I move: "That the Bill be now read a Second Time."
The main purpose of this Bill is to empower Bord na Móna to borrow the amount necessary to finance its third development programme.
As I informed the House when I moved the Estimate for my Department for 1975, Bord na Móna, following the 1973 fuel crisis, carried out a review of bog areas which had previously been considered incapable of economic development. As a result the board formulated its third major bog development programme.
The board's initial development programme adopted in 1946 had as its main features the production of 1 million tons of sod peat annually, improvements in the Lullymore briquetting plant and the establishment of the first generation of turf fired power stations. The second development programme launched in 1950 concentrated chiefly on milled peat production, and since that date the annual milled peat output has been built up to around 3 million tons. The success of that programme led to the erection of four additional peat fired power stations and two new major briquette factories.
The third programme is being introduced at a time when the high cost of imported energy is inflating both domestic prices and the external deficit on the balance of payments. In a White Paper entitled "A National Partnership" laid by the Government before both Houses of the Oireachtas last November, the need to accelerate the development of domestic sources of energy was emphasised. Amongst the proposals listed in that White Paper towards that end was the board's third development programme.
Under the third programme, in addition to the 130,000 acres of bog already in production, it is proposed to develop a further 40,000 acres from which annual production will be available as follows:—Milled peat, 1.7 million tons; sod peat, 44,000 tons; moss peat, 600,000 bales; briquettes, 80,000 tons. The additional milled peat supplies will be capable of sustaining 160 megawatts of electricity generating plant with the capacity to produce 700 million units of electricity annually. A new 80 megawatt unit will be erected at a site yet to be selected. Additional units will be added to the milled peat stations at Lanesboro and Shannon-bridge and the lives of the stations at Ferbane and Rhode will be extended.
Because of the increase in oil prices the cost of production of electricity from milled peat is comparable with that of production from oil. Provided the present trend of world oil prices is maintained, it is expected that electricity generated from milled peat produced under the third programme will continue to be competitive with that produced from oil.
The production of briquettes from milled peat ranks next in importance to the production of electricity from milled peat. Since the rise in oil prices, briquettes have become more popular and production is now scarcely adequate to cope with the demand. To meet the increased demand the board proposes to erect a fourth briquette factory at a cost of £3.5 million and an annual output of 80,000 tons.
Bogs at Coolnagun, Garrymore and Ballydermot will be developed at an estimated cost of £700,000 to produce 44,000 tons of sod peat annually. This will be absorbed by the domestic. industrial and institutional demand for sod peat.
As regards moss peat, four bogs at Gilltown, and Prosperous, County Kildare, Kinnegad, County Westmeath, and Ballivor, County Meath, are to be developed to yield a total annual production of 600,000 cubic metres of peat for processing at the moss peat factories at Kilberry and Coolnamona. This production will be used partly to meet increasing factory demands and partly to replace reductions in bog outputs where some production areas are being cut away.
The development involved in this programme will extend over counties Tipperary, Laois, Offaly, Kildare, Kilkenny, Meath, Westmeath, Galway, Roscommon and Longford and will take about five years to complete. It should provide continuous all-year-round employment for an additional 1,500 men rising to about 1,800 men during the peak production season. The Board at present employs 4,500 men on a regular basis, a figure which rises to 5,500 during the peak production period. The total cost of the programme, including the estimated cost of preparing the bogs by draining them, providing the necessary rail haulage services, production machinery, workshops and ancillary buildings, will be £28.5 million.
The necessity for this Bill arises because the board has almost exhausted its existing statutory borrowing powers. Under the Turf Development Acts the board may not borrow more than £28 million. Its borrowings to date in respect of previous programmes total £27.7 million. The Bill proposes to raise the borrowing limit to £60 million to cover the £28.5 million needed for the third programme and contingencies. The Bill provides that the additional borrowings may be made in any currency and that repayment may be guaranteed by the Minister for Finance in foreign currencies should the need to do so arise. The Minister is already empowered to guarantee borrowings by the board in the currency of the State.
In the case of the first and second programmes the necessary capital was advanced by the Exchequer, but pressing demands on the Exchequer for other services could limit its capacity to meet the board's requirements in respect of the third programme. The board has, therefore, been having discussions with its bankers about the possibility of raising finance from banking institutions. No decision has yet been taken on how the programme will eventually be financed.
A major difficulty which the board must face is how to remunerate its capital investment during the initial five years while the bogs are being got ready. During this period there would be no production and hence no return to the board on the investment. In the case of the first and second programmes this difficulty was overcome by allowing the board a waiver of interest in respect of Exchequer advances for the initial five-year period and a deferment of repayment of capital until after the expiry of that period. The board has proposed that a similar waiver and deferment be granted in respect of Exchequer advances for the new programme. I am at present in consultation with the Minister for Finance about the whole question of the financing of the programme. Meanwhile section 3 of the Bill would enable a waiver of interest on similar lines to the earlier programmes to be granted to the board should it be found necessary to do so.
The adoption of this third programme of Bord na Móna represents an important step in our developing energy policy. The events of 1973 and 1974 brought home to us the vulnerability of our energy supply position. The availability of cheap and abundant supplies of oil from the Middle East led us in this country, as it did in many other western countries, into a position of overdependence on a single energy source. Moreover, it tended to stifle the incentive for the development of costlier alternative sources.
The curtailment of oil supplies in late 1973 demonstrated the great insecurity of undue dependence on Middle East oil. Moreover, the huge increases in oil prices added tremendously to the cost of energy, with repercussions on domestic consumers, industrial enterprises and almost all services. These increased costs added to the difficulties already being experienced by business firms and thus aggravated the recession affecting the economy. They also caused a sharp deterioration in the balance of payments position.
In the light of these developments, there is a clear need for a diversification of our energy sources so as to ensure improved security and stability. In the pursuit of this objective, priority must naturally be given to our native resources, because of security considerations, because of the balance of payments advantages and because the development of our own resources confers additional social and economic benefits. An intensification of the turf development programme is fully compatible with these criteria. It has, of course, been a basic aim of national policy to encourage the development of our bogs. While the aim has been to pursue maximum economic development, the low price of oil which prevailed up to 1973 affected the scale and extent of previous bog development programmes. In this respect, we should perhaps recognise that one effect of the energy crisis has been to lift the economic constraints which previously prevented the development of certain bog areas. These previously uneconomic bogs will now be developed under the third programme.
The opportunity presented by this Bill is being availed of to provide in section 5 two small but desirable improvements in the terms of the board's general employees superannuation scheme. That scheme was established under section 6 of the Turf Development Act, 1953. Under its terms pensionable service dates only from the date on which an employee enters the board's employment. Some members recruited at an age which precluded them from achieving the qualifying period for full pension are anxious to be permitted to purchase the additional years needed for such qualification by making additional contributions to the scheme.
Under the same scheme, pensions of members who die in service are payable for five years and pensions of members who die within five years of retirement are payable until the fifth anniversary of retirement. However, when the board introduced their widows' and orphans' pension scheme on 1st September, 1972, this facility lapsed for new entrants to the board's service as from that date. Employees already on the board's staff who had been contributing towards this benefit were given the option of opting out of payment or retaining the benefit if they were prepared to pay the board's share of the contribution as well as their own. If they decided to retain the benefit they would be required to pay an additional ½ per cent of their salary to the superannuation fund.
I strongly recommend this Bill to the House. It will make an important contribution to our energy objectives, as I have explained earlier. It will provide a social and economic boost to the midland counties whose prosperity is closely linked with the scale of activity of Bord na Móna. It will be a vote of confidence in the board who have always enjoyed the strong support of the whole community for the progress they have made down through the years. The board have earned a high reputation for technical innovation and development and they hold an important place in the fabric of rural life. I am confident that the House will join with me in commending the board for their initiative in coming forward with this programme by giving a Second Reading to the Bill.
