maritime news publication and Lloyds List, a leading news and information source for the maritime industry covering all sectors of the shipping world.
My Department is aware from media reports that the vessel has now been advertised for sale by the buyer for USD $750,000 or €648,000. In this context it is important to note that this is a hoped for resale price and it is mere speculation what the vessel will actually realise should it be sold. My Department has no information with regard to any level of work undertaken on the ship or which it is proposed to undertake prior to sale.
The suggestion that the ship was sold at undervalue is unsupported. A ship valuation is normally based on the market value of the vessel at the time of sale. The definition of Market Value as per the International Value Standards is the estimated amount for which property should exchange between a willing buyer and a willing seller in arm’s length after proper marketing wherein the parties had acted knowledgably, prudently and without compulsion.
I am satisfied that the sale of the decommissioned LE Aisling was carried out in a highly publicised and transparent manner, by a suitably qualified expert and was effected upon the most favourable terms reasonably obtainable given the age and condition at the time of sale and the international market conditions for end of life ships. The disposal of the ship by way of public auction, which was widely advertised in advance by the auctioneer handling the sale, was fully transparent and was open to all interested parties to attend. The public auction process used in the sale of the vessel was appropriate, and in all such situations the prevailing market determines the price achievable.
