I move: "That the Bill be now read a Second Time."
The purpose of the Bill is to provide authority for the Minister for Finance to increase the authorised share capital of Irish Shipping Limited by 10 million additional ordinary shares of £1 each. In addition the Bill provides for an increase of £10 million in the amount of borrowings by the Company which may be guaranteed by the Minister for Finance and for the guarantee of the Company's borrowings by the Minister for Finance in currencies other than the currency of the State.
The Bill will raise the ceiling on the Company's total authorised capital to £22 million and will raise the limit on guaranteed borrowing to £15 million.
The enactment of the present Bill is necessitated by the need to make provision for the capital and borrowing requirements of Irish Shipping Limited in respect of a new bulk carrier and for the financial needs of the Company over the next few years. This vessel is one of the proposed contracts for Verolme Cork Dockyard which the Government announced on 30 July 1980.
Irish Shipping Limited will place the order for the vessel without delay and it is expected that the vessel will be completed about December 1982. It is estimated that the final cost of the bulk carrier will be in the region of £25 million.
The Company has been in a position to fund the acquisition of vessels in the past without recourse to the Exchequer. Indeed 1959 was the last occasion on which the authorised share capital of the Company was increased.
Irish Shipping's principal activity is the operation of deep-sea ships on the international tramp shipping market and this vessel will be used in that trade. This market has been depressed over a number of years because of an oversupply of tonnage and the reduced demand for it. Indications are that this position has corrected itself to a considerable extent and freight rates have improved. In spite of this improvement shipowners still have to contend with the problems arising from worldwide inflation and, in particular, the ever-increasing burden of fuel costs.
Irish Shipping, in consideration of its objective to operate within the framework of a commercial company, would have deferred the acquisition of this ship for some further period. In deference to the Government's concern to provide contracts from the public sector for Verolme Cork Dockyard it advanced its plans in this regard. The Company is not, however, in a position to finance the building of the ship without Exchequer assistance at this stage. It is therefore proposed that the cost of the vessel will be funded by a combination of equity to the Company, borrowing by the Company and the payment of subvention to the yard.
When the company was incorporated in 1941 the mandate given to it was to maintain a fleet to meet national requirements in time of need and to operate commercially thereafter. The measure of its success is that for the past thirteen consecutive years the company has made a profit and has financed its operations and capital programme entirely from its own resources.
The company is involved in a number of ancillary activities which provide alternative sources of revenue to compensate for the inevitable slumps which are endemic in the shipping industry. These activities have made a major contribution towards the achievement of the company's profit record over the past thirteen years and has helped to overcome the adverse effects of a prolonged and severe recession in the world shipping industry.
Irish Shipping Limited are confident that they can operate the new vessel successfully and profitably when it comes into service.
The recession which has been affecting the shipping industry has also in turn caused problems for the shipbuilding industry. Verolme Cork Dockyard has been facing serious financial problems and a lack of orders. The Government took steps to alleviate the situation by arranging for contracts to be placed for the building of two new naval vessels for the Department of Defence, a fisheries research vessel and the bulk carrier for Irish Shipping Limited, in order to protect the jobs of a highly skilled work force.
The continued development of Irish Shipping Limited is important in the furtherance of national development and its activities are of very considerable direct benefit to the economy. It provides well-paid employment for 950 people and its total annual payroll is over £5 million. The present bulk carrier order will provide employment at Verolme Cork Dockyard for the next two years which is a very valuable contribution at the present time to the Government's campaign to maintain existing employment and create new jobs.
The provisions of the present Bill will enable Irish Shipping to expand its deep-sea fleet. I accordingly recommend the Bill to the House.