I move:
That the Dublin Gas Order, 1976, proposed to be made by me and laid in draft before Dáil Éireann on the 10th June, 1976 under subsection (4) of section 10 of the Gas Regulation Act, 1920, be approved.
Gas undertakings generally operate under special Acts which authorise them to manufacture and distribute gas in certain specified areas and which impose certain controls on their finances. Modifications to these special Acts may be made by order under section 10 of the Gas Regulation Act, 1920. Before an order of this kind is made, it has to be laid in draft before both Houses of the Oireachtas. The Houses of the Oireachtas may, by resolution, approve the draft order in the form submitted or they may approve it with modifications or additions. When such approval is given, I may make the order in the form in which it has been approved.
The Dublin Gas Company have applied to me for a special order. The object of the proposed order is to extend the company's borrowing powers, at present limited to £1.2 million. This is substantially below the amount required to carry on their extensive business. As an interim measure, the company's bankers have continued to meet their current borrowing requirements but it is of course desirable that all borrowings by the company should have the necessary statutory authority. This will be attained by the making of the order now before the House.
The company have pointed out to me that up to the present extensions to their borrowing powers have been limited to a definite figure in money terms. Today a borrowing limit in such terms is likely to be reached quickly because of inflation and other developments outside the company's control, such as the vast increase in raw materials costs which followed the energy crisis in late 1973. The company are therefore anxious to obtain an extension of borrowing powers on a basis which will make reasonable provision for future developments without the need for repeat applications within short intervals. The company are heavily involved in the supply of gas in the Dublin area and have been giving consideration to their future strategy, taking account of the possibility of further finds of natural gas in the Irish Continental Shelf area. It is only prudent that the company should now be engaged in making the preliminary arrangements for such developments. This implies a significant extension of their borrowing powers.
The company accordingly propose that the present statutory limitation on their borrowing powers should be modified to give them power to borrow a sum equivalent to one-and-a-half times the amount of the stockholders' funds as shown in their accounts. The company say that it is almost universal with companies whose shares are quoted on the stock exchange that their borrowing powers are related to the stockholders' funds and that the directors are authorised to exercise such powers provided they do not borrow in excess of a fixed multiple of the stockholders' funds.
Having examined the company's proposal I am satisfied that the proposal that the borrowing limit as expressed by an amount equal to one-and-a-half times their stockholders' funds is not out of line with general company practice. The draft order accordingly provides for borrowing power for the company on that basis. The draft order further prescribes the manner in which the amount of the stockholders' funds shall be determined. Based on the company's accounts for the year ended 31st December, 1975, the amount of the stockholders' funds would be approximately £12 million, so that in accordance with the proposal to which I referred the company's borrowing powers would be £18 million.
Notice of the proposed order was published in Iris Oifigiúil and in a daily paper. No objection to the proposed order was received.
The Dublin Gas Company make a significant contribution to the supply of the energy requirements of the Dublin area as about one in three households use gas. In the recent past they encountered financial problems, due largely to the massive increases in raw material costs which followed the energy crisis in 1973. Special arrangements were necessary to tide them over this difficult period, including temporary advances from State funds and the nomination by me of four directors to the board. I am happy to say that events took a turn for the better and the company's financial situation, as reflected in their accounts for the year ended 31st December, 1975, is reasonably satisfactory. The company are very conscious of the need to improve their performance, and I gather that serious efforts are now being made to foster better labour relations and to increase productivity. As Minister responsible for fuel supplies I welcome and commend these developments and I am anxious to facilitate the company in every way open to me in evolving their plans for the future. I am satisfied as to the need for this order and I therefore recommend the order for the approval of the House.
