Gas Bill, 1976: Committee Stage (Resumed).
Debate resumed on the following amendment:
2C. In page 8, after line 47, to add a new subsection as follows:
"(5) In giving directives under this section the Minister shall seek to ensure that the price of gas shall be kept as low as is feasible having regard to its cost, even if it is significantly lower than the price of other forms of energy."
—(Deputy Barrett.)
This is a reasonable amendment that could safeguard persons using natural gas for manufacturing purposes. The Minister by direction may change the price of the gas. In an article I have with me there is a suggested charge of 5p per therm and one can readily see that the Minister might be tempted to put a further punitive tax on this product, as the Minister for Finance put on fuel oil in the last budget whereby manufacturing costs were increased which were passed on to the consumer. This does not make for good economics.
The Minister should try to maintain the price of gas at its low rate rather than attempting to obtain revenue from it or penalise industry. All that our amendment seeks to do is to keep down the price of gas. Because of the decision of the Government to use gas as it will be used, there will be an enormous loss each year. While one Department decide that gas should be used to generate electricity with consequent great wastage, other Departments are publishing advertisements urging people to conserve energy. It is all very contradictory. We could have a loss on this kind of operation of about £3.9 million and could waste much of our natural wealth. I would ask the Minister to accept this reasonable amendment which will give worth-while protection to the consumers.
The same answer applies to this as to the previous amendment in the names of Deputies Barrett and O'Malley. This would tie the hands of a future Government and future Minister and would be unnecessarily restrictive. If the Minister wants to do this at a future date the power to do so is in the Bill. To write it in would restrict the freedom of a Minister or Government or the Gas Board at a future date.
This is an amendment which is of fundamental importance. As the Minister has said, the arguments in favour of it are the same as those in favour of the previous amendment and the arguments against it are those given already. For that reason I do not propose to prolong discussion on this matter. It goes to the kernel of what our energy policy will be, whether we want to avail of the first efficient, cheap, native fuel we have or whether we want to allow the prices to be fixed by the multi-nationals.
In this connection I should like to refer to two brief reports of one of the speeches delivered yesterday at Mr. Wedgwood Benn's energy conference at Church House, Westminister. I should like to quote from two brief reports of parts of the speech of Lord Ryder, chairman of the National Enterprise Board and a member of the British Gas Corporation. I am quoting from The Times of today's date:
He said that when there was talk of raising gas prices to help the competitive position of gas's rivals, "I have to pinch myself to confirm that I am still living in the real world and not at a 1976 version of the Mad Hatter's Tea Party."
It would be wrong for the Government to allow gas prices to rise so that it formed "a wretched cartel with electricity and coal", Lord Ryder added.
That is the point Deputy Barrett and I were making this morning, except that in the case of Ireland it is not with coal, it is with electricity and oil that the wretched cartel would be formed.
Turf is so weak that, unfortunately for us, it does not count. It is not competitively strong enough to form the price level mechanism.
I want to refer also to another part of Lord Ryder's speech at the same conference as reported in today's Financial Times. The report says:
Lord Ryder, chairman of the National Enterprise Board, came out in support of the British Gas Corporation in its contention that there are no grounds for increasing the price of natural gas.
He told the conference: "One of the things that has become a major factor in industry's prime cost structure is energy. Often we cannot place our industries at an advantage over other countries in the cost of raw materials, but in the case of gas we can give a tremendous boost to Britain's industry."
For this reason it was most important, at a time when the Government was doing its utmost to encourage more investment and general industrial reorganisation, not to take on extra costs in the shape of higher fuel prices.
Lord Ryder said that the social implications of an increase in gas prices could have serious consequences for the lower-paid income groups—a point which was taken up and emphasised by several subsequent speakers, particularly those representing organisations like Child Poverty Action Group, Help the Aged and Age Concern.
The points made in that speech yesterday are essentially the points made here this morning by Deputy Barrett and myself. They are valid in Britain. I do not think that is denied. They are equally valid here.
This is the decision Mr. Benn has been asked to make over the past six months, or so, since he became Secretary of State for Energy in Britain. He has refused to take the decision which has attempted to be foisted on to him by the electricity interests and the coal interests, each of whom are very strong in Britain. Here we have the attitude of the ESB in pricing electricity at a very high level, partly through no fault of their own, and partly through their own fault. To a considerable extent they have generated capacity, for which the consumer is now being asked to pay, with money borrowed abroad over the past number of years and which it is costing an extraordinarily high amount of money to service now because of the decline in the value of sterling. We have considerable excess capacity and, in the context of gas coming in and being utilised, excess capacity in electricity generation is likely to continue unfortunately. By refusing to take the decision which the electricity and coal boards are endeavouring to force on Mr. Benn he is, in fact, deciding to keep down the price of gas. That now appears to be the policy.
The Minister for Transport and Power here is doing the opposite. In this section he is creating a situation in which the Minister for Finance can fix the price level of gas. The Minister for Transport and Power said it would be wrong to have different forms of energy at seriously different price levels. The Minister for Finance has a built-in incentive to keep up the price of gas, to increase the profits of BGE because, acting on behalf of the Exchequer, he will get those profits. They will be a form of taxation on natural gas. They will put up the price considerably and they will do away with the advantages which the discovery of natural gas has brought to this country and could bring if it were allowed to be sold at a price which I would describe as its own economic level, the price at which it can be economically sold.
It should not be tied to electricity prices which, in the last resort, are fixed by a cartel. Lord Ryder referred in the British context to a wretched cartel of electricity and coal. Here it is an equally wretched cartel of electricity and oil, with the oil multi-nationals calling the tune. We are now refusing to avail of the first opportunity we have ever had as a nation to break that ring and to smash that cartel and, by competition, to bring down the price of energy with enormous benefit to our nation and particularly to industry.
I would remind the Minister that at this very time industry is at a serious disadvantage because of wage unit costs being so high and with the price of imported raw materials frequently being so high because of the depreciation in the value of sterling as against non-sterling currencies. We have an opportunity, as it were, to equalise our costs and to do away with the disadvantage which our industry is labouring under at present and to give ourselves a major advantage with this God-given gift of gas. Instead of availing of that God-given advantage, if this amendment is not accepted section 11 will have the effect I have already mentioned.
I am not putting this in any political way. I am very seriously concerned that if the Minister for Finance follows the policies set out in section 11 as enunciated by the Minister for Transport and Power this morning, the value to the country of that natural gas will be dissipated to a very great extent. The only benefit it will serve is as another form of tax gathering revenue. The tragedy is that, while there may be some argument for heavy taxation on imported fuels, there is no argument whatever from any point of view for taxation on cheap native fuel. There could not be, and it would be mad to contemplate that there should be.
Does the Minister seriously think turf or hydro-electricity should be taxed in some way? If he were to suggest that he would be laughed out of the House. Basically gas is no different. It is just that it is more efficient and of more value than hydro-electricity or turf. Unfortunately hydro-power is very limited here due to the small number of our harnessable rivers. Turf is inefficient but it is better than nothing. It is not very good. We have to acknowledge that. Gas is valuable. It is a tremendous asset to us and, in effect, under section 11, if this amendment is not accepted, we will tax it in order to keep its price up. We will encourage the board to make big profits to enable the Minister for Finance to take them. In effect that is taxation.
It is the same as if the Minister brought in a Financial Resolution imposing excise duty on a therm or a cubic foot of natural gas. He could not do it in that way, but he can do it in an indirect way. He may do it with some benefit to the Exchequer— obviously there will be—but with enormous disadvantage to our industry, to our employment prospects, and to the economy generally. The benefit to the nation of what we have been fortunate enough to find will be dissipated and whittled away. I would ask the Minister in all sincerity to have a look at this amendment again, to have a look at the whole policy as contained in this section and as enunciated by him this morning, and to agree with us that another way of approaching it is the better way and that great damage can and will be done, unfortunately, by following a policy of dear native energy.
All these arguments were made by Deputy O'Malley this morning. They are not real arguments because he knows very well that section 11 allows the Minister for Transport and Power, after conferring with the Minister for Finance, to fix the price of gas. That need not necessarily be higher than the price of electricity. It could be lower or the same. The Deputy quoted from a conference which took place in London yesterday, many years after natural gas was discovered in England, and many years after a grid was set up. That type of conference could not take place here in years to come if we accepted the amendment, because we would have prejudged the whole issue. That would be an intolerable position to put us into.
The Deputy quoted Lord Ryder as saying he could not accept this. I have no doubt that if there are other finds of natural gas in years to come the then chairman of BGE will make exactly the same arguments, for exactly the same reasons, in exactly the same context to a conference but, by accepting the amendment, no conference will be held because there will be no point in holding a conference on the uses of energy because we will have prejudged the issue.
There will be written into legislation this amendment in the names of Deputies O'Malley and Barrett to the effect that "the price of gas shall be kept as low as feasible having regard to its cost, even if it is significantly lower than the price of other forms of energy". This will be the price of gas for all time. I do not think BGE or the ESB or Bord na Móna should have rights like that. These rights are properly vested in the Minister and the Government and they should be in a position to avail of any options that present themselves after the study to which I referred earlier this morning has taken place. All avenues should be open to them as regards pricing, as regards the people who would get the gas and whether it should be distributed by grid or, as Deputy Barrett suggested, by tanker and so on. These are matters on which there should be a political decision and not something which should be covered by a statute to give Bord Gáis Éireann an inside track, as it were, for all time in relation to all natural gas that was found anywhere in the country and for any use. This is obviously not what the people would want. It should not be what this House would want, and it is certainly not something I want. I cannot accept this amendment because it would tie the hands of any Government in the future. It might be a Fianna Fáil Government that would be here and their hands should not be tied as to how and at what price this gas should be used in the future.
We are not tying anyone's hands to the extent the Minister has said. Our amendment says the price of gas shall be kept as low as is feasible having regard to its cost. That gives a certain amount of flexibility. The Minister said last week and again today—and there is provision for it in this Bill—that the question of setting up a gas grid would be examined in the immediate future. We believe it should have been examined in the past, but it has not been examined.
Assume that we find more gas, about which we can be reasonably hopeful. Surely by accepting our amendment a gas grid is made more viable and attractive. Lower cost energy will mean more users of gas in the future. Whether gas is supplied to Dublin by tanker or pipeline, something will have to be done about the Dublin Gas Company. At present they are paying 132 dollars per ton for naphtha and the ESB are paying 60 dollars a ton for heavy fuel oil. Dublin gas users have been suffering as a result of the prices being charged for gas and a further increase of 11 per cent was announced last Friday or Saturday.
Our aim is to lay the foundations for the proper utilisation of natural gas, with a view to further finds. If all came to all and no more was found, Britain has found so much that there is a surplus and we would be able to import gas if the grid was set up and being used. On the basis established by Britain of providing low cost energy, it will be far cheaper for us to import gas from the North Sea if we have to do it than to have to import naphtha at 132 dollars a ton or at whatever price the multi-nationals say, and they say what the price will be; the Dublin Gas Company have no choice in the matter, as they learned at the beginning of the oil crisis. They were told: "Take it at our price, despite a previous contract, or you do not get it." It was an emergency forced on the Dublin Gas Company.
We should try to benefit from our experience since the oil crisis. One of the main aims of the amendment is to break the stranglehold the multinational oil companies had and still have on our energy situation. We are subject to the UK outer zone system of prices. We do not have a choice in the price of oil products, as has been proved in the last three years. By accepting this amendment the Minister is being provided with an opportunity to break this stranglehold. We have been through most of the arguments already, and again we would ask the Minister to accept the amendment which is realistic and, we believe, in the interest of the economy and of better usage of natural gas.
As Deputy Barrett said, we have been over all this ground before. He argued that one of the main aims of the amendment was to break the stranglehold of the multi-nationals on the energy market of this country, and also that we were part of the UK outer zone price system for oil. Then Deputy O'Malley says the United Kingdom is more efficient in this because Mr. Benn will refuse to allow the price of gas to go up. The Deputies are contradicting each other there. If we are controlled by what happens with oil in England and if what they are proposing would break the power of the multi-nationals, why has it not done so in England? Why has the lower price for gas there not broken the power of the multi-nationals?
There was a price war going on over the last six months.
But if there is we are getting the benefit when we are part of the UK outer zone.
No. There is no competition here.
They also referred to the price of electricity and natural gas in England and said in regard to coal and electricity that this gas would break the cartel to which Lord Ryder referred. In fact, as regards comparable areas in England and Ireland, the price of electricity here is cheaper. I accept the sincerity of what the Deputies opposite are trying to do, but if they think about it long enough they will see that their amendment would have exactly the opposite effect, and in 20 years' time some Minister would have to answer for Bord Gáis Éireann and the freedom they have to run their business as I have to do now for the ESB or as other Ministers for Transport and Power have had to do in relation to the ESB, and you know the emotional fury that is engendered by the very mention of the ESB. Last week I thought Deputy Brennan would take off he became so irate at even the thought of the ESB. If the Deputies' amendment is written into this Bill, exactly the same thing would happen in 20 years' time as regards Bord Gáis Éireann. The decisions on policy and pricing must be kept in the Minister's hands.
As regards the UK outer zone system of pricing, the ESB, for one, are not subject to this. They have their own arrangements.
Mr. Barry
And I hope they will continue to do better because of the type of fuel they use and its being plentiful. We are not contradictory at all in this. Because of their access to natural gas Britain are now doing what we propose should be done in regard to the price structure of oil. While we do not believe that we should do everything Britain does, we are proposing in our amendment that we should take the first step towards ensuring the breaking of this stranglehold about which we have been talking.
The Minister makes the point that the acceptance of this amendment will tie future Government's hands as to the price of gas. There seems to be some retreat from the position enunciated by the Minister this morning because the Minister is now talking about flexibility, but if what the Minister said this morning about the necessity of pitching the price of gas at approximately the same level as the price of other forms of energy represents Government policy, and if that is what they are proposing to do, they are in fact tying everybody's hands for so long as they are there. We will have comparatively dear natural gas.
This is a policy decision which I presume can be reversed. But one of the difficulties about a future Government reversing policy of that kind is that investment has been channelled in a particular direction over a number of years because of the pricing policy of the Government of the day, in relation to a particular form of energy, such as gas in this case. If a subsequent Government come in and disagree with that policy and wish to change it, the Minister for Industry and Commerce in that Government will immediately be assailed by a lot of irate industrialists who will say that they have gone to terrible trouble and expense to invest in a particular way, in a particular place in a particular plant and that they cannot get out of it, that if they had known that natural gas would be sold in this country at its economic price they would not have done all that.
It is not right for the Minister not to tie future Government's hands. In practice what happens is that, once a line of policy is decided upon and put into effect over a period of even a year or two in relation to a matter such as this, it takes years to unscramble that egg. By adopting the policy that the Minister enunciated this morning the Minister will in fact channel industrial investment and industrial thinking over the next five, six or seven years, in a particular direction and once they start moving in that direction they cannot reverse out of it because they will have invested too much that they will not be able to recover. They will have to see through the decisions that were made on the basis of that being the particular policy.
That is very reasonable and I should want some long term policies.
For example, if this policy that the Minister enunciated this morning will now be——
I am sure it is not deliberate, but the Deputy is slightly twisting the point I made this morning. I will explain it later.
If the policy which would be the logical consequence of what the Minister said this morning is put into practice and if an effort is made after the passing of this Bill to pitch the price of natural gas at or about the sort of level that has been fixed by oil and electricity prices for energy, industrial investment in this country over the short term future will tend to go in a certain way. If we were to be in Government in two years' time and if we wanted to implement what we are talking about now and allow the price of natural gas to fall to its natural or economic level, I do not think we could do it without being grossly unfair to a lot of people who would have committed assets and capital to a particular line.
There are many times when on a change of Government the incoming Government might well feel that they do not agree with various aspects of various policies that were pursued by their predecessor, but in the long term they cannot do anything about it because they will be unfair to too many people who have set themselves on particular courses and in particular lines of investment that they cannot back out of. If the policy is to be changed from the top, much if not all of what they may have invested in a particular line would be irretrievably lost.
If the Minister tells us that the likelihood is that the policy of the present Government in relation to the price of natural gas is to have it at approximately the same level as other forms of energy, there will be very long term consequences for industry in particular and also to some extent for domestic consumers of gas. If that will be the policy there would not seem to be much point in thinking about a national grid, because there would be no attraction to incur the heavy capital expenditure of the grid and the further heavy capital expenditure in cities like Dublin, Limerick and Waterford on conversion of appliances. There would be no huge increase, as there was in Britain over the last six or seven years, in consumers applying to get on to gas and to use it as their main domestic fuel.
Over the last 20 years there has been virtually no new consumers of gas joined up to the municipal plant. The corporation did make gas available in some of the corporation housing schemes which they built over the last 20 years, but there have not been many additional consumers; indeed there probably has been a net loss of consumers because a lot of people gave it up when it became too expensive. There will be no incentive to build a grid if natural gas is to be sold at the same price level that municipal or town gas is now being sold at. We have the figures that the Dublin Gas Company are paying for naphtha at the moment, and we have had an increase of 10 per cent by the Dublin Gas Company in the price of gas to their consumers only last week. It will not be worth while going to the expense of bringing natural gas either from Cork harbour or somewhere in the west coast up to Dublin if it will not be sold at a sufficiently low price to make it worth while incurring this capital expenditure and the further expenditure of the adaptation of the appliances.
One wonders about the long term viability of all the municipal gas companies in this country if natural gas is to be sold at the same rate as town or municipal gas at the moment. The only long term safe future prospects of survival or economic success is for all those municipal gas companies in five or ten years' time to have natural gas rather than have to make gas out of naphtha and other very expensive imported fuels. If they are not to get natural gas at its natural price level I do not think there is any future for them.
I wonder what future there is for the Dublin or Limerick gas companies if they have to continue to manufacture municipal gas from very expensive imported raw materials and if they will not have the advantage which they assumed up to today that they would have and which their counterparts in Britain have had for the past eight or nine years, that is, natural gas being available at a fraction of the cost of town gas. For these reasons the refusal of this amendment designed to keep the price of natural gas down to its natural or economic level will be a decision by the Government to fix a higher ceiling or pricing structure for natural gas which will have long-term consequences. The Minister suggests that it is allowing flexibility, that it can be high or low and it is not necessarily either. When the Minister spoke first on the previous amendment he argued that it would not be fair to have one form of energy significantly cheaper than other forms and that they would all have to come up to approximately the same level. That is not so in Britain and has not been so over the past eight or nine years when natural gas has been available on a fairly wide scale.
Notwithstanding various pressures to have it that way, successive British Governments—not just the present one and not just the present Energy Secretary in Britain—have refused to do so and have resisted that pressure. The circumstances are very similar here. Their judgement is that it is in Britain's national interest, as it would be in ours, to have a cheap, native form of energy, the first one we have ever had, efficient and reasonably widespread. In conclusion, I appeal to the Minister not to refuse this amendment and put us in a position in which, in our view, considerable damage will be done to the country.
If this amendment is not accepted a Government in the future will have to amend the legislation to insert some similar provision. A few miles away at present they are tapping for gas off Kish Bank in Dublin Bay. Suppose they found natural gas there, with the heavy concentration of industry on the east coast you would have to sell the gas to many of these industrialists who would have tremendous conversion costs if they were to use it. It would be essential, therefore, to guarantee to these firms that they would have cheap natural gas, as suggested in the amendment. Otherwise it might be difficult to sell it to them. We hope there will be a big find there. There are many fairly heavy industries in the area but they could only take natural gas at a certain price. If it can be guaranteed that the price will be kept low you will sell it to them. You must compensate them somehow for the colossal conversion costs. In the UK they found conversion costs very high but because industrialists were guaranteed a supply of cheap natural gas they could afford to take it.
We are in the same position and in order to create that confidence in these firms along the east coast the Minister should accept the amendment that would be a guarantee to those who will avail of this new form of energy. They must get it at a price that will compensate them for the expensive conversion required to change from their present source of energy to the natural gas. It is much easier to accept the amendment now than for some future Government to have to change the legislation in order to ensure a ready market for any gas found along the east coast or in the Celtic Sea.
Nothing I have heard leads me to change my mind as regards what I said this morning. I said that acceptance of the previous amendment—and the thinking behind both is the same—would prevent any decision being taken subsequently by a Government as to how and at what price this gas should be sold. We are dealing with a Bill to set up a Gas Board initially to handle the Kinsale gas field in a case where we know where the gas is going and the price it will go at. But we must also look into the future and try to see what may happen. There may be other finds in different places and circumstances and to confine that board to selling gas without any ministerial direction at, as the amendment says, the lowest feasible price, having regard to its cost, even if it is significantly lower than the price of other forms of energy, would involve huge policy implications that would be bound to act detrimentally on the Government and perhaps on the people who would supply the natural gas to the Gas Board. I think that a policy of selling a product at a particular price and virtually writing this price into legislation would be unacceptable in any democracy and would certainly be unacceptable to me.
Amendment put.
The Committee divided: Tá, 53; Níl, 61.
Tá
- Allen, Lorcan.
- Andrews, David.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Brosnan, Seán.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Carter, Frank.
- Colley, George.
- Connolly, Gerard.
- Crinion, Brendan.
- Cronin, Jerry.
- Daly, Brendan.
- de Valera, Vivion.
- Dowling, Joe.
- Fahey, Jackie.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin Central).
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Gibbons, Hugh.
- Gogan, Richard P.
- Haughey, Charles.
- Hussey, Thomas.
- Kenneally, William.
- Kitt, Michael P.
- Lalor, Patrick J.
- Loughnane, William.
- Lynch, Celia.
- Lynch, Jack.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Nolan, Thomas.
- Noonan, Michael.
- O'Connor, Timothy.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Timmons, Eugene.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Belton, Luke.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Dick.
- Burke, Joan T.
- Burke, Liam.
- Byrne, Hugh.
- Clinton, Mark A.
- Collins, Edward.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan.
- Coughlan, Stephen.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Maurice.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Governey, Desmond.
- Griffin, Brendan.
- Halligan, Brendan.
- Harte, Patrick D.
- Hegarty, Patrick.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Keating, Justin.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLoughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Connell, John.
- O'Donnell, Tom.
- O'Sullivan, John L.
- Pattison, Seamus.
- Reynolds, Patrick J.
- Ryan, John J.
- Spring, Dan.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Toal, Brendan.
- Tully, James.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
Amendment declared lost.
I move amendment No. 2 d:
In page 8, after line 47, to add a new subsection as follows:
"(6) The Board shall disclose publicly the price it pays for and receives for natural gas in each contract it enters into."
The amendment purports to add a very brief subsection. I referred to this matter on Second Stage and the Minister in his reply—I have not got the context here, but it is my recollection —was not at all in favour of the price being disclosed. Indeed, he made a bit of a laugh of it on the basis that it would be foolish of the board to do this because if oil companies and other such people involved in exploration knew what the price was in a previous find that would make it very difficult for the board to negotiate in future. I cannot see that this argument holds up at all. So far there is only one small find here. We understand the price is five pence a therm and, whether that is right or wrong, it is believed it is right and, from the way the Minister is looking, I believe it is right.
There are many rumours circulating.
In Britain all the prices have been disclosed. They are all well known right from the very first find. The first large field was the Echo Fisk discovered by Phillips. That was away back in the 1960s. The price per therm is 1½ pence. That was the price agreed at that time and all the way along since it has been known what the prices are. The oil companies know and so does everyone else. I do not know what the Minister thinks he is achieving by trying to keep this quiet because it will come out anyway. One of the ways it has to come out is that an Irish publicly quoted company has bought its way into a share of Marathon's operation off Kinsale and it has to publish accounts for the benefit of its shareholders. It has to account for its income, its source of income and the payments by BGE to Marathon. Petroleum (Ireland) Ltd., is part of the company's income and under the Companies Act and under Stock Exchange regulations it must disclose details of its income and it will have to disclose sufficient details to enable anybody by a simple mathematical calculation to work out and prove conclusively what precisely the payment per therm for gas is.
There is really nothing achieved by this ostensible secrecy. It is nothing more than that. It is a facade of secrecy when everyone knows the answer. For the Minister or a Statesponsored board to keep up this facade of secrecy, without either justification or success, engenders in the minds of the public some inevitable disquiet. Why should anyone try to keep it secret? Are they giving the gas away? Are they paying too high a price for it? Are they selling it at an exorbitantly high profit? All these questions inevitably arise, questions which need not arise, and people begin to speculate. Possibly much of the speculation is off the mark but, nonetheless, there is speculation and it is the kind of speculation that can very often be damaging.
This is a publicly owned body. There is no private interest involved here. The Irish taxpayer owns Bord Gáis Éireann in toto and the Irish taxpayer is entitled to know what he is paying for the gas. He is entitled to know what he is getting for the gas sold to industries such as NET and the ESB and the Minister cannot argue he is not entitled to know. If I want to know what the ESB are paying for oil, I can telephone and ask and they will tell me what they paid last week and the week before. It is only right and proper that they should. The Dublin Gas Company had a contract with Esso which was formulated in 1966. It was supposed to last for ten or 12 years. It was a very favourable contract. Deputy Barrett referred to it earlier. In 1973 Esso told the Gas Company they were not going to honour the contract any longer. In a sense the Dublin Gas Company, though publicly quoted, is private because there is no great State investment in it but the company is prepared to publish what it pays for oil and they have to publish the price at which they sell gas to their consumers.
In this case there are only two or, at the most, three customers of BGE but the public are still entitled to know and by these rather futile efforts to cover up the Minister is, I think, bringing the board into a position where allegations will be made against it, allegations which will have no foundation, but allegations, nevertheless, which would not be made at all if simple information of no value to competitors, because there are no competitors, were disclosed. It would be a different matter if there were a number of gas buying agencies, but there are not. Under this Bill we are establishing BGE as the only gas buying agency and any gas found within our jurisdiction on land or under the sea has to be offered to BGE at a reasonable price. That is all set out in section 37. If agreement cannot be reached one can go to arbitration under the 1954 Act.
There is no question of competition because there is no competitor to BGE. It is a State monopoly. Arguments that might hold up if there were competition do not hold up in this case because it is a monopoly. It is a wholly owned State enterprise. The public are the owners in the last resort and the public are entitled to the information. They should not be deprived of it. They will get it anyway because it has to be published in the accounts of Petroleum (Ireland) Ltd., and the Minister is achieving nothing by this facade of secrecy which he knows, as well as I do, is unrealistic and has no meaning in the context of this whole situation. For that reason this amendment should be accepted and I hope the Minister will accept it.
I can understand the Deputy's desire to have the price of the gas revealed in public. There is no kind of philosophic concept behind my refusal to disclose the price. Deputy O'Malley says that BGE are the only purchasing agent, that they have only three customers and that the prices should be revealed. They are the only purchasing agents but, hopefully, they will be purchasing from a number of sources. It is to conceal from A the price given to B that an endeavour is being made to keep the price secret. The Deputy may be quite right that this may not work out, that by getting the accounts of BGE, the accounts of Royalties (Ireland) and of Marathon a person may be able to arrive at the price of the gas. It is only commercial prudence that if you have to buy from two different people you do not let one know what you are paying the other if you hope to get a cheaper price from one than from the other.
What Deputy O'Malley said is true, that originally British Gas published the price they were paying but they have ceased to do so for the reasons I have stated. For the last four or five years they have not disclosed the price they were paying. The present Minister for Energy in Britain refused in the House of Commons a few months ago, to disclose the price they were paying. The energy correspondent of the Financial Times, writing on 13th February last, said that pinpointing the exact price of offshore gas is always a hazardous business as neither British Gas nor its suppliers will give even a hint about the level of individual agreements. It is ordinary commercial prudence when you are buying from A at X price that you do not let B know what that price is hoping that you will be able to buy from B at X — 1 or X - 2. It is ordinary common sense that we should, if possible, keep this price secret for that reason.
This agreement was signed in July, 1975 between BGE and Marathon. It is a 20-year agreement. Surely the Minister would not expect the price arrangements to remain secret for 20 years? If, as he says, it is to protect BGE, when they may find themselves buying from different suppliers who have gas, the same thing should apply in the case of the ESB because they buy from different suppliers.
Yes. They have an arrangement for what is known as Russian oil but they also buy spot cargoes at Rotterdam at different prices.
The ESB do not have to buy all the oil that is offered to them. They can arrange to buy at different prices when a good price comes up or they can arrange to leave it. BGE will be buying all the gas that is offered.
With the sanction of the Minister for Industry and Commerce in certain cases.
They will, in effect, be the sole buying agency in this country.
My point is that it does not affect the ESB price structure.
No, because they can leave it behind them.
They buy from different customers, as they have been doing, and it has not affected them. They set one against the other. As Deputy O'Malley said BGE are a public body and they have a 20-year contract. It seems impossible that the price structure will be kept secret for 20 years. Deputy O'Malley pointed out how it will come out in the accounts of a public company and will be disclosed. Why can the Minister not disclose to the country now what we are paying for it? If it is a good deal it will be of benefit in the future so there is no reason not to disclose it. If the price is right in this instance and if it is to have any effect on a future deal with another customer who has found gas surely it will be helpful to bring down his price to the level which will work in our favour?
Unless one has hopes of getting it cheaper.
If it is a good deal it is to our benefit to disclose the price so that others will know. If we refuse to disclose it it is possible to assume it is not a good deal. If we have purchased this at a competitive price we do not see any reason why that price cannot be disclosed for the benefit of all concerned.
I do not believe Deputy O'Malley and Deputy Barrett are serious in what they are suggesting here because they know there are hundreds of precedents for this not alone in the private sector but in the public sector where you do not give the tricks you hold in your hand over to people you are going to deal with in the future. One would be very silly to give company A the knowledge beforehand of the price which one is already paying to company B when one hopes to get the commodity from company A at a lower price. It is ordinary commercial prudence and I am sure the Opposition are not serious in pushing the amendment.
The Minister's point is not valid. If BGE were in competition with someone else there might be something to be said for this but they are not. They are a State monopoly. Everything has to be offered to them. BGE are in a very strong position because they are the only buyers. They can dig in their heels more easily than the suppliers of the gas can. The suppliers have to get rid of the gas because they have sunk tens of millions of pounds into finding it and recovering it.
The suppliers are in a very weak position vis-á-vis the State because the State, by virtue of this Bill, has established a State monopoly, a single buying board. Nobody is in competition. It is no skin off BGE's nose if the price is disclosed. The only way it could be any skin off their nose, as is stated, is if they did not get a good deal vis-á-vis Marathon. The Minister assured us they got an excellent deal. I assume by that they must have bought at about 2p a term. I could well imagine if BGE paid a high price like 5p a therm that they might not want to disclose it because the public would then realise they did not do so well.
The Minister assured the House today and on another day when Deputy Barrett and I had questions down about it, that they got a very good deal. We assume from that that it was about 2p a therm. Therefore, if it is around 2p a therm and if BGE got a good deal that should be disclosed and it would keep down future costs. If they paid a lot for it, like 5p a therm, I could see the Minister and the board being reticent about disclosing it. I am sure they did not pay such a high price because the Minister told us they got a good deal.
Section 37 deals with arbitration. Subsection (3) states:
If any dispute arises as to the reasonableness of terms on which natural gas is offered for sale to the Board, pursuant to the requirements of subsection (1) of this section, such dispute shall be determined by arbitration pursuant to the Arbitration Act, 1954.
An arbitrator will sit under that Act. The first question he will have to ask is: "Are there any other deals akin to this, analogous to it or similar to it in any way?" BGE will have to go into the arbitration, which in the ordinary way will be in public, unless there is some special provision made for holding it in private. The first evidence that will have to be given to him will be the price BGE paid Marathon for the Kinsale Head field. There might be arbitration within a year or two depending on whether a find is made this season. If there is not agreement, presumably it will be arbitrated on next year or the year after. In the normal way that arbitration will be in public. Even if the hearing is not in public the arbitrator's decision, which will have to contain the grounds for his findings, will have to be made public. The principal ground for his findings—it is the primary criterion— is the price already paid for natural gas on the Irish Continental Shelf.
I would ask the Minister to be realistic about the matter. The arbitrator has to be told, he has to give a public judgment and the parties concerned will have to publish it also. If we are lucky, if there are gas finds in the next few years, which all of us hope will happen, there will be an arbitration under section 37 which will take place in the next few years. It will be held in public. In those circumstances it is just not on for the Minister not to publish the figures. For that reason I am asking him to accept this amendment.
If Deputy Barrett or I considered that any commercial damage was being done to BGE we would not have put down the amendment. There can be no such damage because they are in a monopoly situation. In the event of some very unusual circumstances, if some independent oil company who made a find did not know—all of them know about it; they tell one another immediately because the whole thing is a ring—all such a company need ask when they start negotiations with the board is what the other companies got for their gas. Obviously that is a factor that would be relevant to the price of the gas in their sector, taking into account that some years had elapsed, that costs had risen, that more pipes were required and so on. Nevertheless, as a starting point, the price already paid is the primary criterion and this is very much the case so far as an arbitrator under the 1954 Act is concerned.
There is nothing to be achieved by what the Minister is seeking to do now. No harm whatever will be done but a great deal of good will be achieved. There is now, and will continue to be, speculation. This will be damaging to the board and to the public interest. The speculation will be that if the board have nothing to hide they would disclose the facts and the fact that they have not done so may mean they have paid an abnormally high price to Marathon or any other company. The board will be in a very difficult position. If they do not deny it, it will be accepted as being true; on the other hand, if they deny it, there is a partial disclosure and they are forced into that situation. There should be none of this quasi-secrecy about such public affairs, about public property in dealings between public companies.
I do not think Deputy O'Malley is living in the real world if he thinks that information regarding commercial companies is available to the public in all circumstances. That is not the position. It is true that BGE will be a monopoly buyer of gas; but, hopefully, they will be buying from a number of different sources. Naturally they will want to play one supplier off against the other in an effort to get a lower price. As Deputy O'Malley has said, when the British Gas Corporation was set up the prices were revealed but since they got more extensive finds dealing with different companies they have refused to reveal the prices they pay. The argument that a kind of bush telegraph operates between the major oil companies with regard to telling each other about prices is not right. They combine and help one another a great deal, but I do not think they divulge their sources and the prices they pay. It may be that in the next 20 years this price will be told for one reason or another, but to write it into legislation and to appear to force the hands of the board in their dealings in future finds would not be wise.
Do we know if the gas board in Britain have a monopoly in the buying of oil and gas? Are they in the same position as our board?
We might also ask if they have set up an arbitration system to determine the price of gas in the future where a dispute will arise. The kind of arbitration most of us know about here concerns local government compulsory orders where the purchase of property is concerned. I am sure that Deputy O'Malley in his capacity as a solicitor has experience of such hearings. My experience has been in my capacity as a valuer and I have attended quite a number of such hearings. The guideline adopted by the arbitrator is the comparison with prevailing market values or the nearest market value. I cannot visualise any other way where an arbitration hearing could decide on the price of gas other than by comparison with prices in other areas or from people who sold gas, whether to our board or to the British board. This is the only way an arbitrator can decide on an equitable price for gas if a dispute arises.
If our amendment is not accepted the whole exercise of setting up an arbitration board will be futile and a waste of time. If the Minister will not ask the board in any circumstances to disclose the price, surely he will adopt the same attitude when it comes to an arbitration hearing? An arbitrator cannot do his work unless he knows the price of gas in the last deal.
The arbitrator in this case would be the last appeal when they could not reach agreement. The British Gas Board buy all the gas and the arbitrator in their case is the Minister. Obviously, if you are to compel everybody who discovers gas and brings it ashore in Ireland to sell it to BGE, in justice you must give them some court of appeal if they are dissatisfied with the price, or if they cannot reach agreement with the board on the price. That is only ordinary justice. The intention would be that the number of cases which would go to arbitration would be absolutely minimal, and agreement would be reached on a fair basis between the supplier and BGE without going to arbitration. I would hope the arbitration board would never be used and agreement could be reached between the supplier and BGE. The fact that the price they are paying to the existing suppliers would be known would influence discussions with future suppliers.
One customer might go to arbitration and he might be the first or the twentieth customer and he would open up the whole thing despite the Minister's hope that this will not happen.
That is always a possibility. The hope would be that it would never happen. The existing price would have been arrived at through negotiations.
The Minister is hoping it will continue in that way.
In fairness to the people supplying the gas, we must give them some person they can appeal to if they feel they are being badly done by, by the people they must sell the gas to under the law.
We agree the arbitration board should be there. Our argument is that, since it will be there, there is no point in not disclosing the price of gas now when that can happen, perhaps, in two years' time.
It would be wrong to write into legislation that the price must be revealed. The amendment provides that "the board shall disclose publicly the price it pays for and receives for natural gas in each contract it enters into." That would be against all the commercial norms anywhere in the world. It may be that the price will come out. To compel the board to divulge the price would be wrong.
Would the Minister agree that until 1972 the British Gas Corporation in the Department of Energy disclosed the figures. That means they did it from about 1966 to 1972 which was a six-year period.
About 1971 or 1972. They did not reveal those figures because they were compelled to do so under the legislation.
The felt it did not matter.
They revealed them and then they found they were making a commercial mistake and they refused to reveal them since. The information influenced negotiations they had subsequently with other producers of gas.
The British are in a different situation. They are selling gas to a variety of people and undertakings.
We hope we will be the same.
We are only selling to two.
At the moment. If this amendment were accepted and if there were a find of unlimited natural gas, they would be compelled to divulge the price to everybody they supplied anywhere in the country or anywhere in the world. I do not think that is desirable.
Amendment put.
The Committee divided: Tá, 52; Níl, 60.
Tá
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Brosnan, Seán.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Carter, Frank.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Crinion, Brendan.
- Cronin, Jerry.
- Daly, Brendan.
- de Valera, Vivion.
- Dowling, Joe.
- Fahey, Jackie.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin Central).
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Gibbons, Hugh.
- Gogan, Richard P.
- Haughey, Charles.
- Hussey, Thomas.
- Kenneally, William.
- Kitt, Michael P.
- Lalor, Patrick J.
- Loughnane, William.
- Lynch, Celia.
- Lynch, Jack.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Nolan, Thomas.
- Noonan, Michael.
- O'Connor, Timothy.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Timmons, Eugene.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Belton, Luke.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Dick.
- Burke, Joan T.
- Burke, Liam.
- Byrne, Hugh.
- Clinton, Mark A.
- Collins, Edward.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan.
- Coughlan, Stephen.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Maurice.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Governey, Desmond.
- Griffin, Brendan.
- Halligan, Brendan.
- Harte, Patrick D.
- Hegarty, Patrick.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Keating, Justin.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Connell, John.
- O'Donnell, Tom.
- O'Sullivan, John L.
- Pattison, Seamus.
- Reynolds, Patrick J.
- Ryan, John J.
- Spring, Dan.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Tully, James.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
Amendment declared lost.
Question proposed: "That section 11 stand part of the Bill."
This is probably the most important section in the Bill, because what is done under it will give rise to very serious long-term consequences, particularly in the industrial sector, for many years to come. The section is in a sense neutral. For that reason, we cannot oppose it as such. It allows the Minister for Transport and Power, with or without the consent of the Minister for Finance, to deal with the general financial policy of the board.
The Minister has indicated one approach which might be taken or is likely to be taken. Deputy Barrett, Deputy Moore and I have indicated a different approach, which we think proper. There is quite a divergency. It boils down to whether there should be a dear gas policy in this country or a cheap gas policy, whether gas should be sold at its economic or natural level or whether it should be sold at a level that would put it more or less on a par with other sources of energy, of which the two principal ones are oil and electricity. These are both costly at the moment. By comparison, gas, even though we have not been given the exact figures for it, is likely to be quite cheap. We think it should stay quite cheap.
The main danger that we see in this section is the unfettered ability of the Minister, with the consent of the Minister for Finance to
... direct that the profits of the Board in a year specified in the direction shall be applied in such manner (including application for the benefit of the Exchequer) as is specified in the direction.
There is nothing wrong with having that power. What is wrong is proposing to exercise it in the manner in which the Minister indicated this morning it might be exercised. If there were encouragement to the board to maximise its profits, to put up and keep up the price of gas to industrial consumers principally, the advantages which the discovery of natural gas gives to this country will be lost to the economy. The only gain, and it will be a short term gain in every sense, will be to the Exchequer, because it will in effect be a levy on profit—first of all, a direction to make substantial profit, which is not necessary for the board, and a subsequent direction to remit that profit to the Exchequer will in effect be an excise duty on natural gas.
It is unthinkable that we should have a duty in any form on our own native sources of energy. When the Minister for Finance followed a policy of vast increases in duty on oil and petrol in recent years his argument was that because these were expensive, because they were all imported, he was trying to reduce consumption, although the Minister knew that consumption could not really come down because petrol and fuel oil are vital, and almost any price within reason will have to be paid. The Minister's argument was that they were imports and therefore the price should be kept up. It now appears that the Minister will use the same argument in relation to natural gas even though it is not an import, that the price should be kept up not just to the level of oil prices as fixed by the Arabs, but to the artifically high level of prices as fixed by the Minister for Finance.
Not alone is there crucifying taxation on petrol but there is now, for the first time in the history of this State, taxation on non-petroleum oil products, principally heavy fuel oil used in industry. The figure of increased costs because of this rather silly 2p a gallon introduced this year is £5½ million for the ESB alone. That was not imposed by the Arabs but by the Minister for Finance. The same Minister, while he has grossly inflated the price of petrol and oil products generally, is now apparently taking power under this section to force up the price of gas, not to the level fixed by the Arabs or the multi-national companies but to the level fixed by the Minister after the multi-nationals have done their worst. That, to my mind, is unacceptable and if that policy is to be followed in the future it will certainly be opposed by this party because it is clearly a policy that is not in the interests of this country. It is not in the interests of industrial development or the creation of employment.
The section is an enabling one, it does not compel this to happen. It will only happen if the Minister chooses to have it that way. For that reason we will not oppose the section but we would like it clearly understood that, in our view, if this policy is to be followed we think it is wrong, and that it is clearly in the interests of this country to keep the price of gas as low as possible. The principal factor in the price that will have to be charged by Bord Gáis Éireann is what they pay to the producer, plus the cost of writing off their capital investment and their day-to-day running costs. These will be comparatively small, and the price charged should not be more than about 10 or 15 per cent above what they are paying to the producer for landing the gas and supplying it to the board. On this section I would like an acceptance by the Minister that in general terms that would be the sort of policy that will be followed in the years to come.
We have debated this section with the amendments since about 12 o'clock today and on a number of occasions I said, and I repeat, that if the amendments proposed by the Opposition were accepted they would remove the policy decisions from the Government or the Minister of the day. Under this section the Minister for Transport and Power with the consent of the Minister for Finance can dictate the general direction
... concerning the pricing policy as to the sale or supply of gas or the financial objectives of the Board he considers appropriate.
At this stage to tie the hands of any future Minister for Finance as regards formulating policy or even changing existing policy, if that was thought necessary in the future, by writing into the statute anything of this nature would be extremely silly. I do not move away at all from my view in that regard. Dáil Éireann and a Government must be free to make policy decisions within the conditions prevailing at that time. This is an enabling section and this allows the Minister for Transport and Power of the time that freedom which is so necessary, particularly when we do not know what we will be dealing with in the future. It is very necessary that we should have as much freedom as possible to investigate all the options open to us in the use of natural gas and all policies, commercial and economic, should be left open until a future date and a decision then taken by the Minister of the day in regard to any future finds.
The purpose of our amendments which have been defeated was to copperfasten a low cost energy policy for the benefit of the Government, ourselves and the country as a whole.
The amendments have been disposed of.
The Minister has said that the Bill would not be flexible enough if it were amended. We can only learn from experience and our experience where energy has been concerned in the last two or three years has been that it has been left wide open for taxation, not only the 15p on petrol but also the 2p across the board on oils in the last budget. This has had the effect of adding £38 million to the cost. This is a very serious blow to industry at this particular time because of economic trends and costs of labour and so on and the fact that it is difficult to compete in the export market. We believe that this was a section whereby we could have established a real foundation for a low cost energy policy for this country. That is why we pursued it so long. We still believe in everything we said, and that it is and opportunity lost as far as we are concerned that this section was not amended.
That is nonsense. It is not an opportunity lost. It would be an opportunity lost, and it would remove the flexibility for a Minister if this section had been amended. Deputy Barrett says that all we can learn from is experience. We have no experience of natural gas in this country except for one find which is not yet ashore. We must learn from our experience in dealing with the problems that we encounter in that, and that experience must be available to a future Minister so that he can base future policy on the experience gained here. To tie his hands in any way in regard to that would not be correct.
Question put and agreed to.
Section 12 agreed to.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."
There is provision in subsection (3) that if a member does not disclose an interest as required by subsection (1) the Minister may dismiss him. That is fair enough. Where that happens in relation to a contract that is entered into, what is the situation? Is the contract set aside and if not, why not?
If the board entered into contract with a company and a member of the board did not disclose his connection with that company—is that what the Deputy has in mind?
I am not sure what the legal position would be but I would imagine that in their own interest the board should set aside that contract and seek to renegotiate it. Legally, I suppose the board could not enter into a contract. That is a layman's opinion and probably the Deputy would know better than I do. The section says that a member must disclose an interest and if a contract were signed by the board with that member present without his having disclosed it and it was subsequently discovered that he had this interest, I would think that the contract was void because it could not be entered into by the board under this legislation, because section 13 is in it. I think that would be the position. I am told there are two other Acts containing the same provisions in exactly that form, the ESB Act and the Nuclear Energy Act. In a small country like this I think a provision of this kind is necessary.
Question put and agreed to.
SECTION 14.
Question proposed: "That section 14 stand part of the Bill."
When does the Minister expect the report to be published?
The report will relate to a year ending, whether 31st March or 31st December or 1st January, and as soon as possible after the end of the financial year whatever it will be, the report will be published.
Some of the semiState bodies which are under the Minister's aegis at present are not publishing their reports for up to two years after the end of the financial year.
I do not think they take that long.
Several of them are well over 12 months behind. Would the Minister agree that reports coming out so late are of very little use and are no good to Deputies?
I have tried to work from them and they are no good. An argument one makes can be completely defeated by the fact that one is out of date and yet one is using the latest figures available. We have no amendment about it, but would the Minister consider putting some sort of sanction on them so that they would produce their reports in a reasonable time?
I do not think you can put something in the legislation to say that the report must be produced within 90 days after the end of the financial year but I would certainly take up the matter not just with this board but with all the boards, and ask them to expedite production of their annual reports and get them into Deputies' hands much earlier than some of them are now doing.
Question put and agreed to.
Section 15 agreed to.
SECTION 16.
I move amendment No. 3:
In page 10, subsection (4), to delete "any of" from line 24, and to substitute "such officers or servants hold or are to hold their" for "any such officer or servant holds or is to hold his" in lines 25 and 26.
This amendment is necessary as the original subsection (4) was selective and it could have been related to a section of the officers or servants of the board whereas it was intended to be of general application. The amendment has been agreed by the Department of the Public Service.
Is the word "servants" necessary there? It is a little Victorian.
It is a generally recognised form, "officers or servants" in all legislation. To remove it now might cast doubts on previous legislation. When the Nuclear Energy Board legislation was going through three or four years ago an effort was made to get rid of the word "servants" but, evidently, there are very sound legal reasons for retaining it. I am not sure what these are.
Amendment agreed to.
Section 16, as amended, agreed to.
SECTION 17.
Question proposed: "That section 17 stand part of the Bill."
Why is this section necessary? Surely every board or company is entitled if it needs them to employ consultants and advisers and so on? There may be a provision on these lines in some Act but, on the face of it, it would seem unnecessary. Does it mean that in the case of a company or board without a section of this kind, there is some doubt as to whether they can employ consultants or advisers?
This is in the ESB legislation and it was felt that if it was not included in this—which is parallel legislation to some extent—there might be some doubt cast on the ability of the board to do it because the ESB have written into their statute their right to do it.
Why does subsection (2) apparently limit the period of office or appointment of a consultant or adviser to a period of three years? If this board appoint, as inevitably they will, consulting engineers or probably architects or solicitors, are they to be out on their ear after three years? Do they have to seek reappointment? It seems very unusual and a bit unsatisfactory for them. It is almost as if they would be asked to tender at the end of three years.
These are consultants or technical advisers. The thinking behind the period of three years is that these contracts should be on as short-term a basis as possible and that the board should not engage permanent consultants.
Exactly what type of consultants are involved?
For instance, the board will be deciding what form future use of natural gas will take and what are the policy options open to the board as regards its use. If the expertise were not inside the board they could engage consultants to advise them on this and draw up the various options or policies that the board might follow in the use of natural gas in the future.
Does it envisage covering people like ordinary consultant civil engineers who would be necessary to advise on the matter of laying a pipeline or work of that kind which would be an on-going operation?
They would be engaged for a specific purpose such as laying that pipeline and they would get a contract to design the route. The board itself would undertake the laying of the pipeline but the consultants would design the route. I could not visualise it taking more than three years, and if it did a different position would be created and the board would re-engage, but not without the permission of the Ministers concerned.
Would they be technical or commercial advisers?
They would be technical in a very specialised field.
Question put and agreed to.
Section 18 agreed to.
SECTION 19.
Question proposed: "That section 19 stand part of the Bill."
Is it not unfair that if someone is nominated for election to either House he does not lose his employment but he is seconded without pay? It puts a person in a most difficult position.
Does the Deputy mean if he is elected?
No, if he is a candidate.
There are numerous examples even in this House. The first one that came to my attention was when Deputy Brugha in 1969 was a member of the RTE Authority and he had to resign when he stood for election.
This is a common section in Acts passed in the past ten years, but is it necessary? If a person is elected, fair enough. I am not so much thinking of members of the board but of employees. You could have a porter employed by BGE. Why should he have to get out if he is not subsequently elected?
I am not sure what the original thinking behind it is. Many people were in that position. In practice what happened when an election was declared was that they got their annual leave.
Under this they could not get annual leave. The sub section states:
Where a person who is either an officer or servant of the Board is nominated as a member of Seanad Éireann or for election to either House of the Oireachtas, he shall stand seconded from employment by the Board and shall not be paid by or be entitled to receive from the Board any remuneration or allowances—
He would cease employment the date the election was declared and he would have 21 days' holiday money to come. He would be re-employed on the day after the election if he were not elected. It is standard in all the State companies. If we changed it here now there would be an outcry from others to whom the provision would still apply.
Under this section the board would not be entitled to pay him holiday money.
Read it. It states: "he shall stand seconded from employment by the Board and shall not be paid or be entitled to receive from the Board any remuneration or allowances".
For a period of three weeks, but if he has holidays to come he can be paid his holiday money. Under any of the Employment Acts he would be entitled to his holiday money.
Is it not a reflection on politicians?
I would not agree. A man could not draw his salary from two sections of the State at once. It has been the practice that when a man is elected to the Oireachtas he is not employable by a State body.
Question put and agreed to.
SECTION 20.
I move amendment No. 4:
In page 12, lines 1 to 4, to substitute the following subsection for subsection (1):
"(1) A person shall not, without the consent of the Board, disclose any information obtained by him while performing duties as a member, officer or servant of, or an adviser or consultant to, the Board."
This amendment is to deal with any member, officer or servant, or an adviser or consultant to the board. It provides against disclosure of information except with the consent of the board. It tightens up the wording of subsection (1).
Amendment agreed to.
Question proposed: "That section 20, as amended, stand part of the Bill."
Is this a usual provision? It creates a penalty.
This is normal in cases where the information the officer, the adviser or member might give could be of benefit to competitors. The IDA have it. One can envisage cases where the information would be of benefit to customers, suppliers and competitors.
Question put and agreed to.
Section 21 agreed to.
SECTION 22.
Amendment No. 4a has been ruled out of order.
Question proposed: "That section 22 stand part of the Bill."
The purpose of our amendments was to raise the capital available to the board because we considered that £25 million was not sufficient if the board were to set about doing the job properly. We mentioned a figure of £100 million but the Minister said that even £25 million would be too much. We fail to see this, considering that they will embark on studies which will cost a lot of money. Last week we passed an order raising the capital of the Dublin Gas Company to £18 million, and £25 million for this board appeared to us an inadequate amount if they are to embark on any operations of the scale they should embark on not only in the light of the present find but of future discoveries to which we are all looking forward.
With the high rate of inflation is it not possible to have an inbuilt governor? Otherwise the amount would be out of date in two years.
If it should be out of date in two years' time, I would have to come back here and amend this legislation and there would have to be a debate on the operations of Bord Gáis Éireann up to that date. I cannot understand these amendments by the Opposition because, if they were accepted, the Opposition would, in effect, be muzzling themselves on a debate on Bord Gáis Éireann in future. This figure is sufficient for the immediate purposes of the board and if and when it is not sufficient, the Minister can come back here for sanction for whatever further sum is required.
The reason given by the Minister of our preventing ourselves from having a debate is hardly valid because we would be able to debate the affairs of Bord Gáis Éir-eann on the Estimate for his Department. We believe now is the time to make provision should they decide to go ahead with the erection of a grid. Provision should be made for that grid in this Bill now. Far from stymieing ourselves for the future we would find ways and means of debating the operations of Bord Gáis Éireann in the same way as we have ways and means of debating the affairs of other State bodies.
Is there not a precedent for this? Were there not Bills like this passed by the Fianna Fáil Government signing away our oil rights for £500? Let us learn a lesson from what happened in the past.
There is no precedent. This is the first time we discovered natural gas and it is the first time we set up a gas board. There is no precedent. We are endeavouring to set out what we believe is the best way to go about the setting up of this board without restricting it in the way this section restricts it. That is the main purpose of the amendments which were disallowed by the Ceann Comhairle.
We are not going to make the same mistakes Fianna Fáil made.
Order. The amendments were ruled out because Members may not move amendments which would impose a charge on revenue.
Deputy Barrett is correct in saying there is no precedent for this. This is new. A ceiling was always put in the case of other bodies and on their freedom to spend money, as Deputy Coughlan has pointed out. The idea was that the responsible Minister would come back here if it was necessary to raise the ceiling and justify the actions of the board and be amenable to the House instead of giving large sums of money without any possibility of some form of control over the expenditure of that money.
With regard to Deputy Barrett's point that the operations of these bodies can be debated on the appropriate Estimate, that is so but there are many aspects to an Estimate and the same microscopic attention could not be given as would be given were the Minister to come back specifically to raise the borrowing limits. I believe that is good for the Minister, for the House and for the particular body.
We do not object to a ceiling. It is to the amount we object. With regard to Fianna Fáil selling out our resources, the £500 was stamp duty and the Ambassador Oil Company spent £15 million exploring for oil and natural gas as a result of that agreement. Were it not for that agreement, we would not be debating this Bill today.
Question put and agreed to.
SECTION 23.
Amendment No. 4b in the names of Deputy Barrett and Deputy O'Malley.
The letter I got said amendments Nos. 4a, 4d and 4e were disallowed.
That is correct. We are now on amendment No. 4b to section 23.
I move amendment No. 4b:
In page 12, subsection (2), line 45, to delete "£25,000,000" and substitute "£100,000,000".
This amendment does not impose a potential charge on the revenue. It deals with the limit of the borrowing powers. The argument is essentially the same as the argument made on the previous section. If the board were to decide to construct a grid, this figure of £25 million would not cover the expenditure involved. The Minister may say that, in that eventuality, he will come back but he will recall that under section 9 additional functions can be conferred on the board without further legislation. It seems strange that that can be done without legislation while the building of a grid, one of the more obvious functions, would need legislation. To me, that is not logical. I am told the minimum estimate for a liquefaction plant would be about £50 million.
That is the very minimum.
Certainly £25 million will not get the board very far on a liquefaction plant. It would seem then that the board are not to have such a plant without legislation.
Oh, yes—certainly without legislation.
A grid and a liquefaction plant are two obvious functions of the board, assuming they are found to be economic. I would hope the liquefaction plant would be economic. It is not necessary at the moment because the find is small but, if there are further finds, such a plant will be absolutely essential. I take the Minister's point that he can come back but, if there is no objection to coming back for each development the board may undertake, there should be no objection to coming back for the conferral of additional functions on the board under section 9. That would seem logical. The £25 million is not a great deal of money in the context of the kind of things the board should be undertaking. It is very small, indeed, in that context. It will pay for the pipelines from where the gas is landed on the southeastern shore of Cork Harbour up along the eastern shore to the ESB, to NET and to the city. It will not cover very much more than that. In the circumstances, would the Minister not consider a more adequate figure for capital borrowings because presumably what will happen in the first couple of years will be all borrowed until such time as the board are in a position to build up a revenue of their own or reserves of their own?
That is right. The £25 million involved here is sufficient for the board to do what they have now been told to do, bring the existing gas find through the route named by Deputy O'Malley. If they want to do anything beyond that and if the argument tots up that there is only one small find and it is an argument or a choice as a result of studies undertaken by the board, there is sufficient money there for that. In relation to whether it should be a liquefaction or a national grid, the board or the Minister concerned cannot take that decision without coming into the Dáil and justifying it. That is a good thing. It is very possible, in relation to the grid spoken about by Deputy O'Malley and the necessity for it, that the extra £75 million he speaks of on top of the £25 million might not be sufficient if you had a grid big enough. If the find was big enough and the grid was extensive enough, £75 million might not be enough.
One could not build a whole grid overnight.
Perhaps not. I do not know why the Opposition are doing this. It is a good thing that the Minister should come back here. As regards the functions referred to in section 9 of the Bill, it is correct that the Minister can designate further functions to the board. If those functions should raise their borrowing limit over £25 million—one is talking about fairly major functions at that stage— the Minister must come back again to allow them to increase our borrowing limit over £25 million so the Dáil has a chance to debate those further functions that are designated to the Minister by the board. Under section 9 (2) it has to be approved by both the Dáil and the Seanad. I believe that £25 million is sufficient to deal with the find that is there. Any further finds and their use should be debated in the House.
Amendment, by leave, withdrawn.
I move amendment No. 4c:
In page 13, subsection (4), line 8, to delete "time of the borrowing" and substitute "date of each annual balance sheet of the Board".
The purpose of this amendment is to ensure that in the annual accounts of the board a realistic figure will be shown for borrowing, particularly foreign borrowing. We have had a number of examples recently from two semi-State bodies which have run into a lot of trouble with foreign borrowing, which has gone wrong on them. I refer to the ESB and the ACC. The ACC have shown a substantial loss in their last account as a result of heavy capital losses on foreign borrowing. The ESB have, equally, a lot of trouble with foreign borrowing when they have lost very heavily on it. They have not disclosed this in the same way. They have shown in their account the foreign borrowing as converted into sterling at the time they borrowed it but that bears no relation now to reality. It is only putting off the evil day.
The ESB will have, annually, to make provision against it and the borrowing figures will have to be shown fully in their accounts in the years in which the various loans fall due for repayment. It is misleading to have it otherwise than the way I suggest here. For example, if £5 million was borrowed by one of those boards in 1971, that is equivalent to £7 million. They owe £7 million today if they borrowed £5 million in 1971, as well as the interest and all the rest of it they have been paying in the meantime and will have to continue to pay. This puts a sense of realism into the figure which is shown. It is clearly misleading to give the sterling balance as it was on the date it was borrowed in the kind of financial situation we find ourselves in now.
This point will arise again on section 25. In this particular section the effect could be that where there was nominal borrowing of £23 million the real borrowing would be £26 million. The amount owed would be £26 million and it would be necessary to come back during the currency of the loan, without having obtained a new loan, to get sanction for the higher figure. Perhaps the point I am making here is less important in this particular context than it is in the context of section 25 where it is a question of State guarantee of borrowings by the board for capital purposes.
The main point I want to make as regards this section and section 25 is that if boards, such as this, persist in the policy they have adopted over the past few years of not showing their actual liabilities but showing the liabilities as they were on the date they borrowed them they were misleading the public and they are only putting a gloss on their accounts for the time being. It would be better if the actual loan were updated in terms of sterling each year rather than continuing to show the figure as it was on the date it was borrowed.
This subsection and the other subsections start off by saying:
For the purposes of calculating the amount of borrowings by reference to the limit on principal in subsection (2) of this section the equivalent in the currency of the State of borrowings in a foreign currency shall be calculated at the exchange rate prevailing at the time of the borrowing.
As Deputy O'Malley said, one could have a situation where a board at this time of the year had £24 million at their last date of valuation and if the £ was devalued and the Dáil were not sitting and they went over, by a revalued set of currencies, the £25 million the Minister concerned could not come back into the Dáil and get the £25 million raised to take it. The company would have only one option, repay a sufficient amount of the loan they borrowed to bring them below the £25 million they borrowed.
It is clearly undesirable that the company should be put in that position at a time when the Dáil is not sitting or, indeed, at any time. It would create some questioning in the minds of foreign borrowers if this figure kept on switching and changing in every balance sheet. It is purely for the purpose of calculating the amount of the borrowings by reference to the limit and the principal on some kind of a continuing basis from year to year that this formula is used. If the Dáil was not in session, it would have to be specially recalled to get, perhaps, £250,000 extra borrowing power for the company involved or the company would have to repay that loan more quickly than had been contracted for in order to get their borrowing limit below the £25 million. The other gives a much clearer and much more consistent form of calculation over the life of the loan or over the life of the company. The same provision applies in the Agricultural Credit Act, 1972 and several of the more recent Acts.
Amendment, by leave, withdrawn.
Section agreed to.
Section 24 agreed to.
SECTION 25.
Amendments Nos. 4d and 4e have been ruled out of order as they involve a potential charge on State funds.
How is amendment No. 4e out of order? It is the very same as amendment No. 4c.
Because it involves a potential charge on revenue.
Question proposed: "That section 25 stand part of the Bill."
I do not follow how amendment No. 4e is a charge.
It is because the Minister for Finance is guaranteeing the loans in this case. Therefore, the charge will be on the Minister.
When I was talking on amendment No. 4c which was in order, the point I was making referred to amendment No. 4e. Because they are almost identical I did not anticipate that amendment No. 4e would be ruled out of order. Arising out of amendment No. 4e, it is more substantive in this instance because it is an actual guarantee by the Minister for Finance. It is only right that the public through the annual report should be given the up-to-date figure of what the Minister has guaranteed. There is no point in telling the public that the Minister has guaranteed £20 million when he will have to repay £27 million. It is misleading.
This is related to the £25 million.
It is in relation to guarantees by the Minister. The amount does not matter.
The point arises with regard to the method of calculation in arriving at the £25 million. If account is taken of the Deputy's suggestion regarding updating the value of the currency every year, we should also take account of Deputy Moore's suggestion regarding updating the £25 million every year to keep them in balance.
On the question of guaranteeing borrowing which arises under this section, does the Minister envisage the capital requirements of the board being met from the Exchequer or will the board have to go to the market-places to fund themselves, with a guarantee from the Minister?
That is what I would envisage.
The Minister does not envisage the Minister for Finance advancing any funds?
Not in the case of the £25 million but I should not like to make a categorical statement regarding this matter. A future Minister for Finance might adopt a different approach or there might be different circumstances that would dictate Exchequer financing.
Question put and agreed to.
SECTION 26.
Question proposed: "That section 26 stand part of the Bill."
In this section there is a provision that a district justice will be able to stop the board entering on land and there is no right of appeal in this case.
There is that right. That point was raised when the Bill was being drafted. We consulted the Attorney General with regard to the matter. There is the right of appeal to a higher court from a decision of a district justice.
It is not specified here.
It is automatic. Any decision by a district justice can be appealed to a higher court and this applies in this instance. The Attorney General was consulted and so advised.
This is not a case in the litigation sense. It is a kind of application under a section of an Act that possibly would not give a right of appeal unless it was specifically granted.
The Attorney General has advised that there is a right of appeal against the decision of a justice of the district court in this matter. This subsection was specifically brought to his attention and he advised accordingly.
Question put and agreed to.
SECTION 27.
Question proposed: "That section 27 stand part of the Bill."
Does this not give the board tremendous power? Will it be subject to the ordinary law of the land? Subsection (1) (a) makes reference to the alteration, repair or demolition of a building. What would be the situation if the building was a dwellinghouse? Would it be subject to the 1969 Housing Act? Would the board have to seek permission from the Department of Local Government to demolish a house?
No, the board will not have to apply to the Minister for Local Government.
Is it the situation that they will not have to apply for permission under the 1969 Act to demolish a house?
It is written into section 27 (1) (a).
It is rather strong to give such power to a board.
One can understand the necessity for this when one is dealing with an important matter such as natural gas. A number of boards such as the ESB, CIE, the Dublin Gas Company and the Cork Gas Company have such a right.
The ESB did not have the right in Pembroke Street to demolish their offices. They had to get permission.
I think it is for the purposes of laying pipes. If a gas authority wanted to lay pipes they could do so. Subsection (2) states:
The Board shall not, in relation to a thing owned by the Commission, a road authority, a person specified or described in section 8 (9) of this Act or the Minister or any other Minister of State, exercise a power mentioned in subsection (1) of this section except with the consent of the Commission, road authority, person or Minister of State concerned...
In any event there would be consultation.
I take it that the board would own the buildings they demolish, that they would have acquired them?
Yes, they would have acquired them. It is not just a case of knocking down a person's house without paying for it. They would pay compensation which would be subject to an arbitration board.
Under what section is acquisition carried out?
Would it not be more logical to have the post-acquisition activity governed by a section that would be subsequent to the section dealing with acquisition?
The Bill will not work chronologically. It will be the Act as a whole.
For the purpose of considering it.
Question put and agreed to.
Sections 28 to 31, inclusive, agreed to.
SECTION 32.
Question proposed: "That section 32 stand part of the Bill."
This is very long and detailed. Is there any difference between the sort of acquisition procedure proposed here and the ordinary CPO procedure of the local authorities?
It would relate more to bodies such as the ESB and CIE. It would relate to them rather than to CPOs. They must all be used for a specific purpose. These relate more to the acquisition powers vested in State bodies rather than local authorities.
Such as the powers of the IDA?
I cannot answer that. I am not sure whether the IDA correspond to this or to the local government ones.
The Minister mentioned the ESB. The Minister for Posts and Telegraphs has powers for laying telegraph poles and wires. The wayleave is combined in this authority to being able to use that right alongside the public highway. He is prevented from crossing land except by agreement. The ESB have more exhaustive powers. I always felt it was rather remarkable that a State-sponsored body had more power than a Minister. This is behind Deputy O'Malley's question. Will the power in this section be more exhaustive than the ESB's power?
It is a similar. They will have power to enter land and lay gaspipes. The difference is that the gaspipes will be underground and will need a protection corridor.
I was a bit disturbed to hear the Minister saying it is the same as the ESB's powers. Without wishing to be more critical than one has to be of the ESB, anybody who knows farmers, or who lives in the country and has seen the ESB laying these big high transmission or high tension cables or pylons, knows the ESB act in a most arrogant and highhanded fashion. This is a pretty universal experience throughout the country. They have considerable power under their Acts. They act without much regard for the rights of the owner of the property. I know one farmer near Limerick who has no less than four different sets of these wretched lines in a large field and about 20 acres of his land is valueless now because the ESB saw fit to run four of these wretched lines into one field.
The ESB, in my experience, usually pay no compensation for putting in these wires. They pay if they acquire land but, if they just fix their high tension poles or pylons, they do not pay anything. They serve some sort of notice on you with a map with a red line drawn across it. They tell you they are coming in in a week to put them in, and then a horde of them descend and dig up the farm and in many cases they render the land useless. The local authority will not allow banding within a fixed distance from these high tension lines—I forget the figure, it varies depending on the voltage in the wires. In the case of some of the big ones I think it can be as much as 100 yards. In the case of the lower tension ones it is 50 feet or something like that. This means that, to a great extent, the land is locked up. Is it proposed here that where gaspipes are being laid across agricultural land the board will acquire the land, or is it envisaged that they will simply acquire a wayleave across it and a right to lay their pipes? If it is a wayleave, will they act like the ESB or will they pay compensation to the farmers concerned?
It is a wayleave and they will pay compensation. I would direct the attention of the House to subsection (9), which says:
In case the Board constructs a pipeline the Board shall take all reasonable measures to protect the natural environment and to avoid injuring the amenities of the area and, in particular, and without prejudice to the generality of the foregoing, the Board shall while constructing the pipeline take all reasonable steps to prevent injury to any building, site, flora, fauna, feature or other thing which is of particular architectural, historic, archaeological, geological or natural interest, and when selecting the route for the pipeline the Board shall consult the Commission and in addition shall have regard to any representations made to the Board as regards the route of such pipeline by any local authority within whose functional area a proposed route, or any part of such a route would, if the pipeline were constructed, be situate, or any of the following on, in or over whose land such route or part would in such circumstances be situate...
There is a tremendous amount of protection there which was not in previous Acts for people whose land is being crossed and in relation to any damage which might be done on the route of the proposed pipes.
I am sure the House will agree it is desirable that BGE should have these powers so that they will not be frustrated in their attempts to bring natural gas to whatever parts of the country the Government decide. The powers of the board in this Bill are much more restrictive than the powers the ESB have. A practical example of this is: at the moment the board are negotiating with the IFA. While those negotiations are not yet concluded I think they are proceeding in an amicable and understanding way. I hope the IFA are satisfied with the attitude adopted by the board and that, without going to arbitration and without the board using their powers under this Bill, agreement can be reached with that body of farmers.
For the negotiations with the IFA, BGE have employed one officer with an agricultural and technological background in this field. He has had experience in another country of such negotiations.
May we take it the pipeline will be under the ground?
Reading this it seems to envisage the acquisition of land rather than rights over the land to a great extent. Take, for example, subsection (7).
Besides the rights over the land, they would also be acquiring land itself to build on——
Not to build the pipe on?
No, the transmission stations and so on.
The depth of the pipe will probably vary from place to place depending on the nature of the land, the contours and all the rest of it, but will the pipe be reasonably deeply buried so that, say, tillage can take place on top of it? What will be the usual position?
About three feet down. Yes, tillage could take place on top.
And will the board allow tillage to take place on top?
Yes, they will. That has been part of the agreement with the IFA.
What is the diameter of the pipe envisaged?
Twenty-four inches. This is the one that is handling the existing find. Of course, it need not be that diameter; it could be 12, 18 or 36 depending on how much gas there was and so on, but in this case it has to be 24 inches.
In the case where the board do not require the actual land but are simply acquiring the right to lay the pipe I hope they will, first of all, consult with the owner concerned, unlike the ESB who arrogantly walk in, cut down trees and put up their wires; and, secondly, that they will pay for the wayleave that is involved in laying a pipe even though they do not acquire ownership of the land on which or under which——
That is what the negotiations with the IFA are about at the moment.
About the payment for the wayleave——
——as opposed to the actual purchase——
Yes, to the purchasing of land for construction and building.
And there would be no question of their going in and cutting down things?
I think local authorities pay wayleaves.
Local authorities do, but the ESB do not, on the grounds that the cattle can graze under the wires——
Question put and agreed to.
SECTION 33.
Question proposed: "That section 33 stand part of the Bill."
Compensation under this section covers wayleaves. I understand there is a great deal of controversy or dissatisfaction in the Cork area because of the compensation being offered for these wayleaves at present, and that it is claimed that it is not comparable with what is being paid in England by wayleaves by the British Gas Board. Where wayleaves have been acquired by the board, if a person is not satisfied with the offer made, has he the right to go to arbitration the same as if the land was being purchased?
How would the Minister envisage the board deciding what should be offered?
These discussions are going on at the moment. The board are trying to devise a formula with the IFA that will apply to wayleaves over the land where the pipe is carried. If agreement can be reached on this, that formula will be applied to all the land where the pipe will run. There may be individuals in the route of the pipe who are not members of the IFA, and they will have to be negotiated with separately, or maybe there will be individual members of the IFA who will not accept this formula as being a basis for compensation, so they will have to be negotiated with separately. However, my understanding is that the discussions are going well and that there is a very good chance that an agreement with them as a body will be reached. That does not mean that agreement will be reached with individual members of that body or individuals who are not members of that body.
Yes, they have a right to arbitration.
Does the Minister know that agreement is not being reached?
He can take it from me that it is not. The measure of compensation for wayleaves is different from that for lands acquired for sheds, houses or other buildings. Is that not correct? Our measure of compensation for wayleaves is also different from that which is given by the British Gas Board.
I do not know how the Deputy could come to that conclusion, because no agreement has been reached yet. I would assume the IFA and BGE have taken up negotiating positions. If agreement is reached, then obviously the formula by which the farmers will be compensated for the use of their land is at least acceptable to the farmers' body, which is the IFA, but you cannot say yet that it is not acceptable until you know that.
May I ask the Minister for information under two headings? First, is the measure of compensation for wayleaves the same as the measure of compensation for land which is acquired for sheds or for some other purposes by the gas board? Secondly, is the compensation for wayleaves proposed to be paid by Bord Gáis Éireann the same as the compensation being paid by the British Gas Board? Will the Minister answer the questions?
If the Deputy gives me a chance, I will. I just do not know. Even though some reference might be made to the basis of payment by the British Gas Board, I would not think it would necessarily follow that the same compensation would be paid here as would be paid by the British Gas Board.
It is 70 per cent here and it is 100 per cent of the value of the land in Britain. Would the Minister ask his counterpart——
So that he will find out?
The Deputy should let me finish. I do not think it should necessarily follow that the same compensation should be paid here as is paid in Britain. If the price paid in Britain was, say, £30, would he say that is all that should be got here in certain instances and that it should not be £40? There is no uniformity, and it is not necessary that there should be uniformity. If Bord Gáis Éireann can reach agreement with the IFA on this matter, I think that would be generally acceptable to 99 per cent of the farmers involved in the compensation, and if they do not, then some other formula will have to be devised which will prove acceptable to the farmers' body. However, I think BGE are approaching it in the right way in trying to get an acceptable formula on the presumption that the IFA would speak for the vast majority of farmers.
The Minister has not answered the questions I have asked at all. I asked two simple questions and I did not get a reply to either. I will not press him any further on the matter, but I am stating, first that our compensation is different from and lesser than it is in Britain; and, secondly, that the measure of compensation for wayleaves is much less than it is for the acquisition of other lands. The Minister must know very well that there were negotiations going on last night down in Cork about this very point I am making.
He should know by now what is the outcome.
Does the Minister care whether these negotiations were going on?
The Deputy should not be facetious.
The Minister said that agreement with the IFA as a result of negotiations might set a pattern. It is difficult to understand how it could, because surely the value of all the fields involved would not be the same. A great deal of damage may be caused to the value of a man's property because of a wayleave, whereas it might not be so much in other cases. It seems to me that it would be very difficult to set a standard——
——as a result of negotiations with a body, apart from people who are not members of that body. It may be said that near Cork compensation should be more than away from Cork. There must be flexibility.
Yes, I agree with the Deputy. I do not think it would be easy to devise a formula. If a formula can be devised and if that can be agreed by the IFA that is a major step forward and will ease considerably the problems of BGE in acquiring land and will also reduce considerably the number of cases that go to arbitration. I do not think that this is a simple thing that can be agreed after one night's sitting. This has been going on for a good while and I would see it going on for another few months and even at that stage it might not prove acceptable but the attitude is right and the machinery for devising it is correct and BGE are right to try to reach an agreement with the body rather than go from farmer to farmer.
I presume that if they get enough money they can reach agreement far more quickly.
I doubt if Cork farmers are so difficult to deal with.
The Deputy can see the consequences of that, (a) the price of the gas and (b) that it would not be desirable that BGE should set a price that became the norm for even local authorities in that area or indeed throughout the country. There are other people to be considered besides BGE.
Question put and agreed to.
SECTION 34.
Question proposed: "That section 34 stand part of the Bill."
Why is there a separate section for entry on land by BGE Teoranta when BGE Teoranta are being dissolved in the following section?
Because they have already entered on some land and they must be provided for in what they were doing since they were set up even though they will be disestablished later on.
Yes, but the sections says:
... may at any reasonable time during the period beginning on the passing of this Act and ending on the day preceding the establishment day ...
It only authorises them from the day the Act is passed. It does not authorise what they are doing now, whatever that is.
The Act is brought in by Ministerial Order and if there is a gap between the passing of the Act and the time the Ministerial Order is made then they can enter on land in the meantime as Bord Gáis Éireann Teoranta. That on the establishment day will cease to function and Bord Gáis Éireann will be the body concerned at that stage and they will take over all the functions and all the negotiations that Bord Gáis Éireann Teoranta are presently involved in.
Have they actually started building any of this yet?
Anything they have done up to now has been by agreement with people. This section will give Bord Gáis Éireann Teoranta the right to use the powers of this Bill to enter on land.
Question put and agreed to.
SECTION 35.
I move amendment No. 4f:
In page 23, subsection (6), line 29, after "accordingly" to add "save and except that any contract already entered into between the Company and the E.S.B. shall not be enforceable against the Board".
This comes back to the kernel of the whole thing. The manner in which the gas was allocated by Bord Gáis Éireann Teoranta and the fact that the ESB were allocated 60 per cent of this gas is something that we have disagreed with and will continue to disagree with. While Bord Gáis Éireann Teoranta were not responsible for making the actual decision, they were the body through which the decision was executed. The 60 per cent of the first gas find in our history will be wasted on a scale that should not be tolerated. We put forward last week and have mentioned again today ways in which it could be utilised for the greater benefit of the economy and everyone concerned.
We maintain that the question of a gas grid should have been considered two years ago, not now after this Bill is passed. The loss of 70 to 75 per cent of this gas by generating electricity is a waste of natural resources. It was undoubtedly allocated to the ESB as a matter of expediency. We do not agree with this. It should not have been got rid of in a hurry in a way where three-quarters of the allocation is wasted. It should be fed into Dublin and the densely populated areas on the way. Looking to the future we should be thinking of making it available in places like Shannon, Ennis, the West of Ireland, Dundalk and Drogheda. We should think along these lines. By having low cost energy available particularly in the West of Ireland we would undoubtedly tempt and encourage industrialists to go to the West of Ireland in order to utilise this low cost energy. If what we propose is adopted this is what would happen. Instead of that there is this colossal waste of our natural gas.
Last week we mentioned that it is contrary to EEC policy to utilise natural gas to generate electricity. The Minister gave instances where it was used in some of the EEC countries, but it was put to this use some years before the EEC came out with this particular line of thought on the utilisation of natural gas. Since then as far as we are aware nobody has contravened EEC policy in this matter. We are only a short time in the world of natural gas and our Government made this decision and the fact that Bord Gáis is taking over the liabilities and all contracts and so on of Bord Gáis Éireann Teoranta should not mean that we should perpetuate a wrong decision. I have not read any article or magazine that agrees with this decision to make it available to the ESB and the experts in the EEC countries who have had natural gas for some years, do not agree with what we have done in this country, and we feel that the decision can still be reversed. Admittedly the ESB have gone ahead with their plans for building a generating station in Cork, but they say that this station is designed in such a manner that it can be changed to oil from gas at very short notice. So, in the event of our finding our own oil or the ESB wanting to continue with this, they can still get heavy fuel oil at reasonable prices under present market conditions. If action is not taken now to reverse this decision by acceptance of our amendment one of the greatest mistakes made in many years will be perpetuated. Natural gas, which we did not dream we would have at the time of the oil crisis a few years ago will be wasted. We did not know we were going to have it. We would have loved to have had it. Now we find ourselves with sufficient natural gas to enable us to produce a low cost energy policy.
We are well aware of what we suffered in the last three years as a result of the oil crisis. We know what happened in all sectors of the economy because of the oil crisis and our dependence on oil. Now, we could get away from this terrible dependence on oil; natural gas, together with turf and hydro-electric schemes would certainly give us reasonable independence should another oil crisis occur and we cannot be sure it will not.
We put down this amendment to undo a very wrong decision in our opinion. We are backed up by the opinion of the EEC Energy Committee. Now, there is an opportunity to undo that wrong decision—it is not too late—and to utilise the natural gas for the benefit of the country and help to break the stranglehold in which we have been for the past three years as a result of the oil crisis and the attitude of the multi-national oil companies in charging us for energy on which we were dependent.
To take the Deputy's final point about the EEC directive, that directive does not prohibit use in member states of natural gas for electricity generation but it sets out the circumstances in which the use of natural gas for the generation of electricity may be authorised by a national Administration. That directive is dated 13th March, 1975, and so it could only apply to decisions taken since that date. The Government decision to give the natural gas to the ESB was taken in March, 1974, 12 months earlier.
In any case, the EEC directive provides that while the supply of natural gas for electricity generation is to be on an interruptible basis, it may be authorised if the use of the gas proves necessary for technical reasons or if the gas cannot be put to a more profitable use. On both these counts I think the decision of the Government to allocate the gas to the ESB is acceptable in EEC circles. It is an interruptible supply. If we should at some future date decide that we had a better technical use for this gas we could, because of the fact that the generating station being built at Whitegate, County Cork, is capable of being switched to oil operation, have the option of taking away the gas from the ESB. The amendment of Deputy Barrett and Deputy O'Malley would make BGE and the State—the ESB being the victim—go back on a contract already entered into. That is not a very desirable standard for a State body to set.
It is argued that the use of natural gas for electricity generation is wasteful and I think Deputy Barrett used the figure of 75 per cent waste. The ESB say that with them the conversion rate for electricity is about 40 per cent on a year-round basis, taking into account stopping and starting and everything else. At the user's end, the actual point of use, electricity is the most efficient of all, much more efficient than gas, coal or turf or oil. It has the highest thermal efficiency at the users' end. It appears that the conversion is less efficient than in the case of gas or oil but is much more efficient at the user's end. You cannot argue that because it is not as efficient at one stage you should not use it even though you get a better result with the end use of the natural gas. Conversion of any fuel is wasteful, varying in degree from 10 per cent to 80 per cent.
Deputy Barrett talks of using natural gas in Ennis and Shannon and Clare but the fact is that the only energy distribution system we have on a national basis where a grid already exists is in the case of electricity. Deputy O'Malley referred to an energy conference held in London last week. An energy conference on the use of natural gas was held here about two months ago and some very fine papers were produced. Both sides of the argument were put with spokesmen from the electricity generating bodies arguing that because a grid exists, even though the conversion rate in converting natural gas to electricity was wasteful, the capital costs were very much less and we had the benefit of that. You could get a higher conversion rate by using natural gas all over the country by building a new grid. You must balance one calculation with the other, whether it would be more beneficial to the economy to build a grid and get a higher efficiency rate from the natural gas or get a lower efficiency and use the existing national grid which at present feeds every part of Ireland from north Donegal to the south of Cork. There are two points of view about this. Frequently, Deputy O'Brien makes pleas here for district heating. If the ESB can develop district heating from the waste heat at their power station there will be still greater efficiency in the use of natural gas to generate electricity.
Having said all that, I fully subscribe to the Government's decision which was absolutely right at the time to allocate the gas to the ESB because they had the plans. The benefits of this natural gas are, to a large extent, being distributed over the whole country because 50 per cent of this find is going to the ESB who are feeding the whole country with an energy source. It was the right decision at the time because we had to have big users. The argument has been made about shipping it to Dublin but the use of existing gas in Dublin at that time was less than 10 per cent of the total gas find. Given that, and given our overdependence on imported oil, we should seek to lessen that dependence as far as possible and make ourselves as independent as possible in regard to energy for industrial and domestic use.
The decision at that stage to make us independent in fertilisers for farmers and go some way, even though not nearly far enough, towards making us less dependent on imported oil was the correct decision. For me to accept an amendment that would ask BGE to go back on a contract already signed is something I cannot do. In regard to any further decisions taken in respect of using any further finds of gas, because of the defeat of the Opposition's amendment to raise the £25 million to £100 million this evening, they will have a chance to say what use should be made of these future finds. After two years I cannot now accept that BGE should go back on a contract with the ESB or should ask the ESB at this stage to reverse engines and change their whole buying policy. That policy is tied up with the amount of peat they can get from Bord na Móna. I cannot ask the board to go back on that contract or any future contracts for usage of natural gas. In that event we would have to come back here looking for more money for BGE and we would have another chance of exchanging views.
There would be very little point in expressing views on the amount of our natural gas that will have gone up in smoke or in vapour by that time. The question of going back on contracts is a different matter. I would not subscribe to it, but this is a matter of major importance and merits serious consideration because of the wastage involved. There were contracts for the supply of oil and when the price went up the suppliers did not mind going back on their contracts and mulcting us.
I am surprised at Deputy Barrett. His amendment suggests another thing.
The Minister said the agreement was reached in 1974 but it was only in July, 1975, that BGE and Marathon reached agreement to take gas from Marathon.
On the price to be paid for it. The agreement to take it was much earlier.
It was a contract for the supply of gas, and the price must have entered into it. This decision is not of long standing.
It does not matter if it were only of 24 hours, it is a contract.
Everybody but this Government accepts that it is a mistake to waste our natural gas in this way.
The Minister speaks about the ESB having an established grid. Why should we not establish a gas grid? Whatever happens about the price of oil, the ESB costs seem to keep going up. Even now when heavy fuel oil has come down in price there is no question of domestic users paying less, and I presume the same applies to other users. We propose, and we will continue to do so, that this gas should be used to the maximum benefit of the country and we should set about doing this from the start. By the time other strikes have been made we will have wasted a high percentage. If the ESB are so far advanced with their generating station they can turn over to fuel oil, which is not so expensive now. The sky will not fall down if we insist that they do this. We think the case we have made this week and last week cannot be denied.
I do not think I can give any further answers. As the Deputy has said, the matter has been debated for quite a long time. Even if in the future it is decided that the ESB would not be allowed further use, this can be done under existing legislation rather than asking us now to break a contract with the ESB. It need not be written into legislation in the way suggested in the amendment.
The agreement between Marathon and BGE was come to in July, 1975, subsequent to the EEC directive asking member states not to use natural gas wastefully to generate electricity. The BGE-ESB agreement must have been subsequent to that date. It is possible that the contract has not yet been signed.
It is of very recent origin?
My goodness me, I wonder was it rushed before this Bill.
What dastardly deeds is the Deputy imputing? What is the significance of this?
We were given to believe this was an agreement of long standing.
The Deputy is confusing two things.
The contract we are talking about we now discover was only signed this month.
I am talking about a Government decision.
The EEC directive states that it is wasteful and they tell members not to generate electricity from natural gas. Apparently this contract was signed only in June, 1976. For all we know it may have been signed yesterday, 15 months after the EEC directive, long after the directive was brought to the Government's attention. I will quote again from Mr. Bunyan's article in Energy Ireland:
The ESB will use 270 million therms p.a. from the Kinsale field. As a rule of thumb, for every three units of natural gas available one unit is lost in pipeline and appliance losses, while two units are lost in electricity generation transmission and appliance losses. Thus, the decision to use the gas to generate electricity is a net loss to the country of 90 million therms p.a. which if sold as a direct substitute for diesel oil at the current price of 15 pence/therm would generate a revenue of £13.5 million p.a. for 20 years—more than enough to pay for the investment of £113 million for the proposed pipelines.
Let us take diesel at 15p per therm. There are other more expensive and some less expensive forms of oil for the generation of energy. That amounts to £13.5 million per annum lost for 20 years, a total loss of £270 million. In other words, the acceptance of this amendment would save us £270 million. Not alone would it double the gas grid but it would show a vast profit and he sets out at length —it is all graphs and statistics—how the gas grid would pay for itself. It would be optimum use. That is not denied.
Another aspect to which he refers is worthy of the attention of the House:
However, the use of natural gas exclusively as a feedstock may not constitute the best use in economic and national terms. The fertiliser and the chemical industries have been subject to cycles of under and over supply. An investment decision, taken in a time of high demand, may turn out to be the wrong decision if demand falls. If the export market declines, we could find ourselves having to sell our finished product at a loss, as we have found many times in the past with our agricultural produce.
We have committed ourselves 40 per cent to NET and 60 per cent to the ESB. This natural gas is suitable for the establishment of various kinds of petro-chemical industry and that usage would be optimum usage and very economic. That unfortunately does not seem to have been taken into account at all. The two things picked were fertiliser and electricity. In the past week we have seen what can happen to the fertiliser industry. Gouldings, a long established firm, is closing down and firing 365 men. I know the type of fertiliser they were making is different from the type that will be made in Cork by NET, but what has happened to Gouldings shows the problems the industry can face. Fertiliser sales over the past two or three years have been away down. We are now committing a large proportion of this to one business which, as Mr. Bunyan says, is cyclic. We have a tragic example of how cyclic it is. I am not seriously objecting to NET using this, though there is a certain element of risk involved, but it is a risk we have to take.
The major objection is to the ESB and the arrangement made, an arrangement finalised in contractual form only this very month after notice had been given to the Government about the reservations of just about everyone involved, apart from the ESB and those in the electricity lobby. They are the only people who have no reservations or doubts. On Mr. Bunyan's figures, which are not disputed, I think, there will be a loss of £270 million arising out of what was decided by the Government two years ago and signed in the form of a contract probably as recently as yesterday. We know it was this month anyway.
These are serious matters and this is perhaps the last opportunity we will get to pull back on a major contract, one of very great importance to us, and save ourselves from wasting 60 per cent. That is something we should do now. The Minister fails to take into account the fact that the ESB have now a surplus generating capacity. The growth in electricity demand and sales is zero and has been for the past two years. I am not certain that what is being proposed is wise remembering the existing surplus capacity apart altogether from the national waste involved in using a very valuable source of energy in this way.
Deputy O'Malley has raised two very interesting points, particularly that with regard to the date of the contract. Despite the Minister's statement that they gave these contracts to the bodies they did because they had the organisation, Deputy O'Malley has pointed out there will still be this waste of a very valuable natural asset. It is the Opposition's duty to show we are not satisfied. We believe there will be colossal waste and the country will not reap the benefit it should. Deputy O'Malley also referred to the closure of Gouldings. We all know the fertiliser market fluctuates and the possibility is—we hope it will not be the evolution—the market will fluctuate again. If NET are not able to use all the allocation, what will happen? You cannot just turn natural gas off and on as you would your domestic gas cooker. I am not at all satisfied at the way things are being done and there will be great uneasiness for some years to come watching how this will work out.
The Minister said the Government acted in the best interests. I am sure they did but they did not act in the best interests of the economic use of natural gas. The Minister implied the use of waste gas was peculiar to the ESB. That is not true. Any industrial undertaking which generates heat to any great extent will have waste heat. The waste coming off the first boiler cannot be trapped and used for other purposes. I would hope the ESB would be successful in harnessing this waste heat. We are starting a fairly large housing development in close proximity to two very big ESB stations and we suggested the ESB should be given the contract to heat and light these houses by using waste heat but we were told by the National Building Agency this is not possible. If it is not possible in a densely populated area what hope is there of using such waste in remote areas where houses are thin on the ground?
The formal signing of the contract has not yet been completed. The agreement is there but it has not been signed formally by the boards of the two companies. Deputy O'Malley raised the point about the EEC directive. He said somebody is working to the detriment of the Irish people. The EEC directive referred to decisions taken by national administrations. The Government of this country took the decision to use this gas in this manner 12 months prior to the EEC directive. They had to decide at that stage, which was approximately six months after the discovery of the field and less than 12 months after we came into office, and there were no feasibility studies as to the value or otherwise to the economy of a national grid when we came into office. The Government had to decide the quickest way to get the gas ashore and used in the interests of the Irish economy.
Deputy Barrett speaks about building a grid but this was not possible in the circumstances. It has taken over two years to get as far as this with a very small gas find involved, less than 13 miles. The feasibility of building a grid, the cost of building it, were just not on. Numerous figures have been quoted for the cost of a grid in the country. Any one of them may or may not be right. The only thing I can do is give the cost of an existing pipeline from Inch Strand to the Marino electricity works in Cork. You can multiply that by the appropriate amount of 30. You might be right or you might not. The terrain might be different and there might be more or fewer river crossings. It would not be possible to take this gas. It was essential to get the contract price for the gas at the right level, to take it off fast, because the people who are selling the gas had made large capital investments to discover this gas and subsequently, as they are doing now, to exploit the gas.
The longer the gas was left in the ground the dearer the gas would get because those people would have their money out that much longer. A quick take off was necessary if we were to get a price for the gas. It was also necessary from the point of view of the economy of this country and, as I said earlier, the dependence on imported oil. The oil crisis is still fresh in our minds so we were anxious to lower our dependence as quickly as possible on imported oil.
Deputy O'Malley spoke about petro-chemical industries. There is a fairly small market in the country available to petro-chemical industries so any market we had would have to be an export market which makes slow growth. I am not taking a figure out of my head but it might take 25 years, certainly a great number of years, to build an export market to take off a find of this limited size, so we had to find large users quickly. The ESB were 63 per cent dependent on imported oil. An obvious option was to lower their dependence on imported oil and give them a chance to be less in the hands of the oil producers.
We have a big internal market for fertilisers. Even though there will be a surplus for export we would not be dependent on export markets to take what we would produce off our hands because we have a large internal market. Therefore, NET was the second alternative. Those are the two people who got it. It was strategically and commercially the correct decision to take. If at some future date we want to switch that oil or gas from the ESB, the station at Whitegate in Cork has been so designed that that can be done. The correct decision was taken at the time. It is one I stand over and I certainly would not have BGE break their contract at this stage without warning.
If I understood the Minister correctly no contract can be broken at the present time because no contract is signed.
An understanding is there. You do not have to have it signed.
In my capacity as an auctioneer I often have many understandings with people who are buying property but those are not legal until one has the lolly in one's hand and the contract is signed. I do not go for understandings. We are now in the position that there is no contract between BGE and the ESB. We only have a decision made two years ago, the Minister says, to give the gas to the ESB without any contractual arrangements whatsoever. This makes it still easier for us to utilise the natural gas in the best possible way.
The question of getting it out fast and making it viable is not on because Marathon Oil Company might persuade the Government that it is important to maintain pressure at the well head in order to make the whole find viable. The viability of any undertaking comes from the revenue you make from that undertaking. If 45 per cent of the total gas out there is sheer wastage, surely the viability of it must be looked at again? We have proposed feeding it into the premium gas market, the consumer market. This would help to make it more viable. The building of a pipeline to the denser sections of population would make it possible to use it far quicker than the ESB will possibly get around to doing it.
I do not know how long it will take, but surely it will cost £60 million to £70 million to build this generating station. I presume this building is under way now, but no contract whatsoever has been signed for gas. We have spoken a lot about this but we have now made a very important discovery that there is no contract signed and there is only an understanding. Now is the time to reverse the decision made by the Government at that time in the light of expert opinion with regard to the proper use of natural gas and EEC opinion as well. It is not too late to do this and to use it for the maximum benefit of everyone in the country. This is our first find of natural gas and we should start the ball rolling in the right way by the proper utilisation of it. It makes this easier still because we have no contract signed.
I have nothing to add beyond what I have already said. This has been argued over and over again. I have no intention of allowing BGE to break their understanding with the ESB because the ESB have gone ahead on this.
This debate has certainly thrown up a very significant fact now that we were not aware of before, that is that there is not contract. Therefore, there can be no question of breaking a contract. Government decisions have been known to change from time to time. This Government made a decision in 1974 to grant equal pay to women. At the end of 1975 they made a decision not to grant equal pay to women. Then, in 1976, they made another decision that they would probably have to give equal pay to women but they would put it off as long as they could. Understandings were allowed to arise in the minds of many people as a result of those decisions but that did not stop the understandings being rudely changed because the decisions were rudely changed. We now have a position that nobody is breaking a contract with anybody because we discovered there is not a contract.
I said there is not a contract in the formal sense.
I am surprised that the Chair has not ruled our amendment out of order because it refers to a contract already entered into. Could we amend that now to say: "or to be entered into" so that we keep within the rules of order? We are flabbergasted, as I suppose everybody must be, to discover that at this stage there is no contract with the ESB. I suggest to the Minister that this is a glorious opportunity not to go ahead with what is regarded by common consent of everybody outside the ESB lobby as being an unfortunate arrangement.
I would like to draw an analogy with what is being done now in relation to our gas which I think is not too farfetched. If the ESB found themselves in a position that they did not have surplus generating capacity—unlike their present position— and if they were trying to generate electricity from a native source, if they came to an arrangement or understanding with the Department of Lands to buy State forests and if they chopped down the trees in order to make electricity from logs, that would be patently a wasteful use of a national asset and there would be an outcry. What is being done now in relation to natural gas is equally wasteful and there is an outcry from those who are qualified to comment. Perhaps the general public does not see it as clearly because we do not know a great deal about gas. If the ESB were to suggest generating electricity from burning wood from State forests, I suppose it would be feasible but it would be a dreadful waste of timber. The timber is much more valuable than it would be on conversion into electricity. It has been proved beyond doubt that gas is far more valuable if it is not converted into electricity.
The problem the Minister cited originally, of an existing contract being there and that it would be wrong to ask the parties to break the contract, does not arise. The contract does not exist.
Then the Deputy should withdraw his amendment.
We will change the word "already" to "about to be".
The Deputy cannot do that without notice. That is the amendment that has been put down.
We were not told there was no contract; we were led to believe there was. The word "about" is not necessary. We suggest deleting the word "already" and substituting the words "to be". Will the Chair inform me if it is in order to take that verbal amendment?
An amendment may be amended by agreement of the House. The Deputy is suggesting the deletion of the word "already" to be replaced by the words "to be".
Amendment amended, by leave, by the deletion of "already" and the substitution of "to be".
As I said before, the decision was taken by the Government and it stands. There is no contract between any parties referred to in the Bill and, therefore, the amendment has no significance. The fact that it is not formally signed does not make any difference. All that was in question was the price and the terms of the contract. The morality of the contract existed before now. The fact that it has not been officially signed by the chairman of BGE does not alter the Government's decision. The Government took a decision——
The Government also took a decision about equal pay for women.
The Government took a decision that the natural gas find off the south coast of Ireland would be used 60 per cent for the ESB and 40 per cent for NET, give or take some percentage points and that is how the matter stands.
If we win a vote on this, what are the consequences?
I never answer hypothetical questions.
Is the amendment withdrawn?
No. Will the Chair please put the amendment?
Amendment, as amended, put.
The Committee divid ed: Tá, 55; Níl, 61.
Tá
- Allen, Lorcan.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Briscoe, Ben.
- Brosnan, Seán.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Carter, Frank.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Crinion, Brendan.
- Cronin, Jerry.
- Daly, Brendan.
- Lynch, Jack.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Nolan, Thomas.
- Noonan, Michael.
- O'Connor, Timothy.
- de Valera, Vivion.
- Dowling, Joe.
- Fahey, Jackie.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin Central).
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Gibbons, Hugh.
- Gogan, Richard P.
- Haughey, Charles.
- Hussey, Thomas.
- Kenneally, William.
- Kitt, Michael P.
- Lalor, Patrick J.
- Loughnane, William.
- Lynch, Celia.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Timmons, Eugene.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Belton, Luke.
- Belton, Paddy.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Dick.
- Burke, Joan T.
- Burke, Liam.
- Byrne, Hugh.
- Clinton, Mark A.
- Collins, Edward.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan.
- Coughlan, Stephen.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Maurice.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Governey, Desmond.
- Griffin, Brendan.
- Halligan, Brendan.
- Harte, Patrick D.
- Hegarty, Patrick.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Keating, Justin.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Connell, John.
- O'Donnell, Tom.
- O'Sullivan, John L.
- Pattison, Seamus.
- Reynolds, Patrick J.
- Ryan, John J.
- Spring, Dan.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Tully, James.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
Amendment, as amended, declared lost.
Section agreed to.
Section 36 agreed to.
SECTION 37.
I move amendment No. 5:
In page 23, subsection (1), to insert "or got" after "landed" in line 49.
Amendments Nos. 5 and 5a are related and may be taken together.
My amendment and that of Deputy O'Malley and Deputy Barrett say virtually the same thing. However, the problem there might be that if gas was found and it was not of commercial quality and did not merit exploitation, it would still have to be offered to the gas board, whereas the word "got" covers the situation that if it is found and can be exploited, then the Gas Board must get it. There is not much difference between the two amendments and if the Opposition wish I can accept theirs. However, I think the word "got" covers the situation just as well.
There may have been an error in typing amendment No. 5a, because what I wrote, as far as I can remember, is: "all natural gas discovered within the jurisdiction of the State". The point I would make to the Minister in relation to his amendment and to our 5a as it appears there is that it is only gas got in the State. Gas got outside the State but within the jurisdiction of the State is not covered. What I mean by that is that the State consists of the land of Ireland and three miles beyond it, but the jurisdiction of the State so far as gas and hydrocarbons generally are concerned extends to the edge of the Continental Shelf or as defined in these various orders. That is not covered.
The section reads:
(1) Subject to subsection (2) of this section, all natural gas landed in the State, for consumption therein, by the licensee under an exploration licence or the lessee of a petroleum lease shall be offered for sale to the Board on reasonable terms...
Could I make the suggestion to the Minister that the matter could be put beyond doubt if the section read: "All natural gas landed or got within the jurisdiction of the State"? That would cover both points.
The commas are important here, is that correct?: "All gas landed, or got within the jurisdiction of the State, should be offered...".
No, the commas could be left out: "landed or got within the jurisdiction of the State". You could leave it either way. It is not necessary to have the commas.
Would it be questioned then that "landed within the jurisdiction of the State" would mean the gas should be landed within the Continental Shelf?
"Landed" means brought to land, but the point I am making is that "got in the State" will only cover what was got on land. It will not cover what is got on the Continental Shelf.
It would appear that the Minister and the Deputy are changing the terms of the amendment without previous notice to the Chair.
If you would give us a little latitude, Sir, we might be able to tease out a suitable amendment which we could accept jointly.
Provided the Chair has notice of the amendment that is before the House.
An alternative would be to say: "All natural gas landed within the State, or got within the jurisdiction of the State,".
Section 37 (1) if amended, would now read: "Subject to subsection (2) of this section all natural gas landed in the State or got within the jurisdiction of the State shall be...".
Is this the amendment proposed?
I suppose to be in order, we should both withdraw our existing amendments as printed and substitute the one proposed by Deputy O'Malley.
The agreed amendment would then read: "Subject to subsection (2) of this section all natural gas landed in the State, or got within the jurisdiction of the State,...".
Amendment No. 5, by leave, withdrawn.
Amendment No. 5a not moved.
New amendment:
In page 23, subsection (1), line 49, after "State" to insert ", or got within the jurisdiction of the State,".
Agreed to.
I move amendment No. 5b:
In page 23, subsection (1), line 49, to delete ", for consumption therein,".
The purpose of this amendment is to give the gas board control over all gas landed or got within the jurisdiction of the State regardless of whether it was for consumption within the State or, being optimistic, in the event of our finding more gas, or whether the gas board were involved in the export of gas landed or got within the jurisdiction of the State.
If the House agrees, amendments Nos. 5b and c may be taken together. We can take them separately although they seem to be related.
We will take them separately. The reason for amendment No. 5b is to give the board control over gas, landed or got within the jurisdiction of the State, and that even if some of that gas is not for consumption in the State the board would have control over the export of that gas. It says very definitely "for consumption therein" meaning the State. The licensee in this case shall offer the gas for sale to the board at reasonable terms.
There is some difficulty here. I see what is intended by the amendment but there would be some interference in another Minister's Department if I accepted this amendment, because the Minister for Industry and Commerce is the licensing authority and he sets down the conditions under which a field will be exploited, admittedly in consultation with the Minister for Transport and Power. It is conceivable that at some future time, when all our energy needs in this country are met, that that Minister could say: "This field may be exploited. You have permission to export directly without bringing it into this jurisdiction". If I were to agree to that I might be to some extent dictating that it will not be possible to issue licences under these conditions in that regard. I would be interfering with the issue of licences and the conditions attached to them, which are the responsibility of a separate Department. Section 36 covers that end of it.
That is the very point that the amendment is trying to meet, that there will be, I hope, a situation where quantities of gas will be landed which could not be for consumption within the State. What we are trying to achieve is that they would be landed anyway even if they were not to be consumed within the State.
That is quite possible within the confines of this Bill but the Minister for Industry and Commerce has power to issue licences for exportation and attach to them such conditions as he thinks fit. One of the conditions in 50 years' time if we were overflowing with gas or energy could conceivably be that a person could develop a field and export the proceeds without landing it in this country. It could create difficulties. The licence, and the conditions attached to it, which the Minister would issue for the development of any field would be issued after consultation with the Minister for Transport and Power. Therefore that Minister would have a say in the conditions.
Amendment, by leave, withdrawn.
I move amendment No. 5c:
In paragraph 24, lines 4 to 13, to delete subsection (2).
The Chair was right in saying that the last two amendments were related. I am sorry for saying that they were not.
The purpose of this amendment is to try not to give an out from the obligations imposed by subsection (1) for people who have licences, where the gas has to be offered to someone other than the board. I presume that in the existing licences there is no such provision.
The licence issued by the Minister for Industry and Commerce says the gas must be landed in Ireland and does not say to whom it has to be offered. This legislation says it must be offered to the Gas Board.
The difficulty is that we would prefer to see that the Gas Board would be offered all the gas that was going, anyway, if that is feasible. That is the purpose of the amendment.
That is the general principle behind the legislation, that the Gas Board should get all the gas that is offered; but there are situations which can be visualised where it might not be desirable to do this. An example which I gave was that supposing we had one or two more finds and we established a grid which extended roughly from Galway down east and south, and that is all the gas we have. But supposing at some later stage there is a very small field of gas found off the north coast of Donegal, and at the same time, coincidentally, we get a huge industry here which wants a large supply of natural gas and would be willing to take the total find out of this field, it would seem unreasonable to put a third party between that industry and the gas field and to let the Gas Board direct the find to that industry on a separate contract basis. It is one of these things that might never arise but which we feel we should bow towards it in case it does happen.
Amendment, by leave, withdrawn.
I move amendment No. 5d:
In page 24, subsection (3), line 17, after "1954" to add "In any such arbitration the arbitrator shall not take into account expenditure by any party negotiating with the Board other than expenditure on the Block in which natural gas concerned shall have been found."
The purpose of this amendment is to ensure that in any arbitration hearing, the company concerned, which in all probability will be a multi-national or part of a multi-national, will not be able to set off losses incurred in another oil field far removed from the particular block in which they are now negotiating, which is the subject of arbitration, that no losses other than losses incurred in expenditure on the block in which the natural gas concerned shall be found will be taken into consideration at any arbitration hearing.
The principle that only relevant and appropriate expenditure should be taken into account is entirely acceptable. It is not clear that the very explicit restriction provided for in the amendment would be satisfactory in all cases and therefore it is felt that in relation to all other matters relevant to possible arbitration proceedings the elements to be taken into account should be left for settlement by the arbitrators in the light of the arguments of the parties involved. I have no doubt that the arbitrators will not allow the situation as envisaged by Deputy Barrett, where a company with a licence in Donegal and another one in Cork would be allowed to charge off the Donegal explorations against the find in Cork in determining the price.
One of our principal reasons for putting down this amendment is because of the structure of multi-national companies. They have been known to set off expenditure in Timbuktu against expenditure somewhere in the North Sea. It is because of the structure of multi-nationals that they can and do get away with this. It should not be left to the arbitrator to decide this because multi-nationals are so adept in setting off expenditure that I do not think an Irish arbitrator would be able to counteract them. It has not been possible for years to counteract them throughout the world because of the structure of different companies under the parent company. The Minister should accept this amendment and not leave the matter for decision by the arbitrator.
It is very much in our interest as a country and specifically in the interests of the board that they should go in because it will serve to keep down the price which the board will be called on to pay as a result of the arbitrator's finding. This happens everywhere exploration is going on: the principal objective of the multi-national companies is to ensure that they write off the maximum amount of expenditure against a single find. Since they have been doing it in the North Sea not just in relation to different fields in the North Sea but in relation to different countries altogether, they will certainly do it here. Not only will you have a sort of situation that the Minister said he was sure would not arise, that if they drill off Cork and drill off Donegal and find nothing off Cork they will try to set off their Cork expenditure against their Donegal find—they will certainly do that, but they will also probably set off their Nigerian expenditure. Unless the arbitrator is given power to say: "I am not interested in your accounts with everything fiddled around and mixed up so as to confuse; I want the dockets to show what you spent in block 407, 70 miles west of Donegal and nothing else. You cannot put down £3 million that you have spent off Lagos last year or £5 million that you spent off Cork". If the arbitrator has not that power he will not be able to stop them putting in their Cork expenditure against their Donegal find. This has been shown to be the case in other countries. They could not stop this practice and we will not be able to stop it unless we have a specific power here.
I remind the Minister that it is very much in our interests because what is being arbitrated is the price the board will pay to the discovering company which must at least be partially a multi-national, in a consortium. It is very much to the national advantage that the arbitrator should have power to disregard what we would call irrelevant expenditure. otherwise, the price will be pushed up considerably by setting off expenditure on other blocks. It will mean that if there is one successful find by a company they will set off all their expenditure against that. This will drive up the price of the gas. Without this power the arbitrator will have no option but to award a very much higher price because he has to take into account that they spent £50 million whereas in fact they may have spent £5 million on that particular block.
I can see the purpose of the amendment and I have a lot of sympathy with its object, to keep the price of gas as low as possible, but we might be doing ourselves harm if we allow this amendment through. Take the situation where there are adjoining blocks and a company drills four holes in, say, block 72 and the final hole in block 73 is the one that strikes oil. Even though it is all in the one series of drillings, just because of a line on a map they would not be allowed to include the cost of the other four drillings in the price charged for the gas in the adjoining block. If the five holes had all been drilled in the one block and the fifth one was oil-bearing, according to this amendment they would be allowed to charge all five drillings against the cost of the find. The amendment might be seen as restrictive and might discourage in some way applications for blocks and licences and generally discourage exploration which we want.
I do not think there are any adjoining blocks.
Given to the same people?
I am nearly sure there are. The Marathon case is one example.
That is a different thing. That is where they got a whole load——
Subject to correction, I am pretty certain that some adjoining blocks off the Fastnet are in one group. It could present a problem in that regard. A company that did all the drilling within one block could charge it all against one find whereas if they happened to go into the adjoining block they would not be allowed to charge for the wells they had already drilled.
The arbitrator is not as tied as Deputy O'Malley seems to think as regards the documents he can demand. Because there is this provision I think he can ask for any papers he wants and can ensure that they are the papers that will give him the true facts regarding costings in exploring and exploiting a find of gas.
In the past when blocks in the North Sea were auctioned there was an instance where the Shell Oil Company paid £23 million for one block and another company paid about £500,000 or some small sum for an adjoining block. The Shell Oil Company found nothing and the other company were successful in the adjoining block. I do not think the £23 million should be written off against a gas find on the south coast or the west coast if something similar occurred here. We should be ahead of this situation. Because of the multi-national structure these companies are capable of making such a situation arise. This has happened and they have got away with it. We want to ensure that they do not get away with it at our expense and we should not leave it for a decision by the arbitrator in the final analysis. We should have provision in the legislation to ensure that this practice will not be continued here.
I have a great deal of sympathy with the view that they should not be allowed to get away with any more than they are entitled to. But I see the danger also and I have established now that there are adjoining blocks in the hands of the one company.
Deputy Collins makes a compromise suggestion which I think is a good one to meet the point which the Minister has made. If we substitute the word "field" for the word "block" in the amendment, that would meet what the Minister has in mind. "Field" could be 100 blocks or more. If they have two or three blocks in the field let them set off——
We shall not be taking the Report Stage tonight and if the Deputy would allow me to discuss that matter with Industry and Commerce to consider the implications of it, of which I am not sure, it can be taken on the Report Stage, if necessary.
Is the amendment withdrawn?
Yes, on the understanding that it can come up again on the Report Stage.
Amendment, by leave, withdrawn.
Section 37, as amended, agreed to.
Sections 38 to 44, inclusive, agreed to.
FIRST SCHEDULE.
I move amendment No. 5e:
In page 26, Article 5, line 31, to delete "five" and substitute "three".
This opens up an entirely new field and the Minister would have difficulty in finding people to serve on this board who know anything about the natural gas industry. In the event of the Minister appointing a board and discovering after a year that the members have no proper knowledge of the activities that should be discussed at board level, we consider that five years is too long for service on the board and our amendment proposes three years, which we regard as sufficient. It makes it more flexible for the Minister to take action if board members were not pulling their weight in discussing matters in this new field. This is the case in other State boards.
I can appoint for three years or for five years and I would probably adopt that attitude. It is undesirable that a board should be changed entirely after a stated period and the Minister can appoint members for five years or for two, three or four years. I would not agree to the suggested change. Five years applies to most State boards.
Amendment, by leave, withdrawn.
First Schedule agreed to.
SECOND SCHEDULE.
I move amendment No. 6:
In page 30, Article 4, to substitute "Article 3 (1) (b)" for "Article 3 (b)" in line 47 and "Article 3 (1) (a)" for "Article 3 (a)" in line 49.
This is a drafting amendment consequent on a misprint.
Amendment agreed to.
Second Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Tuesday, 29th June, 1976.
