I move that the Bill be now read a Second Time. This Bill empowers Bord na Móna to borrow for capital purposes with the consent of the Minister for Industry and Commerce and the Minister for Finance by the creation of its own stock—stock which may be secured on the property of the Bord and which may be under-written and guaranteed by the Minister for Finance and which will rank as trustee securities. The Bill empowers the board to raise money in that way to a total of £2,000,000 but it is not proposed to alter the limit of £14,000,000 which was authorised for turf development purposes under the Turf Development Acts of 1946 and 1953.
Generally speaking, it can be said that the provisions made in this Bill in respect of Bord na Móna are similar to those made in 1954 for the E.S.B. In that year, the E.S.B. was authorised to borrow for capital purposes by the issue of stock in a similar way. On that occasion I put forward the considerations which justified allowing the E.S.B. to have direct access to the capital market and the same considerations apply in respect of Bord na Móna. The introduction of this Bill, therefore, in a sense represents a further development of the policy initiated by the E.S.B. Act, 1954.
This Bill was prepared in the Department of Industry and Commerce during the time of the previous Government but it represents a further development of a policy with which I had some association and I want to make it clear that I am in complete agreement with that development. I mentioned that under the earlier Turf Development Acts authority was given by the Dáil to expend through Bord na Móna for turf development purposes capital sums to the limit of £14,000,000. Of the expenditure authorised by these Acts, £10,500,000 has already occurred and there is now unused authority available to the board of £3,500,000—£3.4 million to be precise—which will be sufficient, so far as we can see at present, to cover the board's estimated requirements for a few years. At the end of that time, new legislation will be required but it is perhaps not desirable to avail of this Bill to raise the limit because the Dáil may wish to have and should, I think, seek to have an opportunity of reconsidering the position when the £14,000,000 expenditure stage has been passed.
The total estimated cost of the programmes which the board was authorised by the previous Acts to undertake was £20,000,000. That expenditure was related to a turf development programme which aimed at the realisation of certain production targets by the year 1960. The targets fixed for Bord na Móna under these earlier Acts, and which the £20,000,000 was provided to enable them to realise, involved the production of 900,000 tons of sod peat by 1960, 2,500,000 tons of milled peat, 50,000 tons of turf briquettes which the Lullymore factory is capable of producing, and providing for expanding production of peat moss as the market for it developed. These targets, both for sod turf and milled peat were fixed in relation to an E.S.B. programme which at that time contemplated installed capacity by 1961 of 1,022 mwts. The programme for the construction of new generating capacity by the E.S.B., to which this turf development programme relates, was published to the Dáil early in 1954 and was approved of by the Dáil at that time. By early last year it had become clear that the growth of demand for electric power here was contracting.
Prior to 1955 the demand for current increased at an average annual rate of 13 per cent., that is, the amount of current required to meet the demand in each year was 13 per cent. higher than in the previous year, on the average. The E.S.B. programme for the construction of new generating stations had to be based on the assumption that the expansion of demand would continue at that rate. It became clear towards the end of 1955 or early 1956 that the rate of growth in the demand for current had fallen off. Indeed, in 1956, demand for current exceeded the demand for the previous year by only 7 per cent. The E.S.B. therefore decided to revise its programme for the construction of new generating stations. Its present programme, as revised, contemplates having installed capacity by 1961 of 728 mw. as compared with 1,022 mw. visualised in the 1954 programme. That curtailment of the E.S.B.'s construction programme involved a revision of the Bord na Móna programme as well.
A large part of the sod peat production and all of the milled peat production was designed to be used in power stations. The alterations in the E.S.B. programme involved the deletion from it of new stations or the reduction in the size and capacity of other stations to an extent which meant a considerable diminution in the outlet that would be available for milled peat by 1960. Of the new generating capacity dropped from the E.S.B.'s programme, 180 mw. was intended to be based upon milled peat. The curtailment of the programme affected all the bogs designed for the production of milled peat.
I should perhaps make it clear at this stage that I am not accepting that the growth in the demand for power will not expand again as, I hope, industrial development is accelerated, nor that the E.S.B.'s new generation programme should be based upon the 1955-56 experience. I have not yet had an opportunity of going into the matter in the detail I would wish or of considering what further revision and extension of the E.S.B. programme may be required if the growth in the demand for power should recover. It might be optimistic to hope that we could get back to the same rate of growth as was experienced before 1955 but some improvement on 1956 may, I think, with some confidence be anticipated. If there is an improvement to be expected then it is obviously necessary to have a look at the E.S.B. programme because we could not contemplate a situation arising in which possible industrial developments might have to be delayed or might be limited by any delay in supplying them with electric power.
The particulars which I am now able to give the House relate to the E.S.B.'s programme which is now authorised. As I have informed the House the programme will be reconsidered and it may be that I will have another opportunity of giving the House some further information regarding it because, apart altogether from any question of revising the programme, certain legislation affecting the E.S.B. must be introduced in the course of the year. I have mentioned that when the 1953 Turf Development Act was being passed the targets contemplated for 1960, that is the outputs it was intended that Bord na Móna should be able to achieve in 1960, were 900,000 tons of sod turf and 2,500,000 tons of milled turf.
The present targets for 1960 involved a slight increase in the output of sod turf in that year. As against the 900,000 tons which it was intended they should by then produce, it is now to be 960,000 tons. That arises by reason of the fact that the power stations which were designed to use sod turf, and in connection with which these sod turf bogs were developed, have proved to be substantially more efficient than was anticipated when they were designed. Their output is greater and the requirements of fuel are larger than was originally contemplated. Consequently, Bord na Móna has to keep pace with that improvement in the performance of these stations and meet their full turf requirements which involves that slight increase by 1960 over the target originally set for that year.
Of the 960,000 tons of sod turf which the board will be producing by 1960 more than half, 500,000 tons or over, will go to the generating stations at Portarlington, Allenwood and Lanes boro'.
The big contraction which is now contemplated in Bord na Móna's production by 1960 will take place in milled peat. As against 2,500,000 tons which it was estimated would be required by that year for the new E.S.B. stations, the present figure is 1,300,000 tons. As I have said, if the demand for power expands-that will depend on the rate at which the national economy develops-the rate of milled peat production will expand also, but I do not think it would now be practicable to aim in any circumstances at the achievement of the output of 2,500,000 tons of milled peat contemplated for 1960. I do not think that target could now be realised, but I certainly hope that circumstances will make it necessary to expand the existing target of 1,300,000 tons.
The contribution which Bord na Móna can make to our electric energy requirements is, therefore, in part postponed. In the meantime we are continuing to depend heavily on imported fuel to meet these requirements. One of the matters that I think is worthy of examination is the economy of bringing the new milled peat-fired stations into production earlier than at present contemplated even if it might mean the reduced use—for a time—of existing stations designed to use imported fuel.
That is a matter of arithmetic and I do not think anybody would contemplate at the present time incurring capital expenditure which was not obviously needed in that field. Apart from the advantages and employment which would arise if we could justify bringing these milled peat stations which were dropped from the programme back into the programme again, there would be a clear gain in present circumstances if we could reduce or avoid the importation of fuel for the production of power. I have made it clear that that is a matter for re-examination in my view. I do not want to suggest that any conclusions have been reached.
There is, however, another development of which I think the House already has some knowledge and that is towards the expansion of the production of turf briquettes. In view of the alteration in the position of Bord na Móna which became necessary when the E.S.B. decided it was necessary to reduce its programme, the board put forward to the Government of the time, in May of last year, proposals for the establishment of additional briquetting capacity. The board has, of course, been producing turf briquettes at Lullymore since 1940. Indeed before 1940 they were produced at Lullymore by a private company and there has been a steady growth in the demand for them. They have secured public favour, and with the increasing cost of imported coal that favour becomes greater. The plant at Lullymore has a maximum capacity of 50,000 tons a year and it is now working and will continue to work to that capacity, but that output is very far short of the potential demand for these briquettes.
That demand has been growing in volume as the cost of coal rose. The possibility of expanding production of briquettes was considered previously when I was Minister for Industry and Commerce and I received a report from Bord na Móna early in 1954 which seemed to show that the capital cost of a new factory for the production of briquettes would be so high as to make the briquettes uneconomic if sold at a price which would be economic at the then price of coal.
That situation, I think, persisted during the whole of 1954 and, certainly during that period, as far as I can ascertain, it was the view of the board that the possibility of producing briquettes here in greater volume and selling them at an economic price did not exist. They changed their mind in August, 1955. By then the price of coal had risen to a point at which Bord na Móna considered that it would be possible to establish a new plant for their production and sell them at a price which would be so competitive with coal as to ensure a ready sale for them and in that month the board proposed to reconsider the position in view of the new circumstances that had arisen, that is to say, the higher price of coal which quite obviously was going to persist.
At that time, however-and it is necessary that this point should be understood-the expectation that it would be necessary to curtail the E.S.B.'s programme had not arisen. At August, 1955, the E.S.B.'s 1954 programme stood unchanged and an examination of the position showed that increased briquette production could be undertaken only by cancelling one of the milled peat stations in that programme, involving its replacement, as it was then considered, by an oil-burning station. That proposal was turned down by my predecessor and on the assumption of the time, particularly the assumption that the 1954 E.S.B. programme was to be completed as planned, he took, I think, the right decision but, by March, 1956, the position had changed. The E.S.B. had then decided that it was necessary to cut down considerably upon the 1954 generation programme and that revision involved the curtailment of milled peat production for power purposes.
In the circumstances, Bord na Móna revived its proposal for the establishment of a new briquetting factory and finally put it forward again in May, 1956. After some consideration of the wisdom of having one factory of substantial capacity or two factories of lesser capacity, it was finally proposed by the board that two factories should be established, one at Derrygreena in Offaly and the other at Boora. That decision was linked to the fact that the power station which it had been originally intended to establish at Derrygreena bog had been reduced in the E.S.B. programme from a capacity of 80 megawatts to 40 megawatts and the station which it was planned to establish on the Boora bog had been reduced from 100 megawatts to 60 megawatts.
It will be appreciated that that reduction in the requirements of the power stations which it was intended should be established in these bogs involved the availability of resources there which could be utilised for the production of peat briquettes and towards which a substantial development has already taken place. These proposals to establish these two factories for the production of peat briquettes were approved of by the then Government subject to the limitation that only one of the proposed factories should be proceeded with at once.
The total capital required by the board for these two stations will be £1,800,000 and it will be appreciated, therefore, that the original provision for the purposes of Bord na Móna contemplated by the earlier legislation of £20,000,000 must therefore be increased by that amount.
Deputies will be aware that Messrs. Arthur Guinness and Company, Ltd., have decided to lend Bord na Móna £500,000 towards the cost of that first briquetting factory. I think that this is the occasion upon which I should express, as my predecessor expressed, appreciation of the willingness of that firm to give that very practical assistance to an important national under-taking. The substantial investment in that undertaking by a firm of the reputation and status of Messrs. Guinness and Company will, I hope, encourage others to show similar faith in the country's future. One of the purposes for which this Bill is required is to enable that arrangement between Bord na Móna and Messrs. Guinness and Company to be implemented.
The board has made very steady progress in all its activities and, indeed, for one who, like myself, was in at the beginning of that undertaking and who remembers the doubts that were expressed as to the wisdom of proceeding with it and the prospect of its succeeding the board's accounts of to-day are very pleasant reading. Up to the present it has, in relation to its production programmes which I mentioned, exceeded its target in regard to sod peat. Because of the upset due to the alteration of the E.S.B. plans, the 1956-57 production, the production in the last financial year, of milled peat was only 205,000 tons, against the original target set for that year of 400,000 tons. However, the developments planned are going ahead now and the production of milled peat this year will be increased to something over 400,000 tons.
Not merely has the board achieved all that it was given to do in the matter of the physical organisation of the production of turf fuel for power and other purposes but the financial results of its operations are also very satisfactory. The board has already paid off to the Exchequer its liability in respect of advances which were made to its predecessor, the old Turf Development Board. These advances amounted to £358,742. I am sure the Minister for Finance of the day regarded it as a rather doubtful debt and even though there was incorporated in the Act which set up Bord na Móna the provision which put on them the obligation to pay off that amount already expended by the Turf Development Board there may not have been much hope that it would be able to do so. In fact, it has now cleared off that liability entirely. It has already commenced the repayment through half-yearly annuities of £4,000,000 of the capital cost of the first development programme. The first development programme contemplated an expenditure of £6,400,000 and the repayment of the first £4,000,000 of that sum has already commenced and the repayment of the balance, £2,400,000, will commence in October of this year.
