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COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 2 Feb 2006

Chapter 13.1 — West Link Toll Bridge (Resumed).

Ms J. O’Neill (Secretary General of the Department of Transport) called and examined.

We are considering the 2004 annual report of the Comptroller and Auditor General and Appropriation Accounts, Vote 32 — transport and chapter 13.1 — West Link toll bridge (resumed). The relevant correspondence includes item 3.10 and a letter including documentation received from Ms Julie O'Neill, Secretary General, Department of Transport, dated 11 January 2006.

Witnesses should be aware that they do not enjoy absolute privilege when giving evidence before this committee. Members' and witnesses' attention is drawn to the fact that as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part these rights may be exercised only with the consent of the committee. Persons being invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of the House, or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provision under Standing Order 156 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.

I welcome Mr. Jim Barry, chairman of National Toll Roads Limited, and invite him to introduce his officials.

Mr. Jim Barry

I am accompanied by Mr. Kyran Hurley, managing director of National Toll Roads, Mr. Colm Reid, financial controller and Mr. Tony McClafferty, a director and the former managing director.

I invite Mr. Purcell to reintroduce Chapter 13.1.

Paragraph 13.1 of the report of the Comptroller and Auditor General reads:

13.1 West-Link Toll Bridge

The M50 is a 40km orbital motorway around Dublin, running from the M1 at Dublin Airport to the N11 at Bray. A 3.2km section of the motorway, from the N3 (Navan Road) to the N4 (Sligo Road) includes two side-by-side bridges spanning the River Liffey (West-Link Bridge). This section of the M50 is a toll road. The first bridge opened in March 1990 and the second in September 2003.

This was the second toll scheme in the State. The first was the East-Link toll bridge where tolling rights had been granted to National Toll Roads Ltd (NTR) and which opened in October 1984.

Government Decision

In 1982, NTR had approached Dublin County Council seeking agreement in principle to construct and operate a toll facility across the River Liffey to the west of the city between the N3 and N4 national primary routes. Following discussions and negotiations involving the State, Dublin County Council and NTR, NTR submitted a proposal to Dublin County Council in May 1984.

In October 1984, the Government agreed, in principle, to a proposal from the Minister for the Environment (the Minister) to the conclusion by Dublin County Council of negotiations with NTR. The memorandum to Government noted that if the State finances were not so constrained and if substantial capital investment was being put into road improvement then it could afford to forgo the possibility of tolling the road and of private sector investment.

In the circumstances then prevailing and given the relatively underdeveloped state of the national roads, tolling options had to be considered. The memorandum noted that while tolls were not generally applied to ring roads in European countries, the Western Parkway route was one of only a few routes which could potentially provide an economic return to a private investor without the necessity for State subsidies or guarantees. The proposal to Government noted that the proposed project yielded an after tax return of 18% to NTR by comparison with a gross yield at the time from Government bonds in the region of 15%.

The Western Parkway is the section of the M50, approximately 12.2km in length, from the N81 (Tallaght Road) to the N3 (Navan Road). Its construction was completed in 1990 and was funded by the State except for the 3.2km toll road section.

Toll Scheme

The Local Government (Toll Roads) Act, 1979 provided that road authorities may, with the consent of the Minister, make toll schemes for public roads. Section 9 of the Act provided that the road authorities may, with the consent of the Minister, enter into an agreement (Section 9 Agreement) with another party to provide, maintain, manage and operate toll roads.

In October 1987, Dublin County Council, pursuant to a toll scheme made in 1985 and approved by the Minister in December 1986, entered into a Section 9 agreement (the Agreement) with a private company, West-Link Toll Bridge Ltd, a wholly owned subsidiary of NTR, under which that company would construct the 3.2km toll road including the first bridge. In return, the company would be granted tolling rights to the road for a period of 30 years after which the road would revert to the State.

Second Bridge Construction

While the construction of a second bridge was not covered by the provisions of the 1987 Agreement, it was recognised from the outset that a second bridge would be built if traffic volumes rose to around 56,000 vehicles per day. In 1985 a senior engineer in Dublin County Council had pointed out that at this volume of traffic, the reduced level of service would make it necessary to construct the second bridge. By 1998, the 56,000 per day traffic threshold had been reached. The bridge was opened in 2003, by which time daily traffic was around 40% above the 56,000 threshold.

Licence Fee

The Agreement provided that NTR would pay a proportion of Gross Toll Revenue (GTR) to the State when the average daily traffic volumes over a year exceeded 27,000. The proportion, referred to as the licence fee, would commence at 30% of the GTR for the first 8,000 vehicles in excess of 27,000 and would rise in accordance with increases in traffic volume measured in intervals or bands as outlined in Table 28.

Table 28 Licence Fee Bands

Band

Average Daily Traffic Limit

Proportion of GTR payable to State

First 27,000

1

27,001 to 35,000

30%

2

35,001 to 45,000

40%

3

Over 45,000

50%

In June 2001, the NRA entered into a revised agreement with West-Link Toll Bridge Ltd (the supplemental agreement), under which the company would construct a second bridge in return for a revised toll scheme. The revised scheme added a fourth band to the licence fee structure under which the State would receive 80% of GTR for traffic volumes over an agreed fourth band figure for the relevant year, as set out in the supplemental agreement. The fourth band commenced at 79,000, in 2001, and was to increase in annual tranches to 126,000 by 2020. The 80% threshold has not been reached to date. In 2004, the fourth band would have applied if daily traffic volumes exceeded 88,000. The daily traffic volume for that year was around 84,800.

On the basis of the agreed bands the yield from licence fees achieved and projected is set out in Table 29. The yields for the years from 2005 onwards are based on agreed forecast traffic volumes.

Table 29 Yield from licence fee 1990 to 2020a

Period

Average daily traffic over the period

Licence fee as proportion of GTR

1990 — 1994

13,500

1995 — 1999

42,300

16.7%

2000 — 2004

75,200

25.3%

2005 — 2009

93,000

32.7%

2010 — 2014

105,800

34.8%

2015 — 2020

114,500

36.0%

a Projected yields are shown in italics.

Taxation

At the time of the 1987 agreement, the rate of Corporation Tax was 50%. It was assumed, at that time, that NTR would not be liable for the payment of municipal rates in respect of the toll road and, at that point, VAT did not apply to toll charges.

There have been a number of changes to taxation and other charges in the period from 1990 to date

·West-Link Toll Bridge Ltd became liable for municipal rates on the toll road from 1992

·VAT has been applied to toll charges since September 2001 following a ruling by the European Court of Justice

·The rate of Corporation Tax has fallen steadily over the period, from 50% in 1987 when agreement was reached to 12.5% from January 2003

·Income tax rates and capital gains tax rates have also changed over this time.

Proceeds of Tolling

Table 30 sets out the GTR at the bridge and the appropriations to the State, excluding Corporation Tax, for the period from 1990 to 2004. €79,672,000 has been received by the State since the facility was put in place. The gross revenue in the period was €310,056,000.

Table 30 Toll Revenue and Licence Fee 1990 to 2004

Year

Gross Proceeds

Licence Fees

Municipal Rates

Appropriations to the State (excluding Corporation Tax)

€000

€000

€000

€000

1990

1,834

1991

4,046

1992

5,243

294

294

1993

5,940

309

309

1994

6,719

324

324

1995

8,224

335

335

1996

11,296

347

347

1997

20,749

3,043

356

3,399

1998

26,689

5,817

367

6,184

1999

29,668

7,309

378

7,687

2000

31,045

8,079

390

8,469

2001

33,703

9,220

2,875

12,095

2002

36,857

7,585

3,025

10,610

2003

39,369

8,044

3,176

11,220

2004

48,674

15,094

3,305

18,399

Totals

310,056

64,191

15,481

79,672

Source: Department of Transport (the Department), South County Dublin and Fingal County Councils.

Cost of the M50 to date

The West-Link facility provides access to a 40km motorway standard ring road around Dublin, which in turn gives access to all national primary routes out of the capital city.

The construction of the M50 has been, with the exception of the toll road, funded by the State at a cost of around €1.1bn in 2004 values. Toll charges at the West-Link Bridge are expected to be around a further €1.1bn in 2004 values for the period 1990to 2020, excluding VAT. When account is taken of direct appropriation of funds (€0.44bn) to the State in the form of licence fee, municipal rates and corporation taxthe net cost to the public of the currentM50 facility, before taking account ofincome and capital gains tax, is around €1.76bn in 2004 values. These figures do not take account of the cost of a proposed upgrading of these facilities to cater for user demand.

To the extent that the profits available to the shareholders of NTR are distributed, additional income and capital gains tax will accrue to the Exchequer.

Scope of the Review

Because of public concerns about the operation and cost of the toll road I decided to

·compare the economic cost of the facility with its cost to users

·review the return to NTR

·review the return to government

·consider the options available to the State under its agreement with NTR.

No Cost Benefit Analysis (CBA) was carried out for the West-Link project. The memorandum to Government in 1984 stated that while no CBA had been carried out on the proposed M50, there could be no doubt that given its national importance, the existing traffic congestion and projected traffic flows over the various sections, the investment would provide a substantial real return.

Because of the extended period of the development of the M50 network over the last three decades it is recognised that CBA would not be very informative in this instance and the project may be best viewed as a measure to remedy a major gap in the roads infrastructure. Accordingly, in the absence of a quantification of the benefits from the project no analysis has been made of the economic value of the facility to users.

Costs to Users

The cost of the facility to users is equivalent to the GTR. This section reviews the outturns on foot of the contracts taking account of the GTR projected originally and those now projected or achieved. Two issues in relation to cost were examined in the course of audit

·what was the relationship between the cost of the infrastructure and the aggregate amount paid by road users

·whether, in negotiating the second bridge contract, a reasonable degree of balance was achieved in at least maintaining that relationship.

Relationship between Project Cost and Charges

I reviewed the relationship between the cost of the facility to the users at the inception of the original agreement with NTR and the outturn expected on the basis of experience to date and current projections.

In comparing the economic cost of the facility with the cost to users all rates and taxation have been excluded. The facility refers to the 3.2km section of the M50 which is a toll road. For the purposes of this comparison no account was taken of the State investment in infrastructure on other parts of the M50 since they did not form part of the tolling scheme.

Analysis of the projections at the negotiation of the original agreement shows that the users would pay around €3.70 for each €1 in whole-life costs when expressed in 2004 values. Expected revenue from toll charges and the whole-life costs of constructing and operating the first bridge at that time are set out in Table 31. The 2004 values of the cash flows set out in that table provide the most realistic basis for comparison because it expresses the cash flows in constant values.

Table 31 Expected Revenues and Whole-Life Costs — Original Agreement

Original Estimates 1990 — 2020

Toll Revenues

Whole-Life Costs

Ratio of Revenue to Costs

€m

€m

Gross Cash Flows

758

111

6.8 : 1

Cash Flows at 2004 Values

678

182

3.7 : 1

Source: Gross Cash Flows at time of negotiations in 1984 — Department of Transport.

Analysis of Gross Cash Flows by Office of Comptroller and Auditor General.

By the time the second bridge was being negotiated, the M50 road system had been further developed and the number of users had increased. Because of this increased use, road users were, by then, paying in the aggregate around €5.20 for each €1 in whole life costs. Table 32 sets out the position at the time the contract for the second bridge was being negotiated.

Table 32 Revenues and Whole-Life Costs — 1999

Outturn and Estimatesa 1990 — 2020

Toll Revenues

Whole-Life Costs

Ratio of Revenue to Costs

€m

€m

Gross Cash Flows

1,332

137

9.7 : 1

Cash Flows at 2004 Values

1,026

197

5.2 : 1

Sources: Gross Cash Flows — Department records, NTR published accounts.

a Cash Flows combine actual outturn from 1990 to 1998 and projected cash flows for the period from 1999 to 2020. VAT is excluded.

Analysis of Gross Cash Flows by Office of Comptroller and Auditor General.

The costs borne by users are a factor of the toll rates and the traffic volumes. These are examined separately in the following sections.

Toll Rates

Under the toll scheme provisions toll charges may not exceed a certain level (maximum tolls). NTR may, however, charge less than the maximum toll if it so chooses. The maximum level is calculated by adjusting a base toll by reference to the Consumer Price Index (CPI). The base tolls, in 1990, ranged from 38c (30p) for motor cycles and 76c (60p) for cars up to €4.57 (£3.60) for certain commercial vehicles. The base rate for cars was adjusted upwards following the negotiations for the construction of the second bridge.

The 1987 and 2001 agreements provide that if the State instructs NTR to charge a toll lower than the maximum toll, then the State would be required to compensate the operator. These provisions effectively guaranteed that the real value of the tolls could be maintained independent of the volume of traffic. Currently, NTR charges less than the maximum rate for large commercial vehicles. Maximum tolls and tolls charges in 2005 are set out in Table 33.

Table 33 Toll Charges — West Link Bridge 2005

Vehicle type

Maximum Tolla

Actual Tolla

Motorcycles

0.80

0.80

Motor Cars

1.80

1.80

Buses and Vans

3.10

3.10

Commercial vehicles, 2 axle

6.10

4.50

Commercial vehicles, 3 axle

7.60

5.20

Commercial vehicles, 4 axle

9.20

5.60

a Inclusive of VAT.

Impact of Traffic Volumes

Traffic volumes have been considerably greater than anticipated in the estimates that informed the setting of the toll charges. The original estimates had been based on an assumption that only the Western Parkway section of the M50 would be open to traffic and did not take account of the likely impact on traffic volumes when the additional sections would be completed.

From 1990 to 1996, the volume of traffic at the toll road was below the original estimates. In 1991, the first full year of operation, traffic volumes were around 54% of the estimates. Volumes have risen each year and by 1996 were around 91% of the estimates. In 1997, the year following the opening of the section of the M50 from the N3 to the M1, volumes rose sharply to almost 45,600 per day which was around 65% in excess of the original forecast. In 2004, the traffic volume was over 2.5 times the original estimate.

Traffic volumes at the West-Link Bridge, and the original estimates, are set out in Table 34.

Table 34 Average daily traffic volumes 1990 to 2004

Year

Original Proposals

Actual

1990

20,300

6,800

1991

21,300

11,500

1992

22,300

13,800

1993

23,500

15,200

1994

24,600

16,700

1995

25,900

20,000

1996

27,000

24,700

1997

27,700

45,600

1998

28,400

57,500

1999

29,200

63,900

2000

29,900

67,300

2001

30,600

71,100

2002

31,300

74,700

2003

32,000

78,100

2004

32,800

84,800

Whereas toll charges rise broadly in line with inflation, there is no mechanism in the agreements to provide for a reduction in toll charges if volumes exceed the estimates which informed the setting of the base tolls. The increase in the volumes above the original estimates resulted in additional costs to users of €350m in 2004 values giving a higher return to the operator as well as increasing the amount of revenue accruing to the State.

Second Bridge Negotiations

A detailed proposal for the construction of the second bridge submitted by NTR in September 1999, following negotiations between NTR and the NRA, had the following main financial features

·The costs of providing the second bridge would be met through an increase in the toll charge for cars. The maximum charge for cars under the 1987 Agreement would increase by around 17% from January 2005 with interim increases in the period 2000 — 2004. There was also a proposal that a further 10c be added to the toll, to be paid in full to the NRA. This provision has not been invoked by the State.

·While the existing licence fee structure would continue to apply, a fourth band was to be added in order to reduce the possibility that NTR would make windfall profits in the event that traffic volumes would exceed those projected. The fourth band was to be set at a level that was 6.5% above compromise traffic forecasts agreed between the NRA and NTR.

·Municipal rates were being charged, at that time, on what is known as the "contractors" basis but there were indications that they would be levied in the future on the "profits" basis. Under the profits basis the rateable valuation of the toll road would be far greater. It was proposed that if rates continued to be assessed on the lower contractors basis, the difference between rates assessed on the two bases would be paid by NTR to the NRA, using an agreed formula.

In addition, it was agreed that the toll road must be maintained in a manner that guarantees it will have a residual life of 15 years when it is handed back to the State in 2020.

In December 1999, the Board of the NRA approved the proposal. In doing so it took account of an independent assessment which it had commissioned. The assessment, delivered in November 1999, had noted that the NRA's negotiating position was constrained by two factors

·the original agreement was not open for negotiation and

·the NRA was not in a position to build the second bridge with either public funds or to procure a competing private sector party to do so as NTR had the sole right to toll that section of the M50.

VAT was imposed on toll charges prior to an agreement being signed and the Board approved an amended proposal taking account of VAT in June 2001.

NTR bore the cost of construction (€27m in 2004 values) and will incur additional running costs of €7m in 2004 values. However, as the extra projected toll revenue of €74m arising from the agreement attracts licence fee at50%, the bulk of the net toll revenue after taking account of those costs will accrue to the State (€37m). Although it could be argued that the users were already paying aggregate tolls at a level sufficient to remunerate the investment by virtue of volume increases in excess of those originally envisaged, it could also be argued that because there was no mechanism in the 1987 agreement to cover the second bridge financing, the achievement of an overall reduction in the ratio which the cost to users bears to the total costs incurred by NTR, when taken together with a net marginal return of only €3m to NTR, might be viewed as achieving a reasonable negotiating result.

After account is taken of the financial adjustments arising out of the second bridge negotiation, the cost to users by way of toll revenue is around 4.8 times the whole-life costs of the toll road including the two bridges, or around €869m more than the cost when expressed in 2004 values. Table 35 sets out the position following these negotiations.

Table 35 Revenues and Whole-Life Costs including Second Bridge — 2004

Outturn and Latest Estimatesa 1990 — 2020

Toll Revenues

Whole-Life Costs

Net Toll Revenue

€m

€m

€m

Gross Cash Flows

1,454

170

1,284

Cash Flows at 2004 Values

1,100

231

869

Sources: Gross Cash Flows — Department records, NTR published accounts.

a Cash Flows combine actual outturn from 1990 to 2004 and projected cash flows for the period from 2005 to 2020. VAT is excluded.

Analysis of Gross Cash Flows by Office of Comptroller and Auditor General.

Adjustment of Car Tolls

The figures in Table 35 take account of the impact of adjustments to the toll on cars agreed in the negotiations about the construction of the second bridge in 1999. These adjustments were as follows

·a revised interim toll level for cars of €1.20 applying for the period 2002 to 2004

·calculation of the toll levels from January 2005 by reference to a base level of €1.20 at January 2000 indexed for inflation thereafter.

In addition, the imposition of VAT with effect from September 2001 led to the introduction of certain transitional measures. The charge to the user was increased to €1.30 between September 2001 and December 2003. Because NTR had to remit VAT on the revised toll charge its net toll revenue fell below the previously agreed level of €1.20 for 2002 and 2003. The State compensated NTR in order to maintain the company's VAT exclusive toll revenue at the agreed level.

In addition, it was agreed that the increased toll charge arising from VAT would lead to a certain volume of car users diverting to alternative routes. The proportion which would divert was agreed at around 4%. In order to compensate NTR for the anticipated fall in demand it was agreed that the State would pay additional compensation in 2003. The total compensation paid by the State was €6.4m of which around €0.5m was attributable to compensation in respect of the diversionary effect of the increased tolls.

The transitional arrangements also provided that in 2004 the car toll would further increase to €1.50 giving a toll charge of €1.24 exclusive of VAT. This increase of 4c per car in excess of the charge agreed in 1999 prior to the imposition of VAT resulted in users paying an additional €1m in toll charges in 2004.

Licence Fee Underpayment

The agreements provide that the amount of GTR payable to the State (licence fee) may be audited by the auditor of West-Link Toll Bridge Ltd or by any suitable person as may be agreed by the NRA and West-Link. The agreements also provide that the NRA may request copies of and access to all relevant documentation and records on which the calculation of the licence fee and any deduction therefrom is based. In the event of any disagreement, the matter can be decided by arbitration.

Under this arrangement, the auditor of West-Link Toll Bridge Ltd annually confirms

·the amount of the licence fee

·the turnover upon which that licence fee is based

·the overall traffic volume for the year

·the accuracy of the computation of the licence fee and

·that the computation has been performed in accordance with the Agreement.

Notwithstanding this, my audit established that the amounts paid to the State for the years 2002 and 2003 were incorrectly calculated. Under the 2001 Agreement the compensation paid to NTR should have been treated as an element of GTR because GTR is defined in that Agreement as tolls collected or receivable together with the licence fee credit. This should have resulted in just over €1.8 million extra being paid to the State by way of licence fees. In addition, rounding of the compensation payment per car to the nearest cent by NTR resulted in a further underpayment of €171,000. Details are set out in Table 36.

Table 36 Licence Fee Underpayment 2002 and 2003

Comptroller and Auditor General Calculation

NTR Calculation

Underpayment

Toll Proceeds 2002 and 2003

76,225,477

76,225,477

Licence Fee Credit

6,260,078

GTR

82,485,555

76,225,477

Licence Fee

23,873,880

22,060,335

Licence Fee Credit

(6,260,078)

(6,431,161)

Licence Fee payable

17,613,802

15,629,174

Underpayment

1,984,628

I enquired of the Accounting Officer

·the exact circumstances that gave rise to the non-detection of the underpayment

·what measures have been taken or are proposed to recover it and to monitor and validate future remittances.

In regard to the non-detection of the underpayment, the Accounting Officer informed me that this arose because the checking procedures in the Department had not been adapted to take account of the changed definition of GTR included in the 2001 Supplemental Agreement. This agreement provided that a licence fee credit due to NTR in respect of 2002 and 2003 would be included as part of the GTR for the calculation of the licence fee payable to the State. This was not done by NTR and the error was not identified by NTR's auditors, the NRA or the Department.

In regard to the recovery of the underpayment of the licence fee in respect of 2002 and 2003, she informed me that the Department had taken the matter up with NTR. NTR have accepted that an underpayment has occurred and have undertaken to immediately recoup €2m. In order to assist in confirming the precise amount of the underpayment and to deal with other queries relating to the calculation of the fee, NTR have been asked to provide details and explanations relating to the calculation of GTR and the licence fees payable thereon back to 1997. When this work has been completed, the provisions in the agreement relating to interest on late payments will be invoked and repayment of the amount underpaid will be secured in full.

In regard to the arrangements for the monitoring and validation of future remittances, the Accounting Officer stated that the provision of a certificate from NTR's auditors confirming the accuracy of the payment is an important part of the control system for the validation of the licence fee. In addition, procedures are in place in the Department for checking the remittances. She assured me that, since the Department of Transport was established, the Department has continually moved to strengthen and improve its financial control systems. However, in light of the seriousness of the error that has arisen in this instance, she has instructed that arrangements for validating the correctness and accuracy of the licence fee payment from NTR be reviewed as a matter of urgency. Decisions on measures to strengthen the Department's arrangements for monitoring and validating future remittances will be taken in light of the outcome of the review which is already underway.

Return for the Private Operator

At the time of the Government decision in 1984 it was estimated, in the proposal by the private operator, that the after tax rate of return on the project would be around 18%.

By 1999, prior to the agreement to construct the second bridge the projected after tax rate of return to NTR for its investment was around 25%, based on the outturn to that date and the forecasts which informed the negotiations for the second bridge. Following the construction of the second bridge and taking into account the additional investment by NTR as well as the outturn to 2004 and the revised forecasts, the projected after tax return has fallen by around 1% to 24%.

NTR's Distributable Income

Changed tax structures over the period 1987 — 2004 impact on the ultimate distributable income of NTR. In order to examine the effect of these changes, the distributable income of NTR has been calculated under two separate scenarios for the now estimated traffic volumes — firstly, using the taxation structures ruling in 1987 (original scenario) and secondly, using the rates which applied up to 2004 or are projected thereafter (current scenario).

On this basis, the same gross revenue is projected to result in an increase of €141m, in 2004 values, in NTR's distributable income as set out in Table 37.

Table 37 NTR Distributable Income from the West-Link Project (2004 values)

Current Scenario

Original Scenario

€ m

€ m

Share of GTR

€ m

€ m

Share of GTR

Gross Toll Revenuea

1,100

1,100

Costs

Capital Costs

(131)

(131)

Operating Costs

(100)

(231)

21.0%

(100)

(231)

21.0%

Direct payments to Government

Licence Fee

(285)

(285)

Corporation Tax

(80)

(291)

Municipal Rates

(70)

(435)

39.5%

(576)

52.4%

Revenue to NTR

434

39.5%

293

26.6%

a VAT is excluded.

Change in Return to Government

The return to government arising out of the bridge project is not equivalent to the direct payments made to it by NTR. This is because the income distributed by NTR is taxable in the hands of its shareholders and is, therefore, an additional source of revenue.

In order to examine the likely effect of the revenue attributable to government which was projected at the inception of the agreement compared with what is currently estimated, I took account of the following factors

·the changes in municipal rates, corporation tax rates, tax credits on distributions and income tax rates over the period 1987 to 2004

·the projected distribution pattern of the NTR Group as indicated in their financial statements for the years 2001 — 2004.

Assuming total efficiency in tax collection, the estimated overall return to government has altered between 1987 and 2004 as projected in Table 38. The assumption has been made that all previously non-distributed profits will be distributed by way of dividends when the tolling period expires in 2020. In addition, it has been assumed that all shareholders in NTR are liable for income tax at the top rate and that the dividend income is not sheltered from income tax. The income tax revenue shown is the maximum that can accrue to the State under both scenarios.

Table 38 Revenue accruing to Government — West-Link project 1990 to 2020 (2004 values)

Current scenario — projected sharea

Original scenario — projected sharea

€m

Share of GTR

€m

Share of GTR

Licence Fee

285

285

Corporation Taxb

80

243

Municipal Rates

70

Income Taxb

136

125

571

51.9%

653

59.4%

a Excluding VAT.

b Corporation Tax liabilities of NTR and Income Tax liabilities of shareholders have been adjusted for the effect of tax credits on dividends. These credits were abolished in 1999. Under the original scenario, the tax credits apply for the full period.

However, if the company were to be wound up and remaining assets distributed by way of a capital distribution, the tax accruing to the State would be around €22m less in the current scenario and around €4m less in the original scenario than that shown in the table.

Ultimately, after taking account of all tax revenues, the share of GTR accruing to government has fallen by around €82m or 7.5% of GTR. The difference between the share of the revenue expected to accrue to the State and the share that would have accrued under the revenue-sharing understanding at the time of the original agreement has arisen principally due to the fall in the rate of Corporation Tax. On the other hand, it is projected that revenue of €70m will arise from the imposition of municipal rates with effect from 1992.

There are two ways of viewing this outcome. On the one hand, it is arguable that changes in Corporation Tax rates and other charges imposed by public bodies are part of the normal business risks associated with any project, and that any additional profit, arising from the fall in corporate tax rates, which has accrued to NTR is no more than the benefit accruing to any other business.

On the other hand, it might be considered that commercial agreements involving the State as a party are struck so as to achieve a particular distribution of revenue. Taxation is part of the intended distribution when the State is involved. There may be merit in future partnership arrangements, in putting a mechanism in place to maintain a reasonable distribution in the event of major tax fluctuations in either direction.

Non-reclaimable VAT

VAT has been applied to toll charges since September 2001. The State has, therefore, increased its take at the expense of those road users who cannot reclaim VAT. Analysis carried out by consultants for the NRA indicated that around €99m in 2004 values, in non-reclaimable VAT would be paid by users of the toll bridge and would accrue to the State.

Impact of Upgrading on Revenue Sharing

The NRA currently proposes to upgrade the M50 facilities by widening the carriageways and altering interchange layouts. The traffic volumes accommodated by the M50 are projected to increase as a result of this work. Under the 2001 agreement

·the original sharing arrangement will hold until the traffic projections agreed in 2001 are exceeded by around 6.5%

·thereafter, the State would receive 80% of the GTR for traffic volumes in excess of this level.

Table 39 compares the average daily traffic volumes projected in the 2001 supplemental agreement with the fourth licence fee band above which State will receive 80% of the GTR.

Table 39 Licence Fee — Fourth Band

Year

Current projectiona

Threshold for fourth band

2005

86,463

92,000

2006

89,872

96,000

2007

93,250

99,000

2008

96,298

103,000

2009

99,183

106,000

2010

102,056

109,000

2011

103,918

111,000

2012

105,889

113,000

2013

107,641

115,000

2014

109,545

117,000

2015

111,259

118,000

2016

112,888

120,000

2017

114,423

122,000

2018

115,857

123,000

2019

117,310

125,000

2020

118,518

126,000

a These are the volumes projected in the 2001 Supplemental Agreement.

The proposed upgrading investment will have the effect of further increasing the revenue accruing to NTR as it is likely that the traffic volumes will then exceed the current projections. While NTR will receive 50% of GTR up to the commencement of the fourth band, additional revenue accruing to NTR will be restricted to 20% thereafter.

Options Available to the State

Under the existing arrangements the State may abolish or reduce tolls or limit any increase in them. However, this would trigger compensation entitlements under the agreement.

Broadly speaking, the provisions are

·If the tolls are reduced, or not increased in line with the indexation mechanism, the State must compensate NTR for the shortfall in toll revenue. The amount of compensation payable over the duration of the agreement is the difference between the reduced toll revenue and the toll revenue in the year before any such adjustment, indexed in accordance with the agreement.

·If tolls are abolished, the compensation is the total amount of toll revenue paid, less the licence fee, in the 12 months immediately preceding the date of the abolition of the tolls. This compensation would be payable in each year for the duration of the agreement and would increase in accordance with the indexation provisions.

The Department has informed me that the NRA is currently in negotiation with NTR on a range of issues affecting the West Link agreement, including a move to barrier free tolling and the funding of the proposed upgrading works on the West Link section of the M50.

Review Methodology and Sensitivity Testing

Review Methodology

Except as otherwise stated, the analysis in this review has been conducted using outturns or projected cash flow data which formed the basis of negotiations. These have been expressed in 2004 present values (2004 values) derived using a rate of 5% (excluding inflation) to adjust the value of pre-2004 estimates or outturns to 2004 levels and to discount post-2004 cash flow projections in order to bring them back to 2004 values.

Impact of Discount Rates

A private operator may use a different discount rate than the State. In order to test the variation in the ratio of revenue to costs at different discount rates, the cash flows were also discounted at 3% and 7%.

Impact on ratio of revenues to whole life costs

In all cases, the ratio of revenue to costs had risen by 1999 from the time of the original contract and had fallen somewhat from the 1999 level following the construction of the second bridge. The ratios of revenue to costs at the various discount rates are set out in Table 40.

Table 40 Ratio of Revenues to Whole-Life Costs

3% discount rate

5% discount rate

7% discount rate

At time of contract, 1987

4.4 : 1

3.7 : 1

3.2 : 1

Prior to agreement to construct second bridge, 1999

6.3 : 1

5.2 : 1

4.3 : 1

Following construction of second bridge

5.7 : 1

4.8 : 1

4.0 : 1

The ratio of revenue to costs is greater at the lower discount rates because a greater proportion of costs were incurred at the earlier stages of the project while a greater part of the revenues will arise in the later years. The effect of using a higher discount rate is to place a lower value on the later cash flows.

Impact on revenue sharing

There was some difference in the proportion of GTR accruing to government after taking account of all tax revenues and assuming that the State would receive the maximum income tax revenue. The share of GTR expected to accrue to the government at the different discount rates is set out in Table 41.

Table 41 Proportion of revenue accruing to Government 1990 to 2020

3% discount rate

5% discount rate

7% discount rate

Current projected share

55.2%

51.9%

48.9%

Original projected share

62.5%

59.4%

56.3%

Mr. John Purcell

The committee last considered this chapter of my report on 10 November last when the Accounting Officer for the Department of Transport was examined. The committee did not conclude its examination at that stage, pending the receipt of further information and hearing from the two other major players, namely, the National Roads Authority and National Toll Roads Limited, which have the concession for the toll road until 2020.

On the last occasion in my comments to the committee, I stated that in purely monetary terms the State could be said to have got a good deal in the sense that up to the end of 2005 it got approximately €150 million or so in extra revenue, that is, when one combines its share of the toll income, the corporation tax take, rates to the two local authorities involved and an estimated portion of the VAT on tolls. It got all that for little or no expenditure and taking no commercial risks.

However, that said, there are grounds for believing that the State could have secured a better return, bearing in mind the surge in the volume of traffic on the M50, consequent on the opening of the northern cross route in particular. Clearly, National Toll Roads did well out of the arrangements, benefiting considerably from the large increase in traffic using the toll road. I am sure the company sees this as an appropriate reward for taking the risk on the project.

With regard to the users, I said on the last occasion that they seem to be the big losers in this. Relative to the cost of the investment, they are paying more than was originally envisaged for a lower level of service than might reasonably be expected now that it is half way into the term of the concession. It was this level of service that primarily concerned members at the last meeting. The agreement as constructed did not have specific performance requirements built into it in the way that later toll road deals under PPP arrangements had. It merely stated that West Link — that is, the wholly owned subsidiary of NTR — shall provide facilities for the collection of tolls which are adequate, having regard to the volume of traffic using the toll road. There would be general agreement that the facilities could not be regarded as adequate to cater for the traffic volumes at peak periods but there are no provisions in the agreement for applicable remedies in the event of non-performance.

Things have moved on since the November meeting. Late last week it was announced that the National Roads Authority had terminated its discussions with National Toll Roads on the introduction of barrier free tolling at the bridge. According to reports, tolls at the bridge are to be abolished and an alternative tolling regime covering the upgraded M50 route is to be introduced. This in turn will bring into play the question of paying compensation to NTR under the terms of the existing agreement or for coming to some arrangement to buy out the concession. There are interesting times ahead, Chairman.

Will Mr. Barry make his opening statement?

Mr. J. Barry

I thank the Chairman for the invitation to attend the meeting of the Committee of Public Accounts to consider the 2004 annual report of the Comptroller and Auditor General and Appropriation Accounts as they pertain to the West Link toll bridge in chapter 13.1. We welcome the opportunity to contribute to the committee's deliberations, notwithstanding that circumstances are now quite different from when we were first invited late last year.

National Toll Roads Limited is the toll road subsidiary of NTR plc. NTR plc is Ireland's leading private sector developer and operator of public infrastructure, with investments across the utility spectrum, including waste management, water, wind energy, broadband telecommunications and, more recently, bio-energy. NTR plc has invested over €500 million in infrastructure projects in the last five years and has plans to invest over €300 million in 2006. The company had a turnover of approximately €350 million in 2005 and employs about 1,300 people, of whom 140 are associated with West Link.

The report of the Comptroller and Auditor General dealt primarily with two issues, the question of value for money of the original West Link concession agreement, 1987, and the related supplemental agreement, 2001. The report also dealt with an underpayment of the licence fee due to the State in 2002 and 2003, a matter discovered by the Comptroller and Auditor General during his review of the supplemental agreement.

With respect to the value for money assessment, National Toll Roads notes the Comptroller and Auditor General's conclusion, in evidence before the committee, that the State had got a good deal in financial terms. He also concluded that the National Roads Authority had achieved "a reasonable negotiating result" with the supplemental agreement, which covered the building of a second bridge at the West Link. The report calculated that National Toll Roads is projected to make a 24% return on its initial investment. While unquestionably this has been a very successful outcome for us, it should be seen in the light of an agreed target rate of return of 18% agreed in 1987. In addition, the reduction in the effective corporation tax rate in the period since the agreement accounts for probably half of the excess performance.

The matter of the underpayment of the licence fee to the State in 2002 and 2003 was brought to the attention of the company by the National Roads Authority in July 2005. The complexity in the supplemental agreement relating to the application of a "shadow toll" arrangement in 2002 and 2003 led to an error in the licence fee computation which was missed by National Toll Roads and other parties. Once the underpayment was confirmed by the company and as there was no ambiguity over the commercial intent of the agreement, the amount was immediately paid over in full, with interest. Subsequently internal company systems have been strengthened to ensure there will be no repeat of such an incident.

We have been acutely aware and sensitive to increasing public concern and frustration with the ever increasing level of congestion affecting commuters on or near the M50. Indeed, members of this committee have on occasion expressed serious dissatisfaction with the situation. Recent press announcements by the National Roads Authority and the Department of Transport have outlined various initiatives aimed at addressing the issue. I believe, Chairman, it would be helpful if I gave context to the involvement of National Toll Road and the West Link in the process.

West Link is a public-private partnership between National Toll Roads and the State. Its genesis was in the early and mid-1980s, a period economically far removed from post-Celtic tiger Ireland. The agreement was negotiated through three different Governments in the 1982 to 1987 period and involved the Department of the Environment, Heritage and Local Government, the Department of Finance and Dublin County Council. The investment of €38 million by National Toll Roads accounted for approximately 20% of the State's total road building budget at the time. It involved the transfer of real and substantial risk to the private sector. For the record, the project was brought in on time and on budget in March 1990. The corresponding elements of the M50 were delivered over-budget and later than originally scheduled, some substantially so.

The story since then has been a classic tale of two halves. In the period to 1996, the projected traffic volume failed to materialise and placed the company under considerable financial stress, particularly in the early years. In contrast, the period subsequent to 1996 was characterised by high traffic growth, as the key section of the M50 to the airport, the northern cross, was completed, and dramatic economic growth coincided.

While welcoming the recovery in traffic volumes, National Toll Roads began to anticipate the implications of the significant traffic growth on M50 service levels. It was clear as early as 1997, with 59,000 vehicles a day, that a motorway designed to handle a projected 45,000 vehicles a day would strain under the weight of 70,000, then 80,000 and eventually 90,000 vehicles a day, as we have today. That is a seven-day average, the equivalent of over 100,000 vehicles on week days.

To address the impending service issues, National Toll Roads made its first proposal to the Government in 1998, when we offered to contribute East Link and West Link to a joint venture with the National Roads Authority. It was intended that the joint venture would then complete a "D" ring motorway around Dublin, including the port tunnel and eastern bypass. That was rejected by the Government in early 1999. Later in 1999, we proposed to the National Roads Authority to upgrade the full length of the West Link section of the M50, including extending the plaza to 18 lanes. This was not pursued by the authority and a proposal on the bridge element alone was requested. An agreement with respect to the second bridge, the supplemental agreement, was concluded in June 2001 and the bridge opened in September 2003.

Subsequent proposals by us in 2002 and 2003 proposed to fast-track the upgrade of the M50 and to fund the construction using West Link revenue. The latter proposal included using open road tolling at West Link and detailed the necessary legislative and regulatory requirements for open road tolling. Neither proposal was pursued by the Government or the National Roads Authority.

Notwithstanding the provision in the supplemental agreement for National Toll Roads to undertake the investment, with appropriate return, to upgrade the West Link section of the M50, it became clear to us last year that public concern with congestion and service levels on the M50 was changing priorities. As a consequence, we clearly stated to both the Minister for Transport and the National Roads Authority that we would set no preconditions for any negotiation concerning West Link.

In May 2005, National Roads Authority presented a proposal to us, calling for the control of the toll revenue to revert to the authority and for an alternative payment mechanism to be substituted. It also involved our company remaining in the operator role at West Link and progressively transforming the facility to an open road tolling solution over a period of time. National Toll Roads agreed to make a submission on that basis.

We presented a detailed response on 28 September 2005. We received no reaction from the authority until two months ago when there was a limited exchange of correspondence between the parties on the submission. In addition, a meeting was held between the parties, at our specific request, to clarify where the process was heading. We received a letter from the National Roads Authority on 22 December indicating it was considering terminating the engagement. This was indirectly confirmed to the company by the media last Friday and formally confirmed by a letter from the National Roads Authority on Monday afternoon. The letter also noted that the authority's decision raised many practical and commercial issues that would need to be discussed between the parties.

We now await contact from the authority to discuss the detailed implications of their recent decisions. At all times we work within the framework of policy decided by the relevant State authority. The company will not stand in the way of Government policy and we will be, as we have always been, proactive, constructive and reasonable in meeting public policy goals. We remain committed to reaching agreement with the authority on the many issues raised by the decision.

I thank the Chairman for the opportunity to address the committee. My opening statement, by its nature, is a summary. I direct you and the members of the committee to our earlier submission for more detailed information on some of the matters I have covered. In addition, my colleagues and I are happy to answer any questions you and the committee may have.

May we publish your statement?

Mr. J. Barry

Yes.

Is it your understanding now that your negotiations with the National Roads Authority have irretrievably broken down or can negotiations be recommenced and, if so, are you available to re-enter negotiations?

Mr. J. Barry

My understanding at the moment is that the National Roads Authority does not want to proceed on the basis under which it requested a submission from us last year. That was that they would take control of the tolling at West Link, replace it with an alternative tolling mechanism, and have us continuing the operative role to 2020, including migrating the facility to open-road tolling. I understand they want to proceed on an alternative basis where there is zero tolling at West Link. We have no problem in negotiating with the authority on a different basis from that which it requested in May 2005. We indicated that a number of times during the course of 2005, and in particular in December when it became quite clear that the National Roads Authority had decided that it did not want to engage on the basis it had requested. We, therefore, see no impediment to further engagement in negotiation with the National Roads Authority. In fact, it will be necessary. I suggest that the agreement does not allow for all the matters that will be required in the context of what we surmise are the objectives of the National Roads Authority and the Department of Transport. The letter from the National Roads Authority pointed to many commercial and practical issues raised by the decisions that would have to be dealt with. Both parties will be required therefore to sit down and work through those issues. There will certainly be no resistance on our part to that. We request and desire that it commence as soon as possible so that from the perspective of our staff and shareholders, the uncertainty surrounding the situation can be removed, and the Government and the National Roads Authority can move forward their objectives.

The Department of Transport appeared before this committee in March last year and again on 10 November 2005. Up to last Thursday's meeting we were given indications that sensitive negotiations would proceed this week. Mr. Barry's version of events does not correspond to the information we were given, either at the March meeting or the November one. It seems there was little negotiation at all in 2005 and little more than an exchange of correspondence and a stating of positions. Was there really a negotiating team sitting down with NRA's negotiating team to discuss this over a period of weeks, months or years?

Mr. J. Barry

It would not be fair for me to comment on what the Department of Transport may or may not have said. All I can do is to explain in detail what occurred last year. Early in the year we would have made it quite clear to the Department of Transport and to the National Roads Authority that we were open to negotiation on any basis without precondition with respect to what they might want to do at West Link. Notwithstanding the legitimate expectation on our side — because it is clearly documented within the supplemental agreement that we would be given the opportunity to invest in our section of the M50 to upgrade it and expect a commensurate return on that — our first material engagement was in May 2005 when the National Roads Authority presented a detailed proposal to us as a basis for moving forward. It included an alternative payment mechanism and our staying in the role of operator to 2020. It was a detailed agreement from the National Roads Authority. There was no negotiation on it. It was an explanation by the National Roads Authority as to what it required. We took that away and gave it serious consideration. We had a board meeting at plc level on it because, in effect, it meant changing our concessionaire role with respect to the West Link.

Consistent with our statement that we were setting no preconditions, we reverted to the authority in late June or early July and said we would prepare a submission on that basis. There were three months of intense activity. We had multiple advisers, financial, legal and otherwise, who prepared a detailed submission that would be consistent with the standards of a typical PPP tender that one would expect in the 21st century. The volume of paper would have reached about four feet, as there were detailed schedules underpinning every projection and cost element in the proposal. That was submitted on 28 September 2005.

There was another meeting with the National Roads Authority at that point where we explained our submission. The next contact was a letter from the National Roads Authority in early December seeking a range of clarifications with respect to the submission. There was a tone in the letter that, we surmised, suggested that the basis on which the National Roads Authority wanted to move forward had changed. It had referred to a board meeting — maybe not in writing but through a conversation — that it would have in December. We requested a meeting with the authority prior to its board meeting, at which point there was further clarification of our submission. More importantly, however, we made it clear that if the basis on which the authority wanted to negotiate had changed, while that was frustrating it should tell us on what basis it wanted to move forward and we would start all over again.

We got correspondence before Christmas indicating that the authority did not intend to move forward on the basis previously engaged upon and that instead it would consider exercising the toll abolition clause within the agreement. At that point, we were requested, on the basis that we had said we were prepared to discuss a toll abolition scenario, if we had any submissions to make, to make them by 9 January. We replied that we were happy to make a submission on a toll abolition basis but that we really needed to know what the National Roads Authority wanted. I must also add that in the course of our correspondence, there would have been a fair amount of legalese pointing out our respective positions, as one would expect. We are only dealing with the commercial dynamics of the correspondence. We were told afterwards by telephone or after the meeting — that correspondence would come to us later in January and that it would, in effect, terminate discussions on the basis on which we had been engaged. We were informed by the media on Friday afternoon that the National Roads Authority was issuing a statement, talking about a termination of negotiations and further detail on toll abolition and multi-point open road tolling on the M50. That was formally communicated to us on Monday afternoon when a letter arrived from the National Roads Authority outlining same. At that point we were fully aware of what was in the letter on the basis of media coverage over the weekend. That is where we stand. The letter referred to the need for subsequent engagement with us on the practical commercial issues raised by the authority's decision.

In summary, while there was real substance to the engagement during the past 12 months in terms of the National Roads Authority's initial proposal to us and there was real substance to our submission to it, to the standards of any PPP tender in 2005 or 2006, I would not characterise any engagement as a negotiation. There was no scenario where we sat down and batted over the issues. That may be quite reasonable, I might add, from the National Roads Authority's perspective in the sense that it might have had a view that our submission was so far away from its position there was no point in engaging. I am only giving it from my perspective but from the company's perspective there was no negotiation, as we would call it, last year. We also argue strongly against any assertion that our proposal was unreasonable.

We went back to the 2001 agreement. We said in our correspondence in June that we would assess any proposal on the basis of our legitimate expectation of the value of the concession to 2020 that our shareholders could quite reasonably expect to gain. That did not include three plus three volumes — the upgrade in volumes that would come. In other words, when the motorway is upgraded there will be increased volumes. We did not believe it would be a legitimate expectation on our part that our shareholders should gain from that incremental volume. So, our proposal in September included substantially the volumes we all had agreed back in 2001 would play out in a two plus two scenario, and included our estimation of costs, etc. to the end. The operating cost element of it was a big part. It might have been 40% of the cost of the deal — the move to open road tolling, etc. — measured in hundreds of millions in nominal cost to the State. We offered to do that because, in effect, we did not know what open road tolling was envisaged at that juncture.

My assumption that a team of negotiators from National Toll Roads sat down with the NRA late last year and right through January, that the negotiations had reached a very sensitive point last week and that it was intended they proceed this week is totally incorrect.

Mr. J. Barry

The comment in the statement about terminating negotiations was met with a degree of wry bemusement on our side in the sense that we would not have characterised our engagement as negotiation. At best, it was an exchange of detailed, substantive positions on both sides but it was certainly not negotiations. In deference to the other side, they may have taken the view that our position was such that they would never reach a negotiated solution, etc.

What was proposed in May was a single-point, open road tolling solution on the M50 at West Link. Over the course of the year, their view changed that it was to move to a multi-point open road tolling solution on the M50. I can see commercially why they would have been reluctant to give us the open road tolling contract at West Link because, in practice, it would have meant that we would have ended up tendering and winning the open road tolling contract for the balance of the M50. I can see good commercial reason on their side as to why they would want to change the basis of their requirements. We submitted on a certain basis and that was not engaged with or negotiated on.

I asked if we could publish Mr. Barry's opening statement and he agreed that we could do so. May we also publish his initial submission?

Mr. J. Barry

The Chairman may do so.

I wish to go back a little because events in regard to the toll bridge have unfolded in a manner the committee did not expect. In March of last year, the Department came before us. The issue of the toll bridge has been ongoing for some time. I presume everybody is more than well aware of the considerable congestion. I have read Mr. Barry's submission in which he talks about other issues as well as the tolling plaza. We were informed at that time that the whole area of barrier-free tolling was being actively investigated, that legislation would be required and so forth. In November of this year, representatives of the Department again came before the committee and we were informed that negotiations were progressing. At the November meeting, the committee was disappointed and astounded that so little progress had been made in the interim.

Listening to what Mr. Barry said, it seems that, apart from one proposal, there were no negotiations and nothing else was happening. There was only the major proposal which NTR was requested to submit. Other than that, there were no meaningful negotiations as such. Mr. Barry is aware there is congestion on the West Link toll bridge. From his perspective, was there a lack of urgency in dealing with this issue?

Mr. J. Barry

I am not too sure it is fair for me to comment on what may or may not have——

Was NTR frustrated as an operator?

Mr. J. Barry

We have been frustrated with the process. Our first proposal to deal with congestion on the M50 was in 1998. In 1999, we made a proposal to upgrade our whole section of the M50, including a much larger plaza, to deal with our projected volume growth at that stage. That was not pursued and instead a specific proposal on the bridge was only requested by the authority. As the second bridge neared completion in 2003, we again raised the issue and put the upgrade of the M50 on the agenda and made two proposals on that basis in 2002 and 2003. The latter one included open road tolling.

I am not seeking any plaudits or claps on that basis. As we are a private sector entity driven by return on capital, we look for opportunities to put capital to work and make a return on it. We were driven primarily by that motive but also by what was clearly going to be the need to deal with traffic congestion on the M50. The 2003 proposal included open road tolling for the M50. That was the first time it was placed on the agenda. The environmental impact statement the NRA had at that time was for a 24-lane plaza further north of its current location. In 2004, after our proposal was rejected, the EIS was amended to include open road tolling as we had proposed in 2003 at the West Link. On the materiality of upgrading either our section or the broader M50, there was no engagement.

The controversy surrounding the price increase relating to the supplemental agreement last January put this on the political agenda and we saw greater urgency with respect to moving forward at that juncture. We had a number of meetings with the Department and the Minister in respect of the issue. In a sense, we have been open to doing a deal since then and to moving forward. Since the proposal in 2003, open road tolling has been on the agenda with the Department and the National Roads Authority. The Department has been working on the legislation and the regulatory dynamics that will need to be put in place for open road tolling. We made two detailed submissions on that, the most recent of which was presented early last year. Our expectation is that legislation is imminent in that regard. Work has been done on that matter.

I examined the original agreement and I want to pick up on something. Mr. Jim Barry said NTR was aware of the problem and made various submissions. The agreement referred to setting up a liaison committee comprising representatives of the council, the toll company and, if he so desired, the Minister. Does that committee function? Who are its members?

Mr. J. Barry

That committee exists. It probably meets approximately once a year. I will ask Mr. Kyran Hurley to address the more detailed operation of that committee.

Mr. Kyran Hurley

The last meeting of that committee was held on 15 February last year, at which representatives of the National Roads Authority and NTR discussed matters pertaining to the West Link. In addition, there is regular contact — telephone calls, letters and e-mails — in respect of matters outside the liaison committee's proceedings.

The committee obviously did not meet frequently. The last occasion on which it met was February 2005. It meets once a year. Was it effective?

Mr. Hurley

From the point of view of an opportunity to formally raise any matters National Toll Roads or the National Roads Authority wanted to raise, it was effective. However, it was open to either party to make contact, write letters and make further contacts. To an extent, the liaison committee was only an additional means of formality. There is a regular exchange of correspondence on various matters.

There might have been a regular exchange of correspondence on day-to-day matters but the serious congestion at the toll plaza is what we are focusing on. From what Mr. Jim Barry said, there was a complete lack of real engagement. Was the liaison committee flagging this? The congestion did not just occur this year. It is has been occurring for a number of years.

Mr. J. Barry

This comes down to the issue of congestion. While having huge regard and respect for the Comptroller and Auditor General's report, particularly as he found an error in the licence fee — which was noted and appreciated — I take issue with the suggestion that West Link is the cause of congestion on the M50. The reason there has been no action on the service clause in the agreement is that the plaza has the capacity to deal with the volume of traffic the motorway delivers to it. One could remove the plaza tomorrow but it would make no material difference to the congestion on the M50 at peak hours. The reality is that as one travels down the motorway, one comes to a dead stop at every interchange.

A number of reports have been done by us and others have been done in conjunction with the National Roads Authority. The NRA has also done its own reports on traffic congestion and traffic movement on the M50. They all say the plaza is not the material contributor to congestion on the M50. I appreciate the committee will face a challenge understanding and appreciating that, particularly given all the hyperbole, but there is no question that West Link is a handy way to blame congestion. The reason it has not been a burden to deal with the West Link is that until the motorway is upgraded, the plaza will not be the material problem and that is the real issue around congestion.

Liaison would have dealt with operating issues at the plaza and there were times when operational efficiency could have been improved. A report conducted by MDA, a credible international entity which reviewed traffic on the M50, was circulated to the Commission last year and it suggested minor operational improvements at the West Link, which were acted on. However, if the toll bridge is removed, it will make no material difference to congestion on the road. A legitimate complaint is that one must queue at the plaza off-peak because one is not queuing everywhere else, although the queue is short and manageable.

Motorists who must queue at the plaza find that explanation hard to understand. I have sat in the queues bumper to bumper with other cars as I made my way to the toll plaza. It depends on where one is trying to exit after that. If one is city bound and exits at the Red Cow interchange, one can get off the M50 easily. The plaza is an obstacle to motorists and, while Mr. Barry and I disagree, if he were as confident about his assertion, he would probably have tried to prove the point and would have opened the barriers for a day to examine the traffic flow. That would be a worthwhile exercise because the jury is out on whether the barrier is causing an obstacle, although I accept there are difficulties at other interchanges.

Mr. Barry said his company made a submission on open road tolling. Will he explain such tolling?

Mr. J. Barry

It has multiple meanings.

What does it mean to Mr. Barry?

Mr. J. Barry

As we use it now, it means non-plaza based tolling. It means using electronic forms of tolling to capture all the tolls on a stretch of road. The practical implementation of that involves an electronic tagging system such as EazyPass where transactions are recorded automatically on an account basis and then a proportion of transactions are captured using cameras. Licence plates will be captured and checked against a database of motorists who have paid to use the road. It is generally captured using gantries. These are large metal structures over the motorway which have the readers for the electronic tags or the cameras to capture the licence plates.

How many gantries were envisaged for the M50 in NTR's submission?

Mr. J. Barry

The 2003 proposal, which first raised open road tolling, envisaged one gantry at the West Link. In the proposal put to us by the NRA last May on which it requested a submission, one gantry at West Link was included.

On the bridge?

Mr. J. Barry

On or off the bridge.

A curiosity was raised at the previous meeting. It takes a minimum of four coins to pay a toll of €1.80 and many motorists only use a €2 coin. The issue we could not resolve was whether the State received a proportion of the extra money collected. NTR clarified in its submission that the State does not receive anything and the company takes the additional payments. Has Mr. Jim Barry a figure for the latest year of operation?

Mr. J. Barry

I have a figure for 2004, which was €149,000. The figure for 2005 is approximately €200,000. However, a series of overpayments and underpayments occur in the operation of any toll plaza and there is give and take in those dynamics. Excess coinage is one element of the overpayment. There is a series of underpayments for emergency vehicles passing through and other operational dynamics where people tailgate. There is an underachievement. They probably net out to pretty much nothing at the end of the day.

It was still astute of NTR's legal team in drawing up the contract to ensure the State received a percentage of the tolls that are paid but nothing of the excess.

Mr. J. Barry

I am not sure if it was necessarily astuteness or if it just happened.

I do not imagine that NTR behaves in a Scrooge-like manner regarding emergency vehicles using the toll plaza. Was a programme ever put in place to donate the excess revenue to charity, for instance? That would be reasonable. Most motorists who do not have the correct change and use a €2 coin might feel better if the overpayment were used for a charitable purpose.

Mr. J. Barry

We are very conscious of our obligations in the context of public-private partnerships and matters such as the overpayment of tolls inform our view on all charitable and corporate donations. Last year we sold land adjacent to the plaza to Fingal County Council off market at a significant discount to the market price. It was potentially worth ten or 15 times the level of excess coinage. That was informed by the view that, rather than put it up for auction and get developers to put silly prices on the table, we took a price that the Fingal county manager was happy to pay for a field that will be used for sports. That was worth multiples of the overpayment of coins.

We make contributions to various community organisations in the West Link and East Link areas and others. We sponsor a range of other projects throughout the State with respect to our role as a corporate citizen. That payment informs our view and our commitment as a public-private partner to support charitable and other projects.

According to the NRA, the Minister for Transport stated last Friday that the decision to move to barrier-free tolling "finally provides certainty, certainty that the toll plaza will go, certainty that barrier-free tolling will replace it". As he was opening phase 1 of the M50 upgrade, he said that by the time the upgrade was complete, which is budgeted for 2008, it would be possible to have barrier-free tolling, which has yet to be clarified, ready. What does Mr. Barry envisage happening between now and 2008 when, according to figures supplied by the Department, following the opening of the port tunnel, at least 2,500 additional heavy goods vehicles, HGVs, will use the M50? Have discussions been held between NTR and the NRA regarding the misery experienced by my constituents and those of Deputy Curran? We who live in the vicinity of the motorway experience this misery. What will happen when the additional HGVs begin to use that road from early summer?

The Minister confidently asserted phase 1 of the upgrade will be finished in 2008 and barrier-free tolling will be introduced. It is described in various statements by the Minister as barrier-free tolling. The Secretary General of the Department also made reference to multi-point, open road tolling, which we understand to involve multiple entry and exit points. Could Mr. Barry indicate what he believes will happen up to 2008 and what will happen after that date when, as the Minister said, phase 1 will be complete and open road tolling will be feasible?

Mr. J. Barry

The honest answer is that I do not know. The year 2008 has been referred to in the media and in statements from the Department of Transport. In the letter to the NTR, there was no reference to when zero tolling would be applied at the West Link.

Even though Mr. Barry was involved in discussions and/or negotiations, were there no time lines in regard to what would happen? Was it an open-ended discussion rather than negotiations?

Mr. J. Barry

In the proposals made to us by the National Roads Authority in May, there was a specific timeframe to introduce express lanes at the West Link and then migrate over time to a full open road tolling solution.

What was the timeframe?

Mr. J. Barry

It would have been for some immediate action on express lanes at the West Link, consequential to legislation being put in place. However, the basis on which we engaged last year has been effectively terminated by the National Roads Authority. Other than having an understanding that tolls will be abolished at the West Link, we have no other understanding of what is proposed by the NRA.

To return to the issue, once the Dublin Port tunnel opens, will an already heavily congested roads system, which has far exceeded all the studies relating to the volume of traffic, be obliged to cater for an additional 2,500 lorries a day? Does Mr. Jim Barry accept that figure, or will it be more? This figure was given in a parliamentary reply to my colleague, Deputy Shortall. Does Mr. Jim Barry accept that there will be 2,500 additional lorries a day? Does he have any plans for the period prior to 2008? Has he engaged in discussions with the committee? Did he talk about the port tunnel and the fact that these additional lorries will be using the road?

Mr. J. Barry

The context for the proposal made by the NRA and our submission on it would have related to general congestion and the expectation of an increased load of heavy goods vehicles in 2006. My colleague, Mr. Hurley, will address the issue of traffic volumes. In a sense, the decision by the NRA to terminate engagement on the basis that it proposed last year means we are in a vacuum as to the basis on which it wants us to operate in the short term. We have some understanding that it wants to abolish tolls at the West Link in the medium term and to pay us compensation.

Do I understand that from approximately June to December 2006 — it could be as early as April if the leaks in the port tunnel are dealt with but it is unlikely to be later than June — and for all of 2007, there is no game plan of which Mr. Jim Barry is aware in terms of his discussions with the NRA on the huge volume of determined extra traffic?

Mr. J. Barry

First, I will make an observation on the incremental traffic. The bigger issue for drivers of commercial vehicles will be paying a toll they currently do not have to pay. The next issue will be traffic. Their first challenge will be to get on to the M50. They will stop at Finglas, Ballymun and Blanchardstown before getting to the toll plaza. From a congestion perspective, the plaza is a small element of the general congestion problem these vehicles will face, including getting off at the Galway interchange, Red Cow or wherever. The bigger issue for heavy goods vehicles' owners will be having to pay a toll they currently do not have to pay.

In regard to anything that might be done at the plaza to deal with the flow of heavy goods vehicles from the Dublin Port tunnel, there is no proposal currently on the table from the authority or any party in regard to specific initiatives. I know we will continue to have a difference of opinion on this issue but I can only refer to a whole series of independent reports and also some papers we produced. The motorway is fundamentally at capacity. It is used by 25,000 vehicles per lane per week day. The M25 in London has just 18,000 vehicles per lane in a day. This motorway is at capacity and, therefore, any incremental traffic volume growth will exacerbate congestion. It will not change until the full motorway is upgraded. The first phase will deal with the Red Cow and Galway interchanges. One will queue all the way from the airport to the Galway interchange, even when the plaza is removed, and one will queue all the way beyond the Red Cow roundabout.

Given NTR's experience as the owner of 3 km of the road and the bridge, is the calculation of early 2008 for the completion of phase 1 of the upgrade realistic? I know that when the second bridge was built, it came in on budget and on time and that NTR built other roads. Are the timeframes to which the Minister referred realistic?

Mr. J. Barry

It would not be fair for me to comment without sight of the construction agreement that exists between the consortium that will carry out the construction and the NRA. I would point out that the latter has become much more effective at bringing projects in on time and on budget. I have no information in respect of trying to judge whether the timeframe referred to by the Minister is realistic. I presume it corresponds with the date by which the contracting party has committed itself to complete the project. I could not make an observation beyond that. It will be a very complex and difficult construction project, arguably the most difficult undertaken in the State to date.

On the original proposal for barrier-free tolling to the north of the current toll plaza, with a widened plaza, is it Mr. Jim Barry's understanding that the proposal is now suspended as a consequence of the Minister's statement on Friday and of the NRA breaking off negotiations? If so, given that NTR could be the bidder for the barrier-free tolling, has Mr. Jim Barry any idea how many barrier-free tolling gantries at entry and exit points will have to be erected? Is the original proposal of barrier-free tolling at the new plaza sometime after 2008 still possible or is it Mr. Jim Barry's understanding that there will be tolling at multiple entry and exit points along the length of the motorway?

Mr. J. Barry

I will qualify my answer by saying that we have not been briefed on the specific intentions. I am just commenting on what I read in the media. It appears that a study will be conducted on the best tolling regime to apply to the M50. Given our tolling experience, we expect that it will involve tolling the individual elements. That can be done on two bases. One can do it where people enter and exit or one could have a tolling point on the mid-section or between each of the interchanges. If someone is on the segment between, for example, the Galway road and the Red Cow roundabout, they will run under a tolling point and a tolling charge will be taken.

I am just surmising. I interpret from the media coverage that a big study will be undertaken to discover what the appropriate tolling regime is. Nowhere in the world has a live traffic situation been converted to an open road tolling system as envisaged in respect of the M50. There is open road tolling in a number of locations, notably, Toronto Highway 47 and the Melbourne Express Link. They were new roads. It is highly complicated. The system in Toronto opened and had to be shut down for 18 months. In turn, it was sold to a private operator and reopened. Our proposal calls for a phasing in of open road tolling, keeping a cash element, knocking down the central plaza building and having two or three express lanes through which people would drive running in each direction. The latter is very common in the United States.

We would have chosen a phased approach. It is necessary to try to get the electronic toll element up to 80% plus of transactions. The cost of the vehicle number plate reading technology is very high. In London, the congestion charge had to be raised from £5 to £8 because the cost of operating the purely number-based system was approximately £3. The change needs to be handled carefully. In a short period — within 12 to 18 months — we could get some form of open road tolling solution but it will need to be managed very carefully.

This is a complex issue and there will be a massive commuter education and behavioural change dynamic to it. People will be obliged to buy tokens or their equivalent in petrol stations, open accounts or phone in with credit card numbers. Commuter education is a massive exercise. As to what role EazyPass, which now has almost 90,000 customers, might play in this, in our proposal we envisaged it would be the platform, as did the proposal from the NRA in May last year. We are not sure where that stands now. Taking it at face value, we must shut it off in three years' time.

In the most recent agreement entered into between National Toll Roads and the NRA, namely, the establishment of the 80% band regarding royalties accruing to the State after a set number of vehicles was exceeded, was a proposal made by NTR that was accepted as being part of the agreement? Did that proposal come from NTR originally?

Mr. J. Barry

No, it did not. In effect, the 80% puts a cap on the return to us on the facility. It was reluctantly agreed by us.

Was making a moving target of the 80% NTR's counter proposal?

Mr. J. Barry

Regardless of whether it was a moving target, the reality is that there is effectively a cap on the return we can make from the facility, something that was not there prior to the supplemental agreement. There was significant negotiation on that point. However, there was an element of give and take in the agreement. We were getting an incremental investment opportunity at, as the Comptroller and Auditor General pointed out, a lower return to the original agreement. In return, however, we were obliged to accept some form of cap on our operations side.

Is it not true that the original agreement had a 50% royalty for over 45,000 vehicles and that the subsequent agreement had the 80% royalty, entering the equation once a set figure, approximately 100,000 at the time, was exceeded? In addition, there was to be an increase based on annual traffic levels. It was, therefore, an ever-increasing target.

Mr. J. Barry

It was an increasing target where the original licence fee payments were fixed off static volume figures. With respect to the 80% royalty, it was fixed off a moving target. That is a fair representation of the situation.

What are the figures to date in terms of the 80% band being exceeded?

Mr. J. Barry

It has not been exceeded to date.

Is it intended to exceed it in the next couple of years?

Mr. J. Barry

It depends. If we were to stay in situ, with the upgrade of the M50, it would almost certainly be exceeded and the 80% royalty would come into play at some point.

Does that take into account the additional traffic on an annual basis that has been factored into the equation?

Mr. J. Barry

Yes. It is certainly an upgrade situation. The motorway can only handle so much traffic and there is not going to be much growth in volume on it in the next number of years because it does not have the capacity to deal with it.

This is what I find curious. Everyone agrees that the motorway is operating to capacity. However, an agreement has been reached that unless traffic levels increase by a set amount, the 80% royalty figure will constantly move upward, on an annual basis, in favour of NTR.

Mr. J. Barry

The Deputy is representing the formula as it is in the agreement. The 80% threshold was there as a cap. If traffic reached a certain level, over and above what was projected in the figures we agreed in 2001, we would be capped in respect of the return we could make. That was the purpose and effectively that cap remains. What has happened since the 2001 agreement was made is that there have been lower traffic volumes than we would have anticipated.

How does the 24% return NTR has received rate in terms of comparisons with other toll road operations in Europe and internationally? The DKM report includes some international comparisons in this regard.

Mr. J. Barry

With respect to international comparators, it has tended to be the case that toll roads have either worked or have not. Where they have worked, they have made good returns of the level mentioned. However, a minority do not work, make no return and, from the promoter's perspective, effectively go into receivership. The West Link is quite unique in the sense that we were saved by the Celtic tiger. If the Celtic tiger economy had not taken off and we had not experienced the economic growth that occurred in late 1990s, even with the opening of the northern cross route, we would never have made our base return of 18% that was agreed in 1987.

Is it fair to say that the return of 24% is among the highest, if not the highest, that international comparisons show?

Mr. J. Barry

I would not go that far. I can talk about other parts of our business.

I refer to toll roads specifically.

Mr. J. Barry

Infrastructure would be looked at on a similar basis because the nature of risks tends to be the same. A 24% return is, unquestionably, very good. However, we must remember that the cost of funds in 1987 was 15%. In that context, 18% was a reasonable rate of return to be expected at that time. As I said in my opening statement, approximately half of the excess return over 18% that we have achieved was due to the lowering of the corporation rate of tax, which benefited everybody.

National Toll Roads Limited was the first limb in what has developed into a very complicated corporate structure. What percentage of turnover of NTR plc does National Toll Roads represent?

Mr. J. Barry

Approximately 15% overall of NTR plc.

In light of the current lack of negotiation — even if there is a willingness to engage as of now — does NTR intend to present further proposals publicly or seek to reopen a process?

Mr. J. Barry

We will reply to the NRA this week requesting immediate engagement on its objectives. To be unambiguous, we want to remove uncertainty with regard to the facility. We have 140 staff at the facility who woke up on Saturday to hear that they are out of a job. That is just one element of the problem. We have shareholders and a range of dynamics affecting our business. We want to remove uncertainty. The committee may rest assured that there will be no impediment on our part with regard to resolving the issue.

Media reports demonstrate a different type of thinking about how things should proceed on the M50. Would NTR be willing to resubmit the type of proposals and ideas it has on this?

Mr. J. Barry

We need to understand what the State wants in detail and will happily make a proposal on that basis. On 22 December, we were requested to make some form of proposal before 9 January on the basis of toll abolition. We did not do that. There was no question of our doing something in that timeframe. However, we also did not do it because we did not know what was required in express lanes between now and 2008 or 2009. We did not know what date was involved.

A raft of issues is involved. We need to know what will happen to the toll plaza and whether it will remain physically in place, even though the toll will be abolished. We need to know what will happen with regard to the upgrade of our section of the M50 and who will carry that out. A range of commercial and practical issues are involved with regard to the NRA's current intentions. We need to understand what the NRA wants. We are not looking to direct that. We will accept Government policy or objectives with respect to our facility. Then, in the context of what it wants, we will look to have it respect our rights with regard to our agreement. We are just seeking to discover what is needed on the basis that what was requested from us last May no longer applies.

Mr. Barry may not be able to answer this question, which is of a technical nature. Given that the examples of toll-free roads are fairly sparse, can a direct comparison be made with the Toronto project's number of interchanges, considering the proposed number of entrances and exits to the M50?

Mr. J. Barry

I will ask my colleague, Mr. Hurley, to respond because he visited the Toronto facility and, I hope, counted the interchanges.

Mr. Hurley

No, I did not. The Toronto facility is quite different and there is a charge on a per mile basis. The contract and the equivalent roads authority are set up under a completely different system, albeit to have the same effect. It is not a comparable project and, by international comparisons, we have many junctions reasonably close together — at 3 km intervals on the M50 — whereas the norm is at least 6 km intervals, I understand.

What is the difference in total length of roadway between the M50 and the Toronto project?

Mr. Hurley

The length of road in Toronto is quite a deal longer. Speaking from memory, I think it is approximately double in terms of tolling.

I represent tens of thousands of people in Dublin West, a constituency in which the toll plaza happens to be located. Has the delegation any appreciation that a majority of the people to whom I refer believe that I have today come face to face with those, namely, the representatives from National Toll Roads Limited, who cause them the greatest torment in their working lives? However, according to the delegation, we are all a bunch of dul amús. Its members believe that NTR caused no problem whatsoever in our working lives or wasted time, etc., and that the blame lies somewhere else. Can the committee believe this in all seriousness?

Mr. J. Barry

The Deputy can take it for certain. NTR takes very seriously the concerns of commuters and the public in general in respect of congestion on the M50. The Deputy may either choose to believe what I say or not. I am sticking as closely to the facts as I possibly can.

Many traffic consultants of international repute have reviewed traffic on the M50 in the past five to seven years and have concluded that the toll plaza is neither the material nor a substantial cause of congestion on the M50. The plaza has a capacity of close to 8,000 vehicles per hour but this is more than a two-lane motorway can throw at it. The two bridges are the points of greatest capacity on the motorway. It is then a question of whether the interchanges or the toll plaza have the next level of constraint and the answer is that it is the interchanges. If the plaza was physically removed, the queue from Blanchardstown would start sooner and quicker than it does at present. It already happens a couple of times every day when the queue from Blanchardstown south to the plaza fills the entire well behind the latter. The queue starts from Blanchardstown, not from the toll plaza, and more frequently during the day the queue from the Red Cow and the N4 comes all the way back through the plaza. This is the reality.

We can argue back and forth on this question but no one, not the National Roads Authority, the Department of Transport nor any consultants, has, at any point, challenged the traffic management dynamics of the M50. The reality is that the motorway needs to be upgraded to deal with 100,000 vehicles a day. There will be no end to congestion because it will take much more than upgrading the M50 to undo the lack of spatial planning and the lack of investment in public transport over the past 15 years. If congestion is to be tackled in a serious manner, a holistic approach must be used which will involve outer orbitals, public transport and probably tighter planning rules. It is a reality that once the motorway is upgraded, it will fill up again unless there are some alternatives for people to use.

Mr. Barry gave a very comprehensive report previously to the committee. Is he saying that the mean delay in each direction at the toll plaza is one minute and 14 seconds? This beggars belief. I frequently cross the M50 and even at 11 a.m. in the morning, not even peak time, the traffic is backed up as far as Finglas and the evidence is there that it is the toll plaza that is stopping it. Does Mr. Barry not understand that this is the reason the NRA and the Government are feeling a great deal of heat and that the Government wants NTR out of the place?

Mr. J. Barry

A queue all the way back to Finglas is not caused by queueing from the toll plaza but from the Finglas and Blanchardstown interchanges. Vehicles speed up between each of the interchanges and then come to a dead stop again. The figures from the report to which the Deputy refers are extracts. We have included in our submission the MVA consultants' report on the motorway and I will ask Mr. Hurley to address the specific details of that report.

Mr. Hurley

NTR engaged MVA to undertake an assessment of the toll plaza's performance, consider the causes of congestion and examine journey times. The consultants concluded that the West Link toll plaza's performance was far better than the best comparator they could find, which is the Dartford river crossing in London. The number of vehicles per lane passing through the toll plaza was considerably in excess of the numbers passing through comparable international plazas. As Mr. Barry stated, the consultants concluded that the causes of traffic congestion are primarily the high level of cars and trucks on the road. A total of 100,000 vehicles use a road that is designed to carry far fewer. A road in Belfast, which is also called the West Link, currently has 65,000 vehicles per day on a similar four-lane motorway and this road is currently being upgraded.

The consultants carried out the journey times and travel time surveys over two days last March, between Ballymount and the N3 interchange, a distance of approximately 10 km. They measured the time taken in the morning peak, in the evening peak and in what they called the "inter-peak", the middle of the day. Those figures were averaged across the number of days the measurements were carried out. They concluded, according to their designation of the reasons for delay, that the delay caused by the plaza was one third the delay caused by the junctions within that section. These are their figures and analysis, not NTR's, and these were published in their report.

The evidence of my eyes and my experience and that of my constituents is otherwise.

Mr. J. Barry

I would be happy to take any member of the committee up in a helicopter over the motorway to show the true traffic dynamics because what is happening on that motorway is absolutely transparent when viewed from the air.

With an offer like that, Mr. Barry will need a fleet of Black Hawk helicopters.

Mr. J. Barry

I wish to make one more point to Deputy Joe Higgins. I am of the strong opinion that NTR has pushed the M50 agenda since the day we became involved with it. I will state categorically that without NTR, there would not be two bridges at the West Link and the queues would be even worse because the two-lane bridge without a hard shoulder was the bottleneck on the M50.

The local authorities would then have been forced to deal with the issue.

Mr. J. Barry

If any one of NTR's proposals had been accepted during the period since 1998, there might not have been any issues at the West Link and the issues on the broader M50 might have been well on the way to being resolved. These proposals would have been put forward with a view to corporate finance self-interest because we were looking for investment opportunities. NTR has been putting this issue on the agenda since day one but we work in a context where we do not have the freedom or flexibility to do that; we work in the context of policy and objectives set by the various regulatory authorities. We have nothing of which to be ashamed regarding our role in respect of the M50. We have put the issue of the congestion and the impact on the commuter at the top of the agenda since 1998.

Who owns NTR?

Ten minutes is ten minutes. The Deputy should finish with this question and the next question.

Mr. J. Barry

National Toll Roads Limited is a 100% subsidiary of NTR plc. NTR plc is owned by a number of shareholders. We have the Roche family which was the original funder of the East Link and subsequently the West Link. It owns 45%. Institutions came in in 1987 to bring forward new equity and fund the building of the West Link. Over time a number have sold out and we now have 26% of the company owned by a company called One 51 Limited. The typical institutions, Standard Life, AIB Investment Managers, etc., own probably another 15%. Employees and individuals, probably totalling 600 or 700, own the balance of the company.

I understand the initial investment to build the bridge was approximately £30 million. I imagine NTR has earned multiples of this amount since. Mr. Jim Barry estimates that more than €600 million would go to National Toll Roads if the current arrangement obtained for another 14 or 15 years. How much of this would be profit? I guess it is a substantial amount, which means that the bridge and NTR's investment would have paid for itself many times over. Mr. Jim Barry said the company was driven by a return on capital. Even as a capitalist, he must be embarrassed by the level of riches NTR is taking from the ordinary hard-pressed tax-paying motorist and wishes to do over the next 15 years. Is it not an incredible goldmine for a private corporation? If the State feels it must make an arrangement and give considerable amounts of taxpayer's money to buy NTR out, how much will it take for NTR to go?

Mr. J. Barry

The Deputy raised a number of matters. First, I will talk about the returns on the investment. I refer to the Comptroller and Auditor General's report in that regard. It is very complex to try to work out the returns on any investment. I will not take major issue with the Comptroller and Auditor General's summary which states that on the initial investment we were making a 25% return on our investment. That is the only way and the conventional way to look at investments. An amount of £1 in 1987 was worth a hell of a lot more than £1 would be worth 20 or 30 years later. One cannot look at things in nominal terms. The conventional way is to look at what return one is making on one's investment. At 25%, or 24% on the back of a supplemental agreement, it is a very good return for an infrastructural project, but needs to be considered in the light of what was an agreed rate of return of 18% in 1987. Half the gain over and above the 18% we have made has been down to a change in corporation tax policy, not the fundamentals of traffic and revenue.

Let me make an observation. In the context of the range of projects at which we look in the infrastructure spectrum, 24% is good. One will see anything ranging between 10% and 35%, depending on the associated risk. From our perspective, it is a very successful project. It has allowed us to invest in all these other infrastructural areas and spend to the tune of almost €500 million in the Republic of Ireland on wind energy, waste management, water and broadband communications assets over the course of the past five years. Therefore, it has been successful; we will never run away from this. However, let us be clear. We went into an agreement and took a real risk. I cannot imagine this committee, sitting in session in the early 1990s, suggesting we should be bailed out because we were not making the return we were making at the time.

There was significant financial distress in the early 1990s. Fortunately, our banks did not foreclose. They had the right within their agreements to do so in the early 1990s, as traffic volumes did not materialise. That was a real risk. Therefore, I feel no embarrassment with respect to the return we have made on the investment. We have always fulfilled our obligation to the letter with respect to our agreement.

NTR was able to build shares in all those other enterprises on the strength of the golden goose of the M50.

Mr. J. Barry

Given the Deputy's interest, I note that ours was the first company in Ireland to give staff a share in the company. We implemented an ESOP scheme approximately seven or eight years ago which has been very successful for our staff.

I ask Mr. Barry to respond to the Deputy's other questions.

Mr. J. Barry

Does the Chairman mean how much we might sell out for?

I do not believe that was his question. His question related to the obligations of the State on an annual basis under the contract to compensate NTR for the loss of revenue. That is the way it is couched.

Mr. J. Barry

There is a toll abolition clause within the agreement that on the point of abolition the average monthly revenue for the past 12 months is calculated. That amount is then paid monthly to the concessionaire, National Toll Roads, for the remaining life of the concession and is index-linked. The amount to be paid would completely depend on the point at which it was implemented.

That matter is worth clarifying because there has been a misunderstanding that the State would need to buy out NTR with a single lump sum of capital. Under the contract it is clear that the State would make monthly payments until 2020. Is that correct?

Mr. J. Barry

That is correct.

Would there be an option for both parties to agree to a single lump sum to buy it out?

Mr. J. Barry

We have set no pre-conditions with respect to anything we set out.

Therefore, it could happen.

Mr. J. Barry

Absolutely. If the State came to us and said, "We just want you off the pitch and we want to pay an amount of money," we would have to consider it.

NTR's concession for the next 15 years covers the 3.2 km. stretch from the Galway road to the Navan road. Apart from the plaza, if NTR was off the pitch, what would happen to the other 3.2 km.? Who would be responsible for that section for the next 15 years?

Mr. J. Barry

We would retain responsibility for the concession length to 2020. Therefore, general maintenance and repair of the road etc. would remain our responsibility to 2020.

Is this out of the fee?

Mr. J. Barry

Out of the fee that we would be paid.

Therefore, NTR has a responsibility for the 3.2 km. of roadway, not just the plaza.

Mr. J. Barry

Exactly.

Phase 1 of the upgrade of the M50 has commenced. In due course if NTR's 3.2 km. stretch is to be widened to three lanes on both sides, the State must negotiate with it, if it is to be done in the next 15 years.

Mr. J. Barry

Indeed.

It could be said NTR has a ransom strip of the M50 for the next 15 years.

Mr. J. Barry

I prefer to say, as the National Roads Authority stated in its letter, the decision raises a range of commercial and practical issues with respect to implementation. It wishes to sit down with us as soon as practicable to deal with those. That would be one of the issues discussed.

This is the new issue for the general public. The State could pay whatever is necessary for the next 15 years in lieu of NTR being able to collect the toll. However, if the State wants to touch the 3.2 km. stretch, it must negotiate with NTR. NTR is in a very strong position for the next 15 years if the State wants to widen that stretch of road. The State must deal with NTR, whether it likes it.

Mr. J. Barry

We have rights with respect to our agreement and expect those rights to be respected by the public sector. We have no reason to expect they would not be recognised. There is a hint in the Deputy's tone of questioning——

Mr. J. Barry

——that we intend to just sit there and say, "Give us a big cheque." We will not use that approach. There is nothing in the history of our engagement with the State to suggest we would approach it that in any way. The 2001 supplemental agreement offers a precedent where we came to an agreement. By its very nature, that meant that both sides were happy to sign up. In the context, we will not be unreasonable or difficult with respect to any negotiations we would enter with the National Roads Authority. We took considerable offence at certain media speculation that we were intransigent or difficult with respect to what was proposed last year. Any representation of our approach in that way was disingenuous and misinformation. We would be happy to have an independent party stand over our proposal in September as a reasonable one, in terms of what we would reasonably expect to have made from the concession to 2020 on what is now a purely hypothetical or a two-plus-two scenario. As we enter negotiations with the National Roads Authority, if at an appropriate juncture there is an opportunity for an independent perspective, we will be happy to have it also.

I am happy with everything Mr. Barry has said. I am not getting concerned about it. I am not accusing National Toll Roads Limited of intransigence, all I am saying is that it is obvious that the price will have to be right, from the company's perspective and that of the Government, if they are to do business.

Mr. J. Barry

Absolutely.

I am not suggesting that the company is being intransigent.

Mr. J. Barry

No.

I am just saying that the Government, or the taxpayer, will be obliged to pay a much higher price to deal with the widening of the company's stretch of road, over and above the cost of getting rid of the toll plaza.

I wish to ask another question. I would prefer a brief answer because the committee does not have much time. Who owns the stretch of road in question?

Mr. J. Barry

The State owns it.

The State owns the road.

Mr. J. Barry

We have the right to impose a toll on it

The company has the concession.

Mr. J. Barry

We are also responsible for maintaining it until 2020.

The company has the concession.

Mr. J. Barry

We have the concession.

If the State wishes to widen a stretch of road that it owns, on which National Toll Roads Limited has a concession, it will have to come up with an appropriate price if it wants to deal with the company. I congratulate the company from its point of view but shame on those who negotiated the deal on behalf of the State. We will take that aspect of the matter up with the relevant officials in the next hour when they are sitting opposite us.

Mr. J. Barry

I will be brief because I understand the committee has time constraints. I would like to speak about a precedent that was set last year when the National Roads Authority made its proposal. National Toll Roads Limited happily agreed, while preserving its legal position, to allow the NRA to proceed to prepare for the upgrade of the facility on its account. The agreement was reached despite our legitimate expectation, which was based on a clause in the 2001 agreement, that we would be making the investment in question. We were happy for the NRA's work to progress in parallel. In other words, we were happy for the NRA to prepare to upgrade the road and to spend the necessary moneys. National Toll Roads Limited decided, in effect, not to avail of its rights in that regard. We will take a pragmatic, constructive and reasonable approach to any negotiations. We do not deny that we have a financial interest. As the chief executive of National Toll Roads Limited, I have financial responsibility with regard to the investment. We are not prepared to allow a deal to be done at any cost — that could not happen.

I understand that.

Mr. J. Barry

I do not have job security on the back of that.

I understand that. It is a pure commercial issue, from Mr. Barry's point of view.

Mr. J. Barry

It is a pure commercial issue.

Mr. Barry has made that clear. That is fine. We understand that. I am just saying that the State will be obliged to face a second commercial issue.

Mr. J. Barry

Indeed.

The public might not fully appreciate that second issue.

Mr. J. Barry

Can I just pick up on the other point? There has been much criticism of the deal and the people who did the deal in the period between 1982 and 1987.

Mr. J. Barry

We have to go back. I have described it as the vision of hindsight. This country was financially bankrupt in the mid-1980s. The International Monetary Fund was on the point of calling in the receivers. The context was very difficult. It was a far less sophisticated time as regards the development of infrastructure. The personal computer had just arrived on the scene in 1982 or 1983. There were no detailed financial models. In fact, the actual implementation of any form of licence fee was quite innovative at the time.

That is right.

Mr. J. Barry

We need to be very careful before we criticise the civil servants of the mid-1980s, who were doing their jobs in a very difficult context, and measure them against the context of the 21st century.

If, as Mr. Barry has argued, the toll plaza on the M50 does not cause the congestion on that route, why does National Toll Roads Limited not just add the extra lanes at the plaza to prove its point?

Mr. J. Barry

We are constrained by the limits on what we can do without the agreement of the National Roads Authority and the Department of Transport.

Does National Toll Roads Limited wish to do that? Has it offered to do it?

Mr. J. Barry

Our first proposal was submitted in 1998. Our second proposal was made in 1999. Our third proposal, which related to the second bridge, was also submitted in 1999. Further proposals were made in 2002 and 2003. The Deputy can take it that we were very keen to move forward in respect of the facility.

The State has not responded positively.

Mr. J. Barry

None of the proposals was accepted, with the exception of that to upgrade the facility by adding a second bridge, rather than by upgrading the facility as a whole. That is the only element of our proposals that was pursued.

I wish to ask a final question. Mr. Barry said that the concession agreement was not drawn up on the basis of the additional traffic that would be generated if a third lane were to be added in both directions. Why does the same principle not apply in respect of the extra port tunnel traffic that will appear overnight when the latter opens? National Toll Roads Limited will get a windfall gain from that.

Mr. J. Barry

That is included. We took the risk that traffic levels could decrease as well as increase. We bore the cost of low traffic levels in the early years. In our first partial year of operation, which was 1990, the average daily traffic was just over 6,000 vehicles, which was considerably less than the projected level of 20,000 vehicles. We took the risk and, yes, we have gained. We got lucky with the Celtic tiger, to be frank about it.

I would like to briefly follow up on something. Under the contract, the State will be required to pay National Toll Roads Limited monthly instalments of index-linked compensation until 2020. It is obvious that the size of the monthly payments will depend on when the State discontinues the contract. If the State had discontinued it on 31 December last, how much would the monthly payments have been thereafter?

Mr. J. Barry

Is the Chairman referring to 31 December 2005?

Yes. I presume National Toll Roads Limited has figures for a 12-month period.

Mr. J. Barry

Is the Chairman seeking a ballpark figure?

Yes. Can Mr. Barry give the committee an indication of the size of the payments about which we are talking?

Mr. J. Barry

Some figures were contained in the report produced by DKM Economic Consultants. I can get back to the Chairman with the figures, which will be measured in millions. I think some media reports have referred to a figure of €40 million per annum. I do not imagine that the final figure, which will be based on monthly revenue, will be very different from that estimate. I will be obliged to revert to the Chairman on this question. I am not being evasive, I just do not have the figures.

I am not seeking an absolutely precise figure.

Mr. J. Barry

Yes. The figure mentioned in the DKM report was approximately €400 million or €500 million, in nominal terms, over the remaining 15 years. A figure of €40 million per annum, as a starting point, will not be a million miles away.

Mr. Colm Reid

It could be €600 million.

Mr. J. Barry

I do not know whether the Comptroller and Auditor General has some information on this aspect of the matter.

Mr. Purcell

A figure of €40 million was mentioned. That would be reasonable on the basis of the 2005 traffic levels.

Mr. J. Barry

Yes.

Mr. Purcell

Other matters, such as whether rates would be payable on the same basis if the toll bridge was not there, might come into the equation. There are potential complications which might affect the overall take. For example, we need to consider who would be responsible for what in the event of the abolition of tolls on the bridge.

Is the CPI the relevant indexation or is it infrastructural indexation?

Mr. Purcell

I understand it is the CPI.

Mr. Reid did a quick calculation but Mr. Hurley and Mr. Barry were so horrified by the figure he mentioned that they decided to leave it be.

They thought he should not say that.

I am sure any figure that arises is subject to negotiation and is not necessarily the figure that will be agreed on after the final analysis.

Deputy Curran referred earlier to the possibility of lifting the barrier. Perhaps, as a present for users of the M50, it will be raised on St. Valentine's Day to allow free transit. Perhaps National Toll Roads Limited could kill two birds with one stone in that way, because such a move would also alleviate Deputy Joe Higgins's concern about the exact cause of the congestion on the M50. It is obvious that there is conflict between the findings of National Toll Roads Limited's engineers and consultants and the views of some of the users of the M50 and their public representatives on the causes of the congestion. I totally accept in good faith what has been said by the representatives of National Toll Roads Limited, who have made a very impressive case. Has an objective independent assessment of the reasons for traffic delays, particularly as they might relate to the toll bridge, been carried out by a person who was paid by the NRA or somebody of that nature? Can Mr. Barry answer all of those questions?

Mr. J. Barry

A review of the issues in question was conducted approximately four years ago. The review, which was jointly paid for by the NRA and National Toll Roads Limited, was conducted by Transroute International, a French company with the relevant expertise. The assessment made at that time was substantially the same as the assessment I have outlined. I am aware that other studies have been conducted by the National Roads Authority, not necessarily in co-operation with National Toll Roads Limited. If a report conducted by some other body reached a materially different conclusion, I cannot imagine we would not have heard about it. I am sure such findings would have been presented very directly to us and we would have been challenged on that basis. I would be happy for any entity, such as the National Roads Authority, the Department of Transport or National Toll Roads Limited, to conduct a further study of the traffic on the M50 with an internationally renowned traffic management consultant. I am confident that the same conclusion would be reached. I do not suggest that we should avoid the issue of congestion and the need to fix what is out there in a general way.

Deputy Ardagh also asked about the possibility of raising the barriers. National Toll Roads Limited has a legal obligation to collect the tolls. Fundamentally, it does not have the flexibility to lift the barriers.

Would the agreement of the Government be needed?

Mr. J. Barry

We would have to get agreement from the Government on that.

Perhaps the company will speak to the Government about the matter.

I thought the use of the term "two birds with one stone" on St. Valentine's Day was something of a mismatch.

NTR is a major investor in infrastructure development. How does the board of the public limited company respond to the perception that it is the national corporate bogeyman? This is the image portrayed by the media and some of the Deputies present continue to regard it as a valid one. The delegation has made an impressive case and one could leave this meeting believing the company is not as it is portrayed. How does the board deal with its image in terms of corporate governance, corporate citizenship, social responsibility and so forth?

Mr. J. Barry

We take it very seriously and there is a great deal of frustration with regard to how the West Link is portrayed and, by reflection, National Toll Roads Limited and NTR plc. We try to get our point across on the media and others occasionally speak objectively on the issue. I note Brendan Keenan basically articulated the point I made when he spoke on Sam Smyth's radio programme at the weekend. Mr. Keenan stated he drives on the M50 every day and it is the interchanges rather than the bridge which cause the problem. There are, therefore, informed commentators who will occasionally make that point but it is not in the interest of most commentators to do so. The facts often get in the way of a good line.

Unfortunately, NTR is not a full-time PR player, nor does it have the capacity to feature on the media every day. There is, therefore, a limited amount we can do in that regard and while we do a little, it is a cause of frustration. Unfortunately, it is hard for our message to be heard amid the general noise of the media.

With regard to road tolling what other projects does National Toll Roads plc operate either here or abroad? Does the same difficulty arise on other projects?

Mr. J. Barry

We have a number of subsidiaries, including Greenstar, the largest waste management company in the country, Airtricity, a leading wind energy company with significant operations——

The Deputy's question refers to toll roads.

Mr. J. Barry

My apologies. We operate East Link where the congestion issue has not arisen to the same degree. In fact, traffic on the bridge has declined over the past five years alongside general congestion on the eastern traffic corridor. In addition, we operate the Dundalk western bypass PPP as part of a consortium. This involves operating and maintaining a stretch of motorway extending effectively from the Dublin border to the Border with Northern Ireland and includes the plaza at Drogheda. NTR is in partnership with HBG Ascon, a subsidiary of Royal BAM and the largest civil contractor in Ireland, and Dragadas, one of the largest civil contractors in Spain and one of the largest toll road operators in the world. No significant congestion issues arise at the Drogheda toll plaza.

While the company is unlucky that problems occur on the West Link, it is extremely lucky on the financial front.

Mr. J. Barry

As I point out, traffic growth saved the concession but brought with it significant issues which were transparent from 1997-98.

Has NTR had an input into the outer orbital road outside Dublin? The Taoiseach indicated building such a route would be one of the ways to resolve traffic problems around the M50. What is Mr. Barry's opinion on that? When does he believe it will be in situ, taking into account all the economic and political considerations involved?

Mr. J. Barry

Solving congestion will require a holistic approach incorporating more than just roads. In the specific context of roads, however, while NTR has not done any independent studies or specifically promoted this option, it is our view that an outer orbital route will be required. Dublin does not have a bypass and although the M50 was intended to be a bypass of the city, the lack of spatial planning allowed the city to sprawl substantially beyond the road, which has effectively become the high street, that is, the major distributor of commuters and people around Dublin. It is, therefore, no longer a bypass. For all sorts of reasons, an outer orbital road would probably make sense. It would need to be reasonably far outside Dublin to fulfil a bypass role, as distinct from distribution role, for the city.

In all the traffic surveys conducted by independent consultants, was the origin of the traffic ever measured?

Mr. J. Barry

What does the Chairman mean by the word "origin"?

The reason I ask is that I have been driving on toll roads on the continent for at least 30 years, which is longer than I care to remember. It is general practice on the European mainland that no tolls apply on the approach to large cities, with use of toll roads free of charge for about 20 kilometres around cities. Mr. Barry pointed out that the M50 is no longer a bypass of Dublin but its high street. It is a local distributor road as opposed to a high street because it is now used by people on their way to collect their children from school, to take refuse to the dump, especially if it requires pulling a trailer, visit their neighbours on the other side of the River Liffey and do their daily shopping. It is, therefore, more of a local distributor road, which are not tolled elsewhere and form part of the normal transport infrastructure.

Have the origin and destination of M50 traffic been assessed in the many traffic surveys? I am certain such a study would support my argument that the M50 is essentially a local distributor road largely serving the western suburbs of the city and its function as a bypass, with the exception of traffic to the airport, is diminishing.

Mr. J. Barry

Origin and destination surveys are the base information for settling traffic flows in any context, specifically normal road planning or toll roads. They became very important for toll roads because one needs to understand what will be the price impact and at what point and price people will choose to take a toll road as distinct from a free alternative. These studies have been done. NTR, however, has not conducted any origin and destination work in Dublin in the past five or seven years, although we have done some work at the outer limits of the East Link. I expect the National Roads Authority will have done origin and destination work and continues to do so on an ongoing basis. With respect to new toll roads, extensive origin and destination analysis has been conducted.

Tolling the M50 is akin to tolling the route périphérique in Paris. The M50 is no longer a bypass, it is a local distributor road which everyone uses constantly. The system is not working.

Mr. J. Barry

I will not disagree with the Chairman on that.

The three brief points I wish to raise were addressed previously but I believe they will feature in our recommendations when we make our findings. On barrier free tolling, everyone concerned appears to believe that the removal of the toll barriers is the answer to the problem. The only example I heard today was the congestion charge in London where operational costs accounted for 60% of the total cost. Is NTR aware of any cheaper technology being developed because the cost appears to be ludicrous?

Section 5.1.3 of the MVA report indicates that the delays caused by congestion outside the toll plaza are significantly greater — by a factor by about three — than the delays caused by the toll plaza. Having listened to regular users of the M50 and refused the offer to take a helicopter trip, I find this statement incredible. We will ask the Secretary General whether the Department has carried out studies on the issue. Does Mr. Barry stand over that statement?

If NTR had the wherewithal to raise the barriers for one day, would it have changed last Friday's decision given that the view of the company as the bad guys in this area resulted in the decision to remove it from the equation in future. If the suggestion that the barriers do not cause the congestion on the M50 had been tested, it is possible the company could have argued it had proof positive that the toll plaza is not the cause of the impediment about which the public complains. I do not hear complaints about the requirement to pay a toll but about the delay. Would raising the barriers have proven NTR's case?

Mr. J. Barry

I will ask my colleague, Mr. Hurley, to address some elements of this question. Another dynamic comes into play in terms of having the barrier up. If one stops charging a toll on the M50, one will attract more traffic. I do not believe that the test case will prove anything dramatic other than that the motorway remains congested. The MVA is a credible international consultancy. Its credibility is more important to it than a small consulting contract from National Toll Roads Limited. The report has real substance. I will ask Mr. Hurley to address the specifics of the question.

Mr. Hurley

A number of different toll technologies are in place and are being investigated. The predominant tolling system, which is used across the perhaps 40 or 50 electronic toll roads around the world, is the exact same as the EazyPass system. I would hazard a guess that approximately 80% or 90% of those transactions are done using an electronic tag. The EazyPass system which was introduced by National Tolls Roads in 2001 is readily adaptable and can be used and read at high speed. From looking at current international practice we believe that is the fundamental technology.

The alternative processes are the camera-based systems known as automatic number plate recognition, ANPR, systems, about which Mr. Barry already spoke. These require the user to make contact with a call centre or a back office in some way. According to international practice, that camera-based system is currently between three and five times more expensive per transaction, depending on to whom one talks. Hence the necessity that if one wants that type of system as part of the mix in order to satisfy consumers who might just use it once a year or very occasionally, one would need to have a very small proportion of those. The normal industry practice across the world is to have probably 80%, or in excess of that, using the EazyPass system, which per transaction is between one third or one fifth of the cost of the current alternative technology.

Other technologies are in use, such as satellite technologies, which is used in Germany, in particular, for the tolling of trucks. It was stopped for a period because of problems but it has resumed. It has been very successful but it is extremely expensive and would not be considered under any circumstances by the German authorities for cars and vehicles in general. It is purely used for trucks.

I would like some idea of the cost of the EazyPass compared to manual or any other charge. All I know is that it is a fraction of the more expensive system. What is its approximate cost at present?

Mr. Hurley

The cost of an EazyPass transaction in an Irish context, given the number of transactions we have — it is dependent on volume — is in line with the cost of operator or manual lanes. The multiple would increase with a camera-based system. It would depend on the specification and technologies used and what kind of regulations govern it. For the current level of transactions, the EazyPass transaction is much the same as the operator lanes.

This is an important point. I take Mr. Barry's point that he has experts out there but we have been told that one cannot bring in an electronic control because it is 60% of the total take. The reference is obviously to the London situation.

Mr. Hurley

To clarify, the London situation is not a correct barometer, it is just an indicator. In London there are 100 or 200 crossover points at which images of cars, vans and trucks must be taken. Even though the amount of paying traffic in London is about the same as on the M50 in Dublin — about 100,000 per day — it is much more complicated because currently it is 100% camera based. In the Irish or international road context, there is generally a mix of traditional electronic — EazyPass type systems — and the new camera-based ones.

I do not want to plagiarise the outlines of the five phases but I presume that it would be possible using this to bring a mixture of the EazyPass and camera-based systems. Would that be possible if it is narrowed down to a percentage of casual users?

Mr. Hurley

I admit it is quite complicated to follow the sketches we have.

It is not so complicated. All I am afraid of is that we will grab the idea from you.

Mr. Hurley

The migration path we had designed as to how one would transfer a fully working motorway and plaza to an all-electronic system involved starting from the current base, increasing the number of people that used EazyPass until we reached 60% or 70% and then we could make the final transition to a camera-based system. The latter would come at the end in our approach on the basis that the system has been proven and had not caused utter chaos on the road up to then.

Was this part of the submission to the NRA?

Mr. J. Barry

Part of our submission in 2003 was to put open-road tolling on the agenda.

Mr. Purcell

I note Mr. Barry does not take issue with anything in the report or with my findings, except I suppose for this matter about the low level of service for users. I suggested that the user was a loser, in that sense. He pointed to the MVA report and I bow to the superior technical knowledge of these experts. I have something in common with Deputy Joe Higgins, in particular, because I live out that direction also and I see the evidence with my own eyes practically every morning.

I note that the survey in question was carried out on two week days in March 2005. Reference was made to morning peak, inter-peak and evening peak in both directions. Southbound delays of one minute and 14 seconds were experienced in the morning period. When I first saw that it occurred to me that one of the surveys had inadvertently been taken on St. Patrick's Day because it bore no resemblance to my experience.

When I looked more closely at the survey I realised that as with many of these things it depends on how one defines the period in question. The delay caused by the plaza is defined as the length of time from joining the back of the toll plaza queue to exiting the toll plaza. I am not sure when one enters the back of the queue, it could be when one is as far back as the Blanchardstown entrance or the Finglas exit, or is it just when one comes up to where the toll road expands into its numerous lanes. I do not know. Perhaps there is an internationally accepted standard on this but while taking the general point about congestion and its cause being the structure of the roads and the interchanges and so on, it appeared to me in layman's terms that the survey did minimise the extent of the delay at the toll plaza. That is all I have to say.

Mr. J. Barry

I will briefly address the point made by the Comptroller and Auditor General and I will ask Mr. Hurley to address the technicalities of the survey.

In terms of the report, we were not taking issue with the view that the user got a bad deal. There is bad service on the M50 and that is apparent. What we would take issue with is that we are responsible for that bad service. We were asked to build a 3.2 km. section of motorway and toll it, which we did. The question of whether the tolling should have been there or somewhere else and what level the toll is at, was all set by Government policy, for which we as a private sector operator have no responsibility.

When one reaches the M50 from the M1, one encounters a traffic jam most mornings. If one removed the toll plaza one would still reach the traffic jam at the same point. One queues to get past Ballymun, speeds up to 30 km/h, 40 km/h, or 50 km/h, comes to a dead stop at Finglas, queues to get past Finglas and, after approximately 0.5 km, speeds up to perhaps 60 km/h or 70 km/h. One then comes to a dead halt at Blanchardstown, speeds up again and reaches the queue for the plaza. Removing the plaza does not affect all the previous queues. Mr. Hurley might have something to add on that.

Mr. Hurley

We relied on MVA, a specialist traffic consultancy. We did not tell it what to do or how to do it. We asked it to analyse plaza performance and tell us whether we were meeting standards. We asked it to analyse the causes of congestion and to use the methodology it saw fit to do so. The problem is that the true level of congestion is only really visible to a motorist if he can see both points at the one time. Let me give an example. This morning at approximately 9 a.m. I was on the M50 near Ballyboden and there was traffic congestion extending 2 km. towards Dundrum and extending another 2 km. or 3 km. towards the Red Cow roundabout. However, when I phoned the plaza manager this morning, he said there were no queues at all at the plaza. Try telling someone sitting in the queue at Ballyboden that there is no queue——

There was fog.

Mr. Hurley

I am talking about 9 a.m. this morning.

I was there this morning also.

Mr. Hurley

My point is that it is extremely difficult to explain. The one way we have, other than getting traffic specialists to do so, and leaving them open to challenge or scrutiny by their peers, is to take videos by helicopter. This makes my point abundantly clear.

Mr. Purcell

That is all. There is no outstanding issue as far as I am concerned.

I am impressed. In his history of this matter, Mr. Barry neatly tied in political responsibility for this project to the three main political parties, Fianna Fáil, Fine Gael and the Labour Party, which leads me to believe he is much more astute and media-savvy than he led us to believe earlier. He gave us the impression that everybody was putting upon him.

Before the issue is resolved, Deputy Joe Higgins could be a Minister himself.

Does NTR contribute to parties?

Mr. Barry

Our total political contributions last year amounted to €4,500, out of total revenue of €350 million. A couple of executives somewhere in the group went on a couple of golf outings. The contributions were reasonably broadly spread across the political spectrum and the figure from the previous year was about €3,000. That is the sum total of our political contributions.

I am anxious to hear representatives from the National Roads Authority and the Department.

I have one brief point. I have listened with interest to the debate on whether the plaza is causing congestion. If we accept Mr. Barry's argument that it is not, are we on the wrong foot altogether in considering barrier-free tolling? Are we wasting our time in this regard?

Mr. J. Barry

No. If the motorway were upgraded, one could not have the West Link as there would be queues from it. The capacity for tolling has to increase commensurate with the capacity of the motorway. Open-road tolling is definitely on the agenda. The other option is to create a much larger traditional plaza with, say, 20 or 24 lanes, including a mixture of Eazy Pass-type express lanes, etc. This might reduce the footprint. If one is to continue tolling on the M50, migrating to an open-road tolling solution is the right way to progress.

I thank Mr. Barry.

Sitting suspended at 1.45 p.m. and resumed at 1.50 p.m.

We will resume. There is some relevant correspondence relating to the fatal road accident at Murrevaugh, County Mayo, on 22 December 2004, to the proposed Blackrock to Dundrum quality bus corridor and items 3.1, 3.4, 3.10, 3.15, 3.16 and 3.18 from today's correspondence.

Witnesses should be aware that they do not enjoy absolute privilege when giving evidence before the committee. Members' and witnesses' attention is drawn to the fact that as and from 2 August 1998, section 10 of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These include the right to give evidence, the right to produce or send documents to the committee, to appear before the committee either in person or through a representative, to make a written and oral submission, to request the committee to direct the attendance of witnesses and the production of documents and to cross-examine witnesses. For the most part these rights may be exercised only with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the committee's proceedings if the committee considers this appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a manner as to make him or her identifiable. Members are also reminded of the provision under Standing Order 156 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

Will Ms O'Neill introduce her officials?

Ms Julie O’Neill

I am accompanied by Mr. Jim Humphreys, principal officer in road transport, and Mr. Declan McConnell from my finance division.

Will Mr. Fred Barry of the NRA introduce his officials?

Mr. Fred Barry

I am accompanied by Mr. Gerry Murphy, head of our PPP unit, and Mr. Michael Egan, head of corporate affairs.

Can the witnesses from the Department of Finance introduce themselves?

Ms Deirdre Hanlon

I am Ms Deirdre Hanlon, a principal officer in the public expenditure division of the Department of Finance, and I am accompanied by Mr. Raymond O'Leary from the same division.

Mr. Purcell

Witnesses were able to follow earlier proceedings so I will not go back over old ground. Now the policy decision has been taken to remove tolling at the West Link bridge, the real issues to be addressed are how that can be done at least cost to the taxpayer and how traffic congestion can be reduced in whatever new arrangements are put in place on the M50.

Fixing compensation or buying out the concession will not come cheap — we heard some figures mentioned — no matter what approach is taken. Depending on circumstances it is not beyond the realm of possibility that at some stage in the future I will find myself evaluating the deal that is eventually struck and reporting to the committee.

In regard to the best way to manage traffic on the M50 in the new environment the debate has already begun. It would not be appropriate for me to get involved at this stage.

Ms O’Neill

Since our meeting on 10 November dealing solely with issues arising from the West Link agreement as reported by the Comptroller and Auditor General, I provided on 11 January further information to the committee on both the West Link and road PPPs and their financing generally. I hope this additional information has been of benefit to the committee.

I responded in detail to chapter 13 of the Comptroller and Auditor General's report at the 10 November meeting. On the issues contained in chapter 13, we and the NRA recognise the urgency of the need to improve the level of service generally on the M50 and particularly at the West Link. The NRA has accorded priority to the M50 upgrade project and to the upgrade of the West Link section of the M50.

The upgrade work will take place in two phases. Phase one involves the widening of the carriageway to three years between the Red Cow N7 and Galway road N4 roundabouts and the upgrading of these to interchanges. The contract for this was signed recently and work will get under way in the next few weeks. The Exchequer will meet the cost of this urgent work. The National Roads Authority, NRA, is also pursuing the upgrade of the West Link section of the M50 including the move to barrier free tolling at the West Link toll plaza. As I indicated in my letter of 11 January the NRA considers that barrier free tolling can be achieved in parallel with the completion of phase one of the M50 upgrade which is planned to be completed by mid-2008.

Phase two comprises the remainder of the M50 upgrade, that is, the widening of the remainder to three lanes and the upgrade of other interchanges. The NRA will advertise the procurement of this phase as a public private partnership, PPP, project soon. It is anticipated that the contract will be awarded in early 2007 and work will be completed by the end of 2010.

The NRA, with the agreement of the Minister for Transport, has terminated negotiations with National Toll Roads, NTR, and will undertake a procurement process to select a toll operator to design, implement and operate a barrier free tolling regime. The move to barrier free tolling on the M50 will require the completion by the NRA of a comprehensive traffic study. The detailed proposals emerging from this study will be submitted for the approval of the Government. Meanwhile, the Department of Transport will finalise proposals to Government early this year for legislation to strengthen the enforcement provisions relating to non-payment of tolls.

I hope the additional NRA information provided with my letter of 11 January was of benefit to the committee. In respect of the issues discussed at the meeting on 10 November, the new PPP arrangements differ substantially from the West Link agreement. They differ in their content and in being the result of a competitive procurement process. The competitive bidding of the procurement process is an important protection for the client and the road user.

The new PPP contracts include strong provisions on revenue sharing to protect against super profits, and specify exacting performance standards which the PPP company must meet in operating and maintaining the roads, including toll facility operations aimed at ensuring high customer service standards and minimum delay at toll plazas. I am pleased to be joined by my colleagues from the NRA today to address any further queries the committee may have on the West Link contract or PPPs generally and particularly to respond to the issues raised in the earlier part of the meeting this morning.

I have other points on the wider issue of the Vote but in the interest of time management I am prepared to leave those for the moment. They can be taken as read for the purposes of publication. If we move on to discuss those wider issues and the two items of correspondence to which the Chairman referred I will be happy to make brief introductory comments on those topics at that time.

May the committee publish Ms O'Neill's statement?

Ms O’Neill

Yes, of course.

Did Ms O'Neill listen to the previous witnesses?

Ms O’Neill

Yes.

In that case Ms O'Neill is fully briefed on the matter.

Ms O’Neill

Yes, apart from the last two or three minutes as we came down the stairs to join the committee.

Will Mr. Frank Barry make an opening statement?

Mr. F. Barry

I have not submitted any opening statement.

Why not?

Mr. F. Barry

With respect, I did not know what questions I would be expected to answer.

Is Mr. Barry a separate Accounting Officer or does he intend to move back under the wing of the Department?

Mr. F. Barry

No. I do not. I was not aware I was expected to provide an opening statement. I am happy to make one if that is of benefit to the committee.

It is the practice for Accounting Officers to make opening statements before the committee. Mr. Barry might wish to make some preliminary remarks to bring us bang up to date with recent events. While he might not know what questions we are going to ask some of the questions would spring to anyone's mind.

Mr. F. Barry

I apologise to the committee for not providing an opening statement but I was not aware that was expected. I will certainly do so at any future meetings. Fundamentally, the NRA takes no issue with the Comptroller and Auditor General's report on the West Link which was well-debated at the last meeting of this committee. The NRA regards it as a well-written report which goes to the heart of the issues and has nothing to add to it.

I will comment some of the issues raised by NTR's presentation today regarding the timing and results of our negotiations with it. The NRA received permission to upgrade the M50 at the end of April 2005. It has said, and continues to say, that congestion on the M50 results from the West Link barrier toll, the inadequate junctions and the fact that the carriageways are no longer sufficient to carry the level of traffic it is asked to carry. The toll is not the sole cause of the problems but contributes to them. The solution to congestion on the M50 is to upgrade the M50 and address the barrier tolling. That has not changed.

Having received planning permission in April we submitted draft proposals to NTR in May with a view to converting to a barrier free arrangement. The NTR response came in at the end of September, four months later. It was a significant response into which the NTR had put a great deal of work, considering many of the factors in detail. It took us some weeks to digest and understand it. There were fundamental issues in that proposal which, if carried through, would have precluded our closing a deal with NTR.

We asked our advisers to clarify with NTR's advisers that we were taking legal and commercial advice on this and to ensure that we understood the proposal properly. We sent a long series of questions to NTR leaving it open to NTR to change its approach to some issues if it wished but it did not change in respect of key issues. We met NTR which said it was willing to negotiate further without conditions. There was an exception to that, however, namely, that the payment to NTR for removal of its toll revenue would be based on what it described as its embedded economic value.

Our view was that payment to NTR for the loss of the toll revenue should be founded on the zero tolling provision in the contract. We appreciate that the contract never provided for this type of negotiation so NTR was not bound to that clause. Nonetheless, we believed it was fair and reasonable that the discussions and negotiations should be founded on that clause in the light of NTR's contractual entitlements.

NTR advised us that its position with regard to the embedded economic value was fundamental and non-negotiable. We realised that we could not reach an agreement on payment for the loss of toll revenue which we could defend in view of our responsibilities to the public or before this committee. The Comptroller and Auditor General said that he will probably look at the results of current negotiations. We are happy to make detailed correspondence and the positions of both parties available to him if this committee wants a second view on whether we made the right decision.

There was a further issue. During our engagement with NTR we both reviewed operating systems, costs and how we would manage a barrier free toll system. That revealed two significant issues, one, that we were moving towards dealing with expensive and complex work by negotiation, rather than by ensuring a best market price through a competitive tendering process. As the scale and complexity of the project became clear we became concerned about this, although we did not negotiate with NTR on the commercial factors it sought.

The second issue was that we are proscribed by EU and national procurement rules from negotiating existing contracts beyond a certain point. It was clear that the proposal on the operating system would run a high risk of infringing the procurement rules and leave whatever we did open to legal challenge by any third party. We cannot predict with certainty whether a court would find we had complied with the procurement rules, but once we had identified the high risk involved we had to do everything possible to avoid that risk.

A third consideration was the conditions placed on us when planning permission was granted for the M50 upgrade. One condition for the upgrade — although the upgrade will take place in the distant future, it will still be within the life of the NTR concession which runs to 2020 — is that we consider implementing demand management on the M50 to cater for future traffic growth. The condition requires us to prepare a report no later than three years after the completion of the upgrade. Our view was and is that any barrier-free tolling arrangement we enter at the moment must allow us the flexibility to accommodate and satisfy the conditions imposed by An Bord Pleanála. In other words, we could not reasonably negotiate a competitive bid that put in place a system if it could not subsequently be modified in a reasonably cost efficient manner to cater for future events that might fall out from that condition. The commercial difficulties and procurement concerns that arose in our discussions with NTR on West Link would only have been exacerbated had we subsequently been obliged to extend their remit beyond West Link.

For all those reasons, any one of which would have been sufficient to stop us entering an agreement, we concluded that we are unable to do a deal with NTR on West Link as things stand at the moment. For that reason we went to the Minister to explain the situation and we sought his approval to proceed as we have done.

Ms O'Neill, what is the status of the decision announced last Friday? For example, was it underpinned by a Cabinet decision?

Ms O’Neill

The Cabinet has been notified — I must be careful not to get into the territory of policy matters that are the prerogative of Government — and the Department has conveyed its agreement to the NRA's request to terminate the discussions. From my perspective, the issue of what future tolling regime is put in place on the M50 is entirely a matter for Government policy but how to secure best value for money for future taxpayers and how to secure the best quality of service on the M50 are issues of which I as an Accounting Officer must be cognisant. From my close discussions on the issue with Fred Barry over recent months, I was convinced by his arguments that, given the events that would unfold from the detailed proposals on the way forward that emerged from NTR, I as Accounting Officer could never be satisfied that best value for money for the taxpayer would be achieved simply by negotiating an arrangement to extend or further modify the existing agreement with NTR. The only way to clarify the issues raised earlier about the precise costs involved and whether the cheapest or best value for money option is obtained is to ensure that the move to barrier-free tolling, which has been the clear policy for some time, is put to a market test.

I was also concerned to ensure that we did not find ourselves inadvertently in breach of EU public procurement rules. Things have moved on considerably from the early years when the original NTR agreement was negotiated and it is now clear that third parties may seek to mount a challenge if a significant contract is not put to a market test but simply given away to the incumbent operator. For all those reasons we supported the position adopted and advised the Minister accordingly.

On the issue of what tolling arrangement comes out of the demand management study, the clear position of the Minister and the Government is that the National Roads Authority should come back to the Department with its proposals on foot of that traffic study. That does not mean everything will then need to stop, because the NRA will still be able to begin the public procurement process for the barrier-free toll operation. However, at the end of the day the decision on the toll scheme is a matter for the Government.

If Ms O'Neill is saying as Accounting Officer that her primary interest is to ensure best value for money for the taxpayer, the committee would fully agree with her on that. In saying that, does she make a distinction between the taxpayer and the users of the M50 or does she consider those as one and the same entity?

Ms O’Neill

Obviously one is a subset of the other, in that the users of the M50 are also taxpayers. As Accounting Officer I have a responsibility to taxpayers in general for the price paid for any arrangement made by the NRA, as that comes out of our vote. The current tolling arrangement on the M50, which is underpinned by a €1.80 charge to motorists, is sufficient to fund both the ongoing payment that requires to be made to the incumbent operator, NTR, and the upgrade of the road. The €1.80 charge is index linked so it will continue to provide sufficient funding for both those things, but the current arrangement does not allow us to provide a good quality of service to motorists who use the M50. Therefore, in the interests not so much of taxpayers as of motorists, there is a desire to move towards a barrier-free tolling arrangement as quickly as possible. I know that concerns about the length of time that such a move will take have been rehearsed in detail with the committee on previous occasions.

We want to move to barrier-free tolling because, as the NTR representatives and previous witnesses to the committee have said, the current barriers annoy the users of the M50 because of the effect they have on congestion and on the experience of travelling on the road. We want the NRA to be in a position to put the best possible arrangement in place on the M50 to allow for the free flow of traffic. We want to have the NRA's recommendation on that. We have the interests of the travelling public very much in mind especially in the context of the upgrade to the M50, but at the same time we need to have regard to the costs that are likely to fall out from any arrangement that is entered into. I stress that the revenue generated by the tolls that are currently in place is sufficient to fund the upgrade of the M50.

In effect there is a foreseeable conflict of interest between the generality of taxpayers and the users of the M50 who bear the financial cost. Is that not correct?

Ms O’Neill

We all need to juggle with that reality. As Accounting Officer I need to be mindful both of the impact on taxpayers of any new arrangements entered into and of the desire to provide users of the road with a good quality of service.

When Ms O'Neill appeared before the committee a year ago, she mentioned in response to a question on the difficulties caused by the toll bridge that consideration was being given to barrier-free tolling but it would require legislation. When she appeared before the committee again in November, the committee was — to be blunt about it — dismayed about the perceived lack of progress on the issue. On 10 November Ms O'Neill told the committee:

The NRA, in the context of the upgrade of the M50, is in negotiation with National Toll Roads regarding the upgrade of that section of the M50 operated by NTR. These negotiations are addressing the upgrading of both the road section and the tolling arrangements. The objective from the State's perspective will be to secure significantly enhanced capacity on the M50 ... Discussions and negotiations are under way with a view to arriving at a conclusion which allows us to move as quickly as possible to open-flow tolling at that point. It is a complex legal agreement and difficult and intense negotiations are ongoing between the NRA and NTR.

As Ms O'Neill heard earlier, the evidence this morning from National Toll Roads did not paint a picture of the intense negotiations we had been given to understand took place. The NTR representatives stated simply that NTR was asked in May 2005 for a proposal, which it submitted on 28 September. The committee has seen no evidence of difficult and intense negotiations. The sense of urgency and frustration we felt the previous day was not represented in the contributions made this morning by National Toll Roads. Will the Department witnesses comment on that?

Ms O’Neill

Yes, and with the permission of the committee and the chairman, I will ask Mr. Fred Barry to comment too. Words have all sorts of significance in different contexts. On my own behalf, in terms of the discussions I have had with Mr. Barry and the National Roads Authority, NRA, and in the context of the planning permission granted in April last year, I am clear that the plan to move towards barrier-free tolling as quickly as possible has been to the forefront of our minds and that of the NRA. Intense negotiations took place between various people, NTR prepared detailed proposals which were studied by the NRA, and many contacts were made. We were also encouraged by the response we got to bringing the matter towards a resolution.

Mr. Barry said that the NRA presented a detailed response on 28 September 2005 and received no reaction from the authority until two months ago when there was a limited exchange of correspondence between the parties on the submission. This reflects the frustration we experienced at the previous committee meeting. We could not see a sense of urgency associated with the issue and the arguments made this morning did not show that the NRA or the Department felt that sense of urgency.

Mr. F. Barry

NTR said this morning that the documents it gave us at the end of September were approximately four feet in depth. It took weeks to go through them, to sort out everything there and discover what was being sought. That was not done without any sense of urgency but it took weeks to read through the documents.

We proceeded from there. Whether one describes something as a negotiation or, as was stated, a substantive discussion or exchange but not a negotiation, is a matter of semantics. We went to NTR after going through the documents as quickly as we could. People did not just pore over the documents from nine to five at their leisure. We had people working evenings and weekends. We formulated many issues and questions and put them in writing to NTR. Separately, our advisers were in touch with NTR. Those advisers were not specifically NRA personnel but contacted NTR to clarify certain issues. When we got the response to those, we met NTR because the response told us there were fundamental, probably insurmountable, obstacles unless NTR was willing to change its position.

We are not saying NTR was doing anything wrong. It was entitled to ask for whatever it wished and was under no obligation to negotiate with us on this. It endeavoured to do so but as was clear and as it said, it was seeking to maximise its financial position. Once it became clear to us that in its proposals it was sticking to these fundamental positions, we met NTR again and discussed many items. NTR said it was open to further negotiation on many issues but the fundamental obstacles were not going away. When we knew we could not reach a resolution, there was no point in further exploring side issues, the resolution of which would not contribute to the overall result.

I would like to move on a little. We spoke about the obstacle of the toll plaza and of tolling. NTR claimed this was not a significant delay or obstacle and presented various reports. The Comptroller and Auditor General was amazed at the average toll plaza delay of more than a minute. What is the view of the NRA or the Department on the delay at the toll plaza?

Mr. F. Barry

Our view is that it puts NTR in breach of the terms of the contract which says it is obliged to provide a certain level of service. We put this to NTR in writing and it disagreed.

That is the section in the contract which says the toll company should provide facilities for the collection of tolls which are adequate having regard to the volume of traffic using the toll road.

Mr. F. Barry

That is correct.

The NRA has told NTR it is in breach of the contract.

Mr. F. Barry

We have told NTR we think what it is doing is not adequate to meet the demands of the contract.

When did the NRA first tell that to NTR?

Mr. F. Barry

I cannot say when it was first said verbally, but NTR was told in a written communication in March 2005.

Only within the past year did the NRA refer to this specifically. Most of us who are motorists would have been aware of the problem before that.

Mr. F. Barry

As indeed the NRA was, but we had and still have regular discussions with NTR outside of any liaison committee or written correspondence.

The NRA would, however, have written to NTR in March 2005 outlining this particular.

Mr. F. Barry

We wrote to NTR in March 2005 saying the level of service was not adequate. It wrote back to say it believed it was.

What did the NRA do?

Mr. F. Barry

We had at that stage applied to An Bord Pleanála for permission to go ahead to upgrade the M50 and introduce barrier-free tolling. We knew the decision would be made shortly after that. In April we got the decision and then entered discussions with NTR regarding the barrier and moving towards a barrier-free situation. We also took legal advice on the remedies available to us to see if we could establish that NTR was in breach of the contract.

What was the legal advice?

Mr. F. Barry

In summary the legal advice was that the contract does not contain any remedies, the requirement in question was so vague as to be unenforceable and there was little point in us pursuing any legal avenue because we would not prevail. At the same time we were looking to enter further negotiations when we knew the planning decision was coming through. We have not returned to NTR with threatening legal letters.

The NRA did not do so because the legal advice given to it was that the contract was too weak.

Mr. F. Barry

The advice was that there would be no point.

That is despite the fact that the section exists, although legally the contract is unenforceable.

Mr. F. Barry

There was no remedy in the contract and the description is too vague. There is an arbitration clause in the contract but it is a moot point in terms of interpretation and value of the clause whether we would have gone to arbitration or to the courts.

I know I am jumping ahead but I want to refer to specific issues covered. With regard to barrier-free tolling, NTR indicated this was quite complex and difficult to deliver. There were various possible systems but more than 80% of them would be equivalent to the EazyPass system. What kind of system is the NRA looking at and how reliable and trustworthy is the technology being envisaged?

Mr. F. Barry

The details of the system will emerge from the competitive tendering process but in terms of framework, we are looking at the primary charging method being one of electronic tagging.

An EazyPass type.

Mr. F. Barry

Yes, although not necessarily EazyPass. We envisage having the video camera system available to facilitate those who do not have tags, that is, the irregular users of the system. Through a combination of advertising, encouragement and application of discounts, we hope to encourage significant use of the electronic tagging system. We would aim for as high a penetration of the market as possible with that.

An EU directive addresses some of the technology which might be used. That directive, which was not in place some years ago, now applies to all countries setting up this type of system, so we would require the bidders to be in compliance. We are also open to any innovations or good ideas coming out of the tendering process, which might be cost-effective or give a better level of service.

Without getting into the details, does the NRA envisage tolling to be single-point or multi-point?

Mr. F. Barry

The tolling system we will put in place in the immediate future will be single-point and may well be so in the long term. If I may, I would like to take members back to the conditions set by An Bord Pleanála that attach to the planning permission. We are required to put demand management provisions in place should we arrive at a need for them. I cannot preclude what might be done in future to satisfy that condition.

However, the 2008 position will be single-point, barrier-free tolling in the vicinity of the existing location.

Mr. F. Barry

Yes. So that I leave no doubt in people's mind, I will say this. When we put it out to tender, we will go for a system that is barrier-free and at a single point. However, we will require that it have flexibility. We have a commercial basis for extending it in future, if and when that is required.

Perhaps I might go back to something that I mentioned earlier so that everyone understands. The NTR concession runs until 2020. That is a long time away, and we do not want to do something now that gets in the way of decisions that may have to be made in intervening years. If this were a matter for the next two or three years, we could rely on the forecasts and make a decision. However, we wish to provide a flexible system that will allow us to satisfy planning conditions and do what is required, at the same time not tying ourselves into doing anything between now and then.

The specific 2008 position, however, is barrier-free tolling at a single point.

Mr. F. Barry

Yes.

Irrespective of whatever compensation deal is agreed — a lump sum or monthly payment, as is the case in the contract — is the existing revenue from tolling at current rates sufficient in ball-park terms to buy out NTR and finance the upgrade works?

Mr. F. Barry

Yes. In ball-park terms, the €180 million is sufficient. It is index-linked.

I would like to inquire again regarding the conditions set by An Bord Pleanála on demand management. I have a schedule of various proposals on NTR. I represent the area and was a member of Fingal County Council during discussions on this. I recall very detailed discussions. Was there not a proposal in 1999 to upgrade the West Link and extend the toll plaza very significantly? This was after the second bridge had been completed. Furthermore, a year or two later, a very detailed proposal was extensively canvassed in local communities abutting the M50 in the Blanchardstown and Castleknock areas to move the toll plaza slightly north of its present position to Diswellstown and widen it. It seems to me that, in response to Deputy Curran, Mr. Barry is saying that, in the short run, we have the period up to 2008 when phase one of the upgrade will be finished, with no change until then.

Mr. F. Barry

Yes and no.

Might Mr. Barry give us the "Yes" and "No" parts of the answer?

Mr. F. Barry

The "No" part is that we see no way, for example, to improve the overall capacity of the M50 between now and 2008. The construction works under way will take until then to complete. As part of the re-engagement with NTR, we intend seeing if there are any interim ways in which we can improve the service at the West Link, even in the short term.

Mr. Barry has just told my colleague, Deputy Curran, that his proposal in the immediate post-2008 period is that there be single-point, barrier-free tolling. I might sound stupid, but what is the difference between that and the Diswellstown new plaza proposal of four or five years ago? It was not barrier-free, but I recall attending all the meetings and looking at all the plans. I brought many residents' associations with me. I have a strong memory of it. What is the difference between what Mr. Barry has just said to Deputy Curran and what was in that proposal four or five years ago? Will he move the single point to south County Dublin and away from the bridge?

Mr. F. Barry

The Deputy will appreciate that I am not familiar with the 1999 proposals.

I am, since I remember them.

Mr. Gerry Murphy

The 2002 proposal was for a 24-lane plaza at Diswellstown. That was at a time when we were doing preliminary design and traffic work before submitting the environmental impact statement, EIS. When we examined that as an option, we found that it would have resulted in queues at the levels of traffic that were to materialise in the M50 upgrade. The Deputy will recall that the M50 EIS identified that up to 200,000 vehicles a day might pass on sections of the motorway, including that one, while the current figure is 90,000. A 24-lane plaza would not be able to cope with them and would not provide the requisite level of service. For that reason, it was not included in the EIS. However, we included the principle that where tolling was to be applied, it should be completely barrier-free.

Where is the single barrier-free point to be now?

Mr. F. Barry

A study is being conducted.

We are going back to basics for more studies. I am concerned about the period up to 2008. In six months or less, we will have a new port tunnel opening, and the Department has advised my colleague, Deputy Shortall, that there will be an average of 2,200 HGVs per day on the road. I am sure that the witnesses are aware of the absolute frustrating misery that the M50 is for people who live in the vicinity of the toll bridge. Have they any plans in place regarding the absolutely dreadful deterioration that will take place once the port tunnel opens? How will they deal with the additional traffic after 2008? Are they confident that phase one of the upgrade, which I understand is quite complex from an engineering perspective, will be finished on time?

Mr. F. Barry

The fact that I said the exact location will result from the study does not in any sense preclude our proceeding with the procurement processes. That will not lead to any delay in our putting anything in place. They are parallel activities.

Could the single tolling point be anywhere on the length of the road, or would it be near or at the bridge or in the current location?

Mr. F. Barry

With respect, we have committed ourselves to coming back to the Minister with the results of the study and recommendations from it. I do not wish to enter into a discussion on whether it might be in one place or another. Preparing that work in no sense delays implementation of the system, since the procurement process will start and continue in parallel therewith. The construction work — the rebuilding and adding of flyovers, junctions and so on in an operating environment — is extremely complex, but I am satisfied that it will have been done by 2008.

From early summer 2006, an extra 2,000 lorries per day will use the road. Those who use the M50 would be interested to know whether the witnesses have any plans for how that additional traffic — a huge volume — will be dealt with.

Mr. F. Barry

I have said already that the solution to congestion on the M50 is to improve the junctions, add the carriageways and remove the barrier. We are working towards that as best and as fast as we can. Without being presumptuous, I remind the committee that we received planning permission in April 2005. Those of you who are familiar with what has to be done as regards going through an inquiry to get a contract placed, will appreciate that was as fast as it could be done. We are moving on this with all the expedition we can, and I would like to be able to do it faster, if I could.

Was there a reason why Friday was what was described as "high noon" and the discussion negotiations were terminated suddenly at that point? We have heard a lengthy description from NRT and the NRA to the effect that there was a good deal of correspondence. The NRA had to study the correspondence and the material which is fair enough, and it took time. However, did the NRA sign off on that on Thursday night and then announce the decision on Friday morning? It did not give any preliminary advice to the other party to the effect that it was really thinking of pulling the shutters down, or did it?

Mr. F. Barry

While we did not give formal advice to the other party, we asked, in December, for its comments on the effectiveness of the clause in the contract relating to zero tolling. It was at that point that we asked it to give any submissions it wanted on that particular issue, before our January board meeting. We went within the NRA to our own board in early January and arrived at a view, passed on by the board — subject of course to the Minister's approval, given the nature of the issue. We brought that through the Department to the Minister who gave us his decision.

Will the Secretary General say if that was the subject of a minute to Government — to make that a Government decision?

Ms O’Neill

The Government was informed of the position on this by way of an aide-mémoire.

What was the Government informed about?

Ms O’Neill

The Government was informed of the fact that the NRA had decided to terminate discussions with NTR at this stage.

When was the Government informed?

Ms O’Neill

Recently.

Was this before or after the public announcement?

Ms O’Neill

I do not think it is appropriate for me to get into something like that. That is a matter for Government in the first instance. However, in the normal course of events, it is within the road authority's prerogative to conduct the type of discussions that were under way between NRA and NTR. It would have been open to NRA to proceed on the basis that it did without involving the Department. However, because of the wider policy issues involved for overall tolling arrangements for the M50 that might arise out of this process, the NRA would recognise that this was something the Minister wished to take to Government for the Cabinet to take a decision on.

We have been kept closely informed by the NRA as to the progress of its discussions and deliberations, including those of its board. In discussing matters with the NRA last week it was clear to us that there is an urgency for all the reasons spelt out about the need for barrier-free tolling as quickly as possible. A fundamental precondition was for the NRA to finalise whether that should be done by agreement with NTR about barrier-free tolling or by going to the market. The quicker this happened the better in terms of the NRA moving on the process speedily. We share the view that barrier-free tolling is desirable as quickly as possible and we certainly want it by the time the upgrade is completed in 2008.

It is clear that the public procurement process, by its nature, will take anything up to 12 months to complete. A series of steps must be gone through in a contract of this type in terms of preliminary notice to the market and going beyond that, out to the market. It is also clear that even when the procurement process has been gone through and an operator is identified, work must be done in terms of the design of the scheme. We wanted to move on that process as quickly as possible.

The Minister, therefore, was giving his agreement to the move as regards the termination of negotiations with NTR. It was not, nor could it be, a decision on what the process to emerge from that decision could be. That is an issue which will go to Government and on which the Cabinet will form a view.

The Minister is quoted in the statement from NRA that was issued when he opened the work. The decision to move to barrier-free tolling finally provides certainty. I understood Ms O'Neill to say it was decided to conclude negotiations and that no decision was made. However, the Minister is saying a decision was made on barrier-free tolling.

Ms O’Neill

There is no doubt that the Minister has agreed to move to barrier-free tolling. There is nothing new as regards that. That position was adopted not just by this Minister, but by his predecessor and by the Minister before that when the matter was under the auspices of the then Department of the Environment. No Government decision is needed, therefore, to move to barrier-free tolling per se. However, the issue as to where that barrier-free tolling might be located is a matter on which the Government will want to express a view. Recognising that we were moving to barrier-free tolling and that we wanted to do this as quickly as possible in the context of the upgrade, agreement was reached the other day on the very well-grounded proposal from the NRA that the most cost-effective route, ultimately providing best service for the customer, was to terminate discussions with NTR.

I wish to ask a technical question about public procurement.

We are moving on. The Deputy may come back in again if she so wishes. She is well over time.

I should like to move away from Dublin. We are talking about barrier-free tolling on the M50 by 2008. I understand that the completion date for construction of a tolling plaza at the second river crossing in Waterford is also 2008. Government negotiations as regards the tendering process, I understand, are ongoing and will be finalised within the next couple of months. What type of tolling is anticipated for Waterford?

Mr. Murphy

The estimated timeframe for the completion of the Waterford bypass is 2010. Construction is to start this year and there is a four-year building process. The tolling plan for Waterford is similar to that provided for Kilcock-Kinnegad, which is a plaza with a special fast lane for electronic card holders. All lanes process electronic tolling, but our strategy for rural plazas is that it is not necessary to embark on the more complex free flow open road tolling.

This is barrier tolling.

Mr. Murphy

It will be barrier tolling, as with the Kilcock-Kinnegad and Drogheda bypasses.

I return to what Ms O'Neill said half an hour ago and quote her directly: "In the interests of the motorists and taxpayers we need to move towards barrier-free tolling". Is that a reference to the interest of people living in Dublin or taxpayers everywhere?

Ms O’Neill

The question——

It seems that there is a preferable option here, which has been quoted by everybody over the last couple of weeks, namely, barrier-free tolling. However, it seems to be the preferable option for Dublin, but not for Waterford.

Ms O’Neill

The important issue is that the preferable option for motorists, whether they are in Waterford, Dublin, Kilcock-Kinnegad or wherever is not to be caught in gridlock, particularly in a situation where they have to pay a toll for the privilege.

Barrier tolling in Waterford would prevent that more than barrier-free tolling.

Ms O’Neill

The issue as to when it is worthwhile in cost terms and in terms of quality of service to the motorist to move to barrier-free tolling is dependent on the traffic volumes on a particular road. Some of my colleagues are able to give chapter and verse on this, but the traffic volumes on the M50, both before and after the upgrade are significantly greater than on any of the other roads being put in place that involve tolls.

I want to get this straight. Construction is to be completed in 2010, two years after the M50 becomes barrier-free with regard to tolling. People in Waterford will be expected to go to a barrier tolling booth or plaza. Surely Ms O'Neill has got this backwards in view of what she has just said as regards the interests of motorists and taxpayers everywhere. I do not accept this. She has come out with this over the last week. There is a tendering process which is about to be completed. I would strongly suggest that the process be suspended with regard to the tolling arrangements on the second river crossing in Waterford and that the merits of barrier-free tolling there be investigated. I do not accept that barrier-free tolling can be done in one part of the country while barrier plazas are provided elsewhere.

Mr. F. Barry

The opening level forecast volumes in Waterford is of the order of 13,000 vehicles per day. The forecast for traffic volumes by 2027 is of the order of 40,000 vehicles per day.

It is about efficiency.

Mr. F. Barry

There is an order of magnitude difference in the levels of traffic we are dealing with. With regard to efficiency, I respectfully direct attention to the Dundalk bypass which is currently carrying 26,000 vehicles per day without delay to those using it, even though it has a modern barrier system. I am confident that what is proposed for Waterford will provide efficient service for the users of the Waterford bypass.

It is a less than satisfactory arrangement. People in Waterford will not buy that, considering what Ms O'Neill just said. She specifically stated that in the interests of motorists and tax payers, we need to move towards barrier-free tolling. That seems to mean barrier-free tolling for people in Dublin, but not for people in Waterford. For ease of living, barrier-free tolling would suit everyone better.

Mr. F. Barry

Fortunately, we currently have an example of a modern toll system in Dundalk working at significantly higher traffic levels than we will see in Waterford. I invite everyone from Waterford with a concern to go there and have a look.

I suggest to Mr. Barry that if people asked these questions 20 years ago when a toll plaza was being planned on the M50, this hearing would not be happening. I suggest very strongly that the merits of barrier-free tolling on the second river crossing be considered. This is a major urban area and it should be considered.

Ms O’Neill

I may have mentioned the last time I was here that the kind of service level agreements in place for all the new toll arrangements are very different in terms of the service standards that must be delivered. The queueing time must also be limited. Every new operator that signs a PPP contract must be in a position to adapt to barrier-free tolling at some point in the future if that is required. The EazyPass arrangement, which gives people the option not to choose to use the barrier, will be there in the case of all the new arrangements. Nobody is forced to go through a barrier.

It should be accommodated for the first day. This is a better system and the officials from the Department have been saying for the last week that this is the way to go. This should be accommodated on the first day as opposed to adapting to barrier-free tolling after the fact. I am sorry, but I just do not buy it. Ms O'Neill has contradicted herself horribly from what she said earlier. It seems a decision has been made, that is it and I am being left to yap on. I really think the Department needs to look at this. If Ms O'Neill is serious about what she said earlier in the meeting, that barrier-free tolling is the best way for motorists and taxpayers, then it should be the best way for motorists and taxpayers all around the country, not just Dublin.

The point has been well made.

Ms O’Neill

I would never treat any Deputy on this committee with disrespect as if he or she was just yapping on. We will take note of the point and reflect on it. There is always a difficulty in balancing the interests of taxpayers and the cost benefit analysis associated with barrier-free tolling, as well as ensuring that people get a good quality of service. We want people to have the same quality of service in respect of how fast they can move around a motorway, be it in Galway, Waterford, Kilcock or Dublin. The problem is that there has been an abysmal level of service for some time on the M50. When I spoke about a move to barrier-free tolling, I was not contradicting myself. A move to barrier-free tolling on the M50 is clearly needed to improve the quality of service there.

The barrier-free tolling will be a form of electronic tolling. It will either be a type of EazyPass or a combination of that and some other system involving cameras recognising number plates. Is that correct?

Mr. F. Barry

Yes.

This directly relates to the Department. We had a report from the Comptroller and Auditor General in here only a short time ago about road safety and speeding cameras. The cameras operate mostly in the greater Dublin area. The figures show that only 50% of the photographs taken were capable of resulting in a prosecution. I presume that the technology that has recently come in for speed cameras will be unsuitable for barrier-free tolling. The track record of cameras involving the Department has been an unmitigated disaster.

If electronic tolling is to be introduced, does that mean tourists will get through free of charge? Their number plates will not be recognisable or chargeable. Cars from Northern Ireland will not be recognisable or chargeable, nor will all the cars from eastern Europe.

Ms O’Neill

I will ask some of my colleagues here to talk about the particular technology in place. The technology in place for Garda speed cameras is very different from the kind of technology that would be used here. The technology we will be using is much more developed and is a combination of two systems.

How did it develop from last year to this year? These speed cameras are recent innovations.

Ms O’Neill

I know that arrangements are being put in place to roll out extensive speed cameras with a new contract, but I take the Deputy's point.

Mr. F. Barry

The number plate recognition works quite well in an environment such as Toronto where there is much snow and more extreme conditions than here. The resolution is actually very good with the available technology. I agree with the Deputy that we must address the issue, but I do not regard is something that we cannot address.

How do we deal with the cars from Northern Ireland and eastern Europe?

Mr. F. Barry

We can capture the number plates. The question of enforcing bills across the Border is a bit beyond——

Speaking on this topic yesterday at another committee in the House, the Revenue Commissioners and the Department of Finance officials stated that they had no idea how many cars were coming in from some of these countries. There is no mechanism. If they are here on a temporary basis, their cars cannot even be taxed. Therefore, there is no possibility of enforcing bills. I think that should be taken into consideration before this route is chosen.

Are there many land acquisitions involved in the upgrade of the M50?

Mr. F. Barry

There is land acquisition involved, although most of the carriageways will be carried within the existing boundaries. There is a land acquisition at the junctions. I am not aware of any along the carriageways, although it could be that there are some bits and pieces——

Will Mr. Barry address the point raised earlier by NTR, given that the company has a concession on the 3.2 km between N4 to Galway and the N3 to Navan? The Department cannot walk on to that without the company's consent. Will the Department have to get a CPO to obtain the right to do work on that stretch of road on land which is already in State ownership because NTR has a 20 year concession on it?

Mr. F. Barry

We will try to work something out with NTR. For commercial issues on previous occasions, we were a long way apart, but NTR has been very co-operative so far in allowing us to progress the design and move forward with the work on that West Link stretch. If NTR follows through on the goodwill expressed in its discussions, we will be able to reach an accommodation.

Without having to get a CPO.

Mr. F. Barry

Yes.

However, that CPO may have to be invoked.

Mr. F. Barry

I do not want to make what sounds like a threat.

I just want to figure out the general principle. When the NRA builds roads through County Laois or any other county, it goes through the CPO process. Why would there potentially be a softly, softly approach to this landowner in regard to this concession?

Mr. F. Barry

It is because we already own the land.

But the NRA cannot go near the land because he has a concession on it.

Mr. F. Barry

With respect, the compulsory purchase of land where the State does not have already have the land in its possession for the purposes of road-building is a different situation to the one we are in with regard to——

Is there a legal framework to allow the NRA reacquire this concession if NTR does not sell it back, given that Mr. Barry has just said the normal CPO requirements would not apply in this case? Is legislation in place to allow the NRA to do this if it does not have co-operation?

Mr. F. Barry

We believe we have statutory rights to enter and do work.

Is that covered in the agreement?

Mr. F. Barry

No, it is outside the agreement.

Mr. Barry might let us know his basis for stating that.

I wish to move on to the agreement the NRA has with NTR. Two issues have arisen since Mr. Barry began his contribution some minutes ago. The first was the question of compensation for the buyout of the toll at the West Link. Mr. Barry stated there was a fundamental difference in that the NRA wants the buyout based on the existing toll paid per annum in accordance with the consumer price index.

Mr. F. Barry

Yes.

However, the NRA stated — which was not stated to the committee earlier — that NTR disagreed and suggested the buyout would be based on the economic value of the toll, which is a different concept entirely. Mr. Barry went on to say that the contract did not specify how the compensation figure was to be arrived at.

Mr. F. Barry

To clarify, the contract specifies what is to happen in the event of tolls being set at zero. The contract did not address negotiations that might take place of the type in which we were engaged with NTR. That allowed NTR to put forward an argument — I have no objection to NTR putting it forward — that it should get what it regarded as the economic value of the toll.

In the context of the current proposals, whereby we will invoke the zero toll clause, the clause is reasonably clear as to what will happen.

Mr. Barry's second point was that he felt NTR was in breach of contractual arrangements regarding the facility to collect tolls, having regard to traffic volumes. He stated that the contract was so vague as to be unenforceable. Was that his exact meaning?

Mr. F. Barry

Yes.

Who was the legal adviser to the State who presided over the drawing up of a contract that was so vague as to be unenforceable?

Mr. F. Barry

It was 1987. I have no idea.

Would it have been an office of the State or a private legal firm?

Mr. F. Barry

It was the local authority. I have no idea who advised the State.

Perhaps it was George Redmond.

It would have been done through a local authority.

Mr. F. Barry

The original contract was done through Dublin County Council.

Mr. Barry can understand our difficulty given that the NRA's contract is so vague as to be unenforceable. That does not inspire confidence on this side of the room or from the general public as to how the NRA might deal with its next contract. He can understand that we are once bitten, twice shy and that we have a difficulty.

Mr. F. Barry

I understand that. We have provided a copy of the model contract we are using on the current PPP schemes to the Oireachtas Library and, therefore, it is available to the committee.

To take up Deputy Fleming's point about the inadequacy and unenforceabilty of the clause in the contract in question, am I correct in recalling that the clause is replicated in the agreement for the second bridge which opened in 2003, and that this was then the responsibility of the NRA, not the local authority?

Mr. F. Barry

Yes, but the negotiations on the second bridge did not afford us the opportunity to renegotiate everything that was in the original agreement. It was an agreement to build the extension to the bridge or, rather, to add the second bridge to the first.

The NRA did not reopen the issue at that point, when it had the responsibility and opportunity to do so, and despite its belief that the clause was inadequate and unenforceable. To make adequate provision to collect tolls is fundamental in the contract.

Mr. F. Barry

With respect, the contract, in our view — it is a view shared by the committee — is deficient in many respects, not just in regard to that particular clause. However, it was not open to us to cause NTR to renegotiate all its fundamental rights etc., in the contract.

With regard to the second bridge, we endeavoured to come to a commercial arrangement that was acceptable on our side and to which NTR would sign up in order to provide that bridge. It was never intended as a fundamental renegotiation of the entire contract.

The Secretary General of the Department of Transport, Ms O'Neill, in contrast to her last appearance before the committee, appears on a good day because, on this intractable problem of congestion on the M50, over the past two or three days in the Dáil and again in discussion with NTR just before Ms O'Neill appeared, we have had the benefit of considerable anger release therapy. We are exhausted talking about the matter at this stage so Ms O'Neill has come at the right time.

Mr. Barry, I do not get it. The NRA would like to have a free hand on the M50 — obviously, the NRA would like a free hand to determine policy with regard to tolling and everything else. However, the NRA has a dog in the manger in NTR, which has a contract. NTR is saying to the NRA that it will not hand over the golden goose without the NRA paying it a fortune. The Minister told us that there will be a toll-free situation in two years but the NRA does not have an agreement with NTR at this stage. As I understand it, the talks have ended. Where does that leave us?

Mr. F. Barry

The barriered tolling arrangement provided by NTR at present will be suspended at that time and a new toll operator will be engaged solely as a toll operator, not as a commercial beneficiary from the toll revenue, which will allow the combination of the Government and the NRA more flexibility in the management of the road system. That will be put in place in the intervening period.

Does this not presume that the NRA has arrived at an agreement with NTR?

Mr. F. Barry

We are entitled to invoke the zero tolling clause without agreement. The State is entitled for various reasons to require NTR to set the toll to zero and it provides for compensation to NTR in those circumstances.

Therefore, as of now, it is the intention of the NRA that the formula that Mr. Jim Barry of NTR related to us earlier will come into play.

Mr. F. Barry

Yes, we have no choice in the matter. We are legally bound to implement that formula.

Is it Mr. Barry's assessment that, as related by the Comptroller and Auditor General, approximately €40 million per year will be paid to NTR?

Mr. F. Barry

That is correct. The figure was discussed earlier and the estimate of the value in 2005 was approximately €40 million. It would be somewhat higher in 2008 through a combination of inflation and the traffic growth that will have occurred by that time.

Therefore NTR will walk away with €600 million of taxpayer's or public funds.

Mr. F. Barry

NTR is already entitled to and receives that money. There is nothing I can do and I am not aware of anything anybody else could do, if anybody wanted to, to deprive NTR of its contractual rights.

The NRA might appeal to its sense of public-spiritedness, perhaps.

Mr. F. Barry

I will try that.

I would not spend too long at it.

What is Mr. Barry's view on the outer orbital route referred to by the Taoiseach in recent days? Mr. Barry represents the NRA. Does the NRA have any interface with other public authorities, particularly public transport authorities? As we know, one of the reasons we have all these problems is the horrific public transport infrastructure. The NRA is trying to build a motorway to Navan but there is the possibility of a rail link being developed if the investment is provided. Does the NRA view itself as having any role in pushing for public transport?

Mr. F. Barry

In common with most people, I recognise that heavy investment in public transport is required. I have yet to meet anyone who does not in general agree with that position. The NRA does not have a formal advocacy position in this regard. It is not part of our brief to canvass on behalf of Bus Éireann or the Railway Procurement Agency, for example. However, in any discussions I have, in public or private, with anybody who asks for my view, I express my support for increased investment in public transport.

An integrated approach would involve the NRA having discussions with the RPA, the Government and so on.

Mr. F. Barry

The Department of Transport provides that integration between the different agencies under its aegis.

However, the roads lobby wins out heavily every time in terms of the amount of investment.

Mr. F. Barry

On behalf of the roads sector, we need the investment we are getting to continue providing roads. It is not for me to comment on Government policy in regard to whether more money should be put into other sectors. We get good value for the public in the road projects we manage. We are working our way towards a far better road network but this costs money. The level of funding we receive is a matter for the Government and it is not for us to say what it should be.

In response to Deputy Higgins's earlier question, the outer orbital route is an example of where we co-operate with other agencies. For instance, we will talk to the Dublin Transportation Office as part of that. We also work with local authorities and the DTO in regard to quality bus corridors and other issues.

What is the NRA's relationship or interaction with local authorities on major projects such as the Ennis bypass or the projected Castleblaney bypass? What is the role of the NRA in this regard?

Mr. F. Barry

Our role in this regard is defined by the requirement of the legislation to operate project execution through the local authorities, except in unusual circumstances. They are the road authorities. The regional design offices set up throughout the country to bring together groups of local authorities in the early stages of major road works development projects work closely with our inspectors and project managers. It is a team effort. We get projects to the point of being ready for tender and, providing we are in a position to make the funding available — we make an annual announcement as to what will come forward for that year — the local authorities issue the tender documents, receive the bids and make a recommendation to us as to which tender should be selected.

Does the NRA have a major supervisory role, for example, in the execution of the contracts?

Mr. F. Barry

The primary execution comes from the local authorities. We become involved when variations that might have financial implications or technical deviations such as a new type of bridge are proposed.

The reason I ask is that major infrastructural road projects were built by Gama Construction on the foot of grossly exploited immigrant labour. When I and others raised this issue, I did not hear the NRA being proactive on the subject. That company was subsequently gifted the Castleblaney project. Is the NRA concerned about this issue? Has it had any discussions with local authorities to ensure this type of exploitation is rooted out? On even larger projects run directly by the NRA, there is concern about practices that may be implemented by subcontractors and others. Is the NRA taking measures to root out exploitation of migrant building workers?

Mr. F. Barry

In regard to the Castleblaney project, where Gama Construction was recommended for the work and has been awarded the contract, we discussed the previous behaviour of that company. Not only did it give us assurances but the local authority was satisfied arrangements were in place to ensure whatever may or not have happened in the past, the work in Castleblaney would be done in accordance with acceptable norms in Ireland.

Mr. Barry indicated that the new single-point barrier-free toll, which is due to open some time in 2008 when phase 1 of the M50 upgrade is completed, will be governed by public procurement policy. Does this mean National Toll Roads Limited will be entitled to bid for that project?

Mr. F. Barry

Yes. There will be a two-stage process. The first stage is a pre-qualification process through which companies satisfy the NRA as to their financial stability and technical ability. NTR Limited will be entitled to put itself forward in this phase and if it gets through that hoop, will be entitled to bid for the work. If it provides the most commercially advantageous offer with the appropriate level of service, it will be entitled to win the work.

Is NTR Limited the owner or merely the concession-holder of the current toll booth on the M50?

Mr. F. Barry

I apologise, I do not know.

Is there a scenario where the NRA will pay NTR Limited €40 million a year to stand down its toll booth after which there will be a public procurement procedure to which it may apply? Will the State seek to maintain its share of revenue from the current level of tolls? Is that part of the plan?

Mr. F. Barry

The plan is that the entire toll revenue will come to the State. The NRA will pay NTR Limited and the contractor who builds the road extension.

Does all of this mean it could cost much more to maintain the current levels? Mr. Barry said there will be a single-point toll. In regard to demand management, I understand the NRA was considering open tolling in future in respect of the entirety of the road. What are the NRA's medium-term and long-term plans in regard to demand management? Is "demand management" another way of saying "pricing"? Will the demand be managed at only one point, as in the new toll plaza, or will the existing NTR Limited toll plaza be recycled?

Mr. F. Barry

In regard to the existing NTR Limited plaza, if the State invokes the contract provision setting tolling on the West Link section of the road to zero toll, the NRA will be precluded from putting another company's toll facility on that section to collect a toll.

What if NTR Limited wins the competition?

Mr. F. Barry

While I have said we will specify the exact location for the new toll barrier following the study to be undertaken later this year, the location we specify will not be on the West Link bridge because we are precluded from putting in tolling there in parallel with setting it to zero tolling.

As to what might be needed for demand management in the future, the purpose of this study is to devise appropriate options to address that.

Does the NRA not rule out multi-point tolling along the length of the road?

Mr. F. Barry

For the same reason I have declined to speculate as to where the barrier-free toll may be, if I respond by eliminating implausible suggestions, through an entire series of questions I am led into speculating on what will happen. It is not right for me to do that. We should undertake the study and make the recommendations, which I am sure the Government will publish, and everybody can form a view. I am sure the Government will make them public anyway and then everyone will be able to view them.

Ms O’Neill

I wish to clarify a point that may be behind Deputy Burton's question concerning the sense that National Toll Roads Limited could win on the double in this matter. A couple of points are worth making. No matter what we do, the sum to be paid to National Toll Roads Limited in the coming years must be paid anyway. In the scenario described by Mr. Fred Barry, that amount will be capped at a particular level in the future by invoking the clause in the contract. The transitional arrangements from the existing boothed barrier toll arrangements at the M50 to a barrier-free arrangement must be paid for. While this could have been done by negotiating with National Toll Roads Limited and paying it to do the work, there was never any question that it would simply switch from running a toll with a barrier to being barrier-free without charging an additional cost.

Essentially, in Mr. Barry's scenario, the National Roads Authority, NRA, will capture all the index-linked gross toll revenue, based on the current €1.80 charge, and will use it in the most cost efficient way, both to pay National Toll Roads Limited what it is entitled to under the contract and to pay for the move to barrier-free tolling. From the State's perspective, in terms of the flexibility identified by a number of members, this certainly appears to be the most efficient way to minimise the costs and, much more importantly, to conduct a market test as to what is the most efficient way of installing barrier-free tolling.

As for barrier-free tolling, Ms O'Neill mentioned changes in legislation. I understand that one of the difficult points in her discussions and negotiations with National Toll Roads Limited was the question as to what would happen in respect of vehicles which could escape from paying. Is it correct that the Department gave some consideration to imposing penalty points for failing to honour the barrier-free structure?

Ms O’Neill

In general, penalty points are for safety matters. Obviously, the question of the legislative arrangements to be put in place is a policy issue for the Government. We are in discussions with National Toll Roads Limited in respect of the draft heads of a Bill that will be required to give the most effective powers to the operator, the Garda and others to pursue those who do not pay the tolls. This includes the issue of people coming from abroad or from Northern Ireland, which must also be examined. In that context and as I understand it, there will be arrangements as part of this system for people who fly into Dublin Airport and hire a car or who come across in a car ferry or come down from the North to be able to pay as occasional users of the toll. However, the ability to pursue people for non-payment will require legislation which we are drafting at present in consultation with the NRA.

By invoking the zero tolling charge, we can calculate the payment to National Toll Roads Limited, which will be index-linked. However, the rate of increase of motor vehicles on the road is greater. By taking this step, is there a possibility of an economic net gain to the State without affecting the rate charged because of the natural growth in the numbers? We will never hit the 80% figure cited in the amended agreement. Has it been viewed in that way?

Ms O’Neill

Does the Deputy mean in terms of the possibility of a return to the State?

Ms O’Neill

The critical issue at present is to ensure that the revenue from the M50 toll is used to provide a good quality of service to people who use the M50. That is the priority. While it is ultimately a matter for the Government as to what to do with the proceeds of any toll, the priority is to turn it into a quality service for users.

Will Mr. Barry reiterate the point in respect of the specific condition in the planning that refers to the survey?

Mr. F. Barry

I will quote from the permission: "A scheme of specific demand management measures for the M50 motorway corridor shall be published by the relevant road authorities, not later than three years after the M50 Motorway Upgrade Scheme has been completed". The reason given is "to protect the traffic capacity provided by the M50 Motorway Upgrade Scheme over its design life".

Would this have to be done by 2013 or thereabouts?

Mr. F. Barry

At the latest, yes. However, as I stated previously, knowing that this must be done, it would be remiss of us not to at least make accommodations for it in our current work.

We understand the compensation which the NRA will be obliged to pay when it sets the toll to zero. It will be approximately €40 million a year in 2005 terms and will be index-linked. Did the NRA include the concept of embedded economic value in its discussions with National Toll Roads?

Mr. F. Barry

We had quite specific commercial proposals behind it.

What would it cost? Would it be paid in a lump sum or in instalments? How would it work out?

Mr. F. Barry

I am not at liberty to provide the committee with details of the commercial correspondence between the NRA and National Toll Roads Limited. We are bound by a confidentiality agreement. As I stated, I am quite open to providing it for the Comptroller and Auditor General who is entitled to examine our documentation. Perhaps that might be an avenue.

Can Mr. Barry provide ballpark figures?

Mr. F. Barry

No.

Very well. Perhaps National Toll Roads Limited might correspond with the committee and provide it with the breakdown on that matter.

A number of committee members have expressed an interest in the tragic accident involving the late Ms Gallagher in Mayo on 22 December 2004. It has been raised with the Department and Ms O'Neill has stated that she is willing to comment.

Ms O’Neill

I am. I will make a few short points. Aisling Gallagher died in a tragic accident in December 2004. My current understanding is that the Garda has submitted a file to the Director of Public Prosecutions, DPP, arising from its investigation of the accident and is awaiting a decision by the DPP. Recently, the Health and Safety Authority decided to carry out an investigation of the health and safety aspects of the pavement improvement works undertaken by Mayo County Council at the site of the accident.

As for the issues raised in the correspondence from Mr. and Mrs. Gallagher regarding the standards applicable to road surfacing works and the enforcement of same, in general, the specification of standards for roadworks, including road surfacing and resurfacing for different types of surfaces, are matters for the NRA. I understand they have been set out by the NRA in its specifications for roadworks and its design manual for roads and bridges. I am informed by the NRA, representatives of which are present, that the standards and requirements in respect of road surfacing and resurfacing have been further elaborated upon in a number of circulars in recent years, namely, in June 2002, July 2002 and May 2005. These circulars set out best practice in the use of dense bitumen macadam on national roads.

For those who may not be familiar with the issue, it concerns the need, when one uses dense bitumen macadam, to top-dress it as rapidly as possibly and not to leave it without top-dressing over the winter season when the skid resistance on the surface can deteriorate. In this case, there appears to be a clear issue of concern that Mayo County Council had left the surface without a top dressing for a period. I cannot comment on the extent to which that was a contributory factor in the accident, which is a matter for the Garda inquiry and for the HSA, which is concerned with that aspect of the case, as well as with the position of signage at roadworks sites.

Again, a traffic sign manual is published by the Department under the Road Traffic Acts, which sets out guidance on the provision and use of traffic signs generally, including the signs recommended for use at roadworks. Compliance with the requirements of the manual is a matter for the local authority. Failure to comply with the requirements of the traffic sign manual is not an offence, per se. Compliance with the national roadworks specification and the guidance on health and safety regulations are also matters for the local authority.

I appreciate the depth of passion and concern expressed by the parents of Aisling Gallagher concerning the circumstances in which she died as well as the service they have done in raising this issue for public debate. It is incumbent on the agencies of the Department as well as the Department itself, where it has a direct role, to be clear as to what the requirements should be in those circumstances and to advise local authorities on those requirements. However, as Mr. Barry mentioned, the actual execution of roadworks is a matter for the local authorities under the Road Traffic Acts. There is a major onus on the local authorities to ensure they are compliant with the guidance and legislation. Even where no sanctions are involved, it is very important for the local authorities take seriously their responsibility to carry out works in accordance with the guidance.

The standard position across the board in respect of road accidents is that the Garda is responsible for investigating such accidents and their causes and deciding whether prosecutions are warranted. I am glad the Health and Safety Authority has decided to carry out an investigation because, as the road surface had not been finalised, it was still a work site. I do not think the authority had decided to carry out an investigation at the time the Chairman sent the correspondence to me.

We are aware of the issues and are ensuring that our guidance to local authorities and others involved in roadworks is as up to date as possible. However, at the end of the day, responsibility for adhering to this guidance rests with local authorities. Elected members and officials in local authorities are responsible for ensuring they comply with this guidance.

I will go through it again and point out areas on which we should focus. It is a fact that dense bitumen tarmacadam is a dangerous surface unless it is top-dressed.

Mr. F. Barry

It can be a dangerous surface unless it is top-dressed.

Ms O’Neill

It is important to state that.

Best practice is to hot press it and it is capable of being top-dressed with tar and chippings. This was not carried out in County Mayo because it is difficult to top dress with tar and chippings in winter because of factors like high levels of moisture. Therefore, the decision was deferred until the following June. The accident occurred on 22 December 2004. In January 2005, the local authority, in consultation with the NRA, reviewed the position and decided to top-dress the road with heated bitumen. I do not recall the technical term for the substance used. The NRA moved to make the road safer after the accident. Did a parallel situation occur on the road where the Navan bus crash took place and did the same set of issues in respect of the road surface arise?

Ms O’Neill

As the Navan road is a non-national road it does not come within the scope of the NRA or the Department. A number of different investigations into the crash are under way. I understand that a file has also been sent to the Director of Public Prosecutions, DPP, in respect of this case. The Health and Safety Authority is also investigating this accident. I am not privy to the outcome of this investigation. Clearly, as the case involved one of the Department's agencies, Bus Éireann, we are examining it from all angles. Until such time as we have the result of the findings, I cannot comment on the case.

I understand from the correspondence from Mr. Gallagher that there was an issue surrounding the involvement of dense bitumen tarmacadam. I understand that it is recognised that dense bitumen tarmacadam is part of the process of resurfacing a road and that it must be allowed to sit for a short period. The question arises as to how long it can be safely left to sit. I understand that the road in Mayo was resurfaced very close to winter and that it was then impossible to leave the top surface in those weather conditions.

The question relates to speed and this is where our traffic signs manual comes into play. It concerns speed limits because, as Mr. Barry noted, dense bitumen tarmacadam is dangerous, particularly when vehicles travel at speed. Under the Road Traffic Acts, speed limits must be observed in the vicinity of roadworks, particularly due to the reason I have just described.

It would be more practical to erect speed signs.

Ms O’Neill

This is true. Due to the fact that it was not one of our roads, I cannot comment on the specifics of the case. It would be inappropriate for me to comment before the outcome of the investigation.

We will leave the matter for the time being. It is a very tragic and sensitive issue.

Ms O’Neill

Yes, it is.

I tabled a parliamentary question this week, to which I have not yet received a reply, asking whether any consideration has been given to involving the Health and Safety Authority in all investigations. I have a background in industrial safety and have been very concerned for a number of years about the investigation of accidents. They are treated in isolation and the ethos of investigations is legalistic. It is concerned with who is responsible for the accident and any ensuing court case. The preventative element is almost non-existent. I believe that health and safety should automatically be a part of investigations into fatalities or dangerous incidents. There would still be Garda investigations into accidents but prevention of accidents would also play a role in investigations. It would involve learning about the cause of the accident but it would not be done in isolation.

Such an approach has been used in industrial safety investigations in sectors such as the construction sector. I understand that there were 21 fatalities in the construction sector last year. Each case is investigated by professionals who are equipped for full accident investigation but who also aim to prevent any recurrence of the accident.

Ms O’Neill

As the Deputy stated, it is a policy matter and it would not be appropriate for me to comment on it. It is very important that we do not always look to somebody other than those directly responsible for organising road improvements or roadworks when it comes to taking responsibility. It is also extremely important that we do not do anything to take the spotlight of the responsibility off local authorities and their agents to look after these roadworks, of which there are many. For example, this repavement is very small-scale in terms of the overall spend of the NRA and would be part of a wide range of road improvements and maintenance contracts over the years. Responsibility for ensuring guidelines are followed must rest with local authorities and their agents.

That is a different issue. I have no complaint about the idea of providing safe conditions and road surfaces and responsibility for this must remain with local authorities. I am talking about when dangerous incidents, not merely fatalities, take place. One case I investigated did not involve a fatality but the investigation proceeded as if a fatality had taken place. It is the only way to prevent dangerous incidents before fatalities take place.

Everybody is guessing and playing the numbers game. I cannot accept a situation where, for example, it is decided to cut the rate by 12% next year. I subscribe to the idea of zero tolerance in this area. We should examine what took place and avoiding a recurrence. I would try to find some place for this message.

Mr. F. Barry

I am very familiar with the work of the Health and Safety Authority in the construction sector. The authority regularly investigates construction accidents, even those which do not involve fatalities. In my previous job as manager of a large engineering and construction firm, I had an excellent working relationship with the authority. Its support over the years in improving my firm's safety performance was excellent. The authority's practice of involving itself in both dangerous occurrences and fatalities in the building industry is helping to lift everyone's game. I agree with Deputy Dennehy that there are lessons to be learned that go beyond one particular situation. If everyone involved heeds these lessons, it will greatly improve matters. I support the principle enunciated by Deputy Dennehy.

I would like to see Mr. Barry promoting this idea in the right area because everyone is looking after their own corner. The coroner and the Garda carry out their functions but there is no exchange of views. Nobody is concerned about preventing recurrences.

I thank Mr. Fred Barry and his staff for providing detailed replies to a series of questions which we forwarded to them regarding the tragic death of Aisling Gallagher. This is included in the correspondence. The replies we received were very satisfactory. Could Mr. Murphy send me a briefing note on the public-private partnership on the Limerick tunnel consistent with commercial considerations and provide the fullest information possible?

Mr. Murphy

Yes.

A penalty point offence will be introduced for driving on the hard shoulder. Does this mean that the ubiquitous tractor driver and the man in the JCB can no longer move in on the hard shoulder and hold the rest of us up for a week, rather than for half a day?

Ms O’Neill

I will need to clarify that matter for the Chairman and get back to him. I must examine the precise nature of the penalty involved. It is designed to discourage people from consistently driving on the hard shoulder who are not availing of it for emergency purposes.

As announced, driving on the hard shoulder garners one penalty point.

Ms O’Neill

Yes.

One would not realise it in Dublin but this is a major point of discussion down the country. Will we be behind the tractor or the JCB all day long and will they incur a penalty point if they move in?

Ms O’Neill

I will clarify that for the Chairman with pleasure and get back to him.

On the road from Limerick to Rathkeale, a tractor driver would lose his licence in one day if he needed to move in every time he held up traffic.

With the new range of penalty points and if a tractor driver passes the level at which he or she loses a licence, has the Department taken legal advice as to the constitutionality and proportionality of the cumulative effect of the penalty resulting in this loss and the loss of livelihoods?

Ms O’Neill

I would need to re-examine the specific situation but the development of the penalty points regime was subject to considerable discussion and legal advice. We never enact legislation without getting the approval of the Attorney General's office. An issue that the Attorney General always examines is whether legislation is proportional and constitutional.

The Deputy is aware of the way the penalty points regime operates in practice. People have the option of taking a smaller fine and a small number of penalty points or they can go to court to vindicate their positions. The removal of a licence in situations where people are serial offenders in road traffic law is a matter that would have been considered before the penalty points regime was introduced. It has operated without a successful legal challenge against it since the initial points were introduced.

Inevitably in this country, whenever any new arrangement or extension of road traffic law — which, after all, is in the interests of road safety — is introduced, one finds that people attempt to mount challenges against it. We as a Department would be very robust in attempting to introduce and implement arrangements on good legal advice that are designed to save lives. We have all witnessed what has happened in road safety recently. We are very concerned.

A number of the new penalty points relate to traffic management offences, such as being in a yellow box. I am not aware of much concern about this being the cause of road deaths.

A number of similar offences are to be addressed. For example, while it is unspecified, people tailgating or being too close to the next vehicle can be extremely dangerous but in urban traffic situations there is a significant lack of clarity as to what constitutes an offence. One can get stuck in a traffic jam in the morning. For urban motorists in very slow moving traffic, the accumulation of penalty points could result in the loss of people's livelihoods. Has the Department conducted any studies as to how these measures are likely to be implemented?

Ms O’Neill

The legislation that gave effect to the penalty points offences was introduced several years ago in the Road Traffic Act 2002. All of those issues would have been debated and considered rigorously at the time. The focus of penalty points offences is on road safety issues. For example, the regime is not normally used in respect of parking offences or not paying tolls.

In the preparation of the legislation, we would have consulted with the Garda Síochána why these offences have the potential to be serious contributors from a road safety point of view. Everybody understands the conceptual difference between somebody driving quite close to someone else in slow moving traffic and somebody driving close to the rear end of a car on a motorway or in fast moving traffic. One must expect that gardaí will use common sense in their interpretation of how these points are applied. They are designed to give gardaí an armoury in terms of a range of offences, particularly in cases of people causing very serious difficulties by their driving behaviours. The points are for a range of offences rather than being limited to a small number.

In the coming months, we will examine the type of advertising promotional campaign and the like that we must place to advise and inform people. Clearly, one does not want people to be unnecessarily worried about small matters but it is important that this range of offences, which were enacted by the Oireachtas some years ago, are capable of being implemented. The Garda Síochána will be in a position in April to implement them. Our belief is that these points comprise an important contribution to road safety, which is a serious challenge for us at present.

Is it agreed to dispose of Vote 32 by noting it and chapter 13.1? Agreed. The agenda for our meeting of Thursday, 9 February 2006 is the 2004 annual report of the Comptroller and Auditor General and Appropriation Accounts, Vote 10 — Office of Public Works, chapter 3.1 — agreement on the use of Garda radio masts.

The witnesses withdrew.

The committee adjourned at 3.45 p.m. until 11 a.m. on Thursday, 9 February 2006.

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