asked the Taoiseach the nature of the communications he has had with the British Prime Minister since the beginning of July 1984 on the subject of the Kinsale Gas Pipeline Agreement with the Northern authorities.
Ceisteanna—Questions. Oral Answers. - Kinsale Gas Pipeline.
4.
In my contacts with the British Prime Minister since the beginning of July 1984, I urged that the Kinsale gas project should proceed on the terms set out in the agreed Memorandum of Understanding signed on behalf of both Governments in October 1983, which was drawn up so as to be fair to both parties and which took full account of uncertainties about future energy prices, exchange rates and demand. The Prime Minister was unable to accept the case I made and, as Deputies will be aware, the British Government subsequently indicated that they would not go ahead with the project.
Would the Taoiseach accept that the breaking of this contract represents a loss to the economy of approximately £600 million? Secondly, does he accept that it was a serious breach of faith on the part of the British Government to renege on this deal that had been solemnly signed? Thirdly, will he agree with me that it is the most serious setback to North-South co-operation in the last number of years? Will he make available to this House the contents of the letters which passed between him and the British Prime Minister so that we can judge whether a good relationship existed or if the language used in the reply was of a very curt nature?
I would not like to put a figure on the loss involved. The calculation would be very complex, so I must leave the Deputy with his figure. I could not confirm it or offer an alternative. The calculation of the loss involved depends ultimately on the alternative use to which the gas is put and the alternative value got for it. To say the least, that is highly speculative.
We were disappointed that the understanding which was signed was not carried forward into full agreement. As regards the correspondence, it would be contrary to practice to publish the contents of private correspondence between the Prime Minister and me. I wrote to her on 10 July and received a reply on 1 August. I responded to that on 8 August by way of a message to her. A reply was received to that on 21 August. We had a further brief discussion on the subject on 3 September. It would not be appropriate to publish the correspondence. I very much regret that the understanding reached has not been implemented. It is a serious set back to economic relationships between North and South. The implementation of the understanding would have represented the biggest single act of North-South co-operation open to the two Governments.
I did not dream up the figure of £600 million. That figure was used by the Minister at the time when, in the full glare of publicity, the agreement was signed. Will the Taoiseach confirm that what was signed on 10 December was an agreement? The Taoiseach did not comment on whether the language used by the British Prime Minister was curt in the extreme.
What was signed was a memorandum of understanding.
Does the Taoiseach consider that to be an agreement?
It is an agreement to agree. It carries with it certain penalties for not fulfilling the agreement to agree.
Therefore there was an agreement?
It is an agreement to agree which carries with it certain penalties if it is not carried forward. It is a normal procedure.
If there are penalty clauses there must have been an agreement.
The figure of £600 million could be a fair representation of the value of the gas to be sold. The Deputy suggested there would be a loss of that amount but that depends on what alternative use we put the gas to in the circumstances of not selling it to Northern Ireland. That is more difficult to assess.
I refer the Taoiseach to a statement issued by Mr. Adam Butler, Minister at the time. He did not speak about an agreement to agree but the fact that he clinched a deal for the supply of Kinsale gas to Northern Ireland on 10 October 1983. He stated that the agreement meant there would be gas industrial jobs for people in the next century. Clearly there was an agreement and a serious breach of faith by the British Government. Clearly the Taoiseach was repudiated by the British Prime Minister at the time for attempting to interfere in her decision. It was her decision in the final analysis that killed this deal.
The decision to end the deal was made by the British Government. They decided not to proceed with it in what they regarded as changed circumstances. We did not regard that as an adequate reason for not proceeding because the deal contained within it provision for flexibility and allowed for the possibility of a whole range of take-up of the gas. Although the British Government made the point that a further examination and consideration of the prospects suggested that the demand for the gas would be less than the maximum figure originally provided for, the figure which then emerged, according to their studies, was within the range contemplated by the agreement. It did not, therefore, seem to us to be grounds for not proceeding with the agreement. That point was made very forcibly by us to the British Government at the time.
The Taoiseach gave them time to get off the hook.
Was there any clause as regards cancellation of the agreement? Is the Taoiseach aware that the Cooper Lybrand report spells out quite clearly that the case for the supply of Kinsale gas to Northern Ireland is as strong today as it was then? Did he mention this at the last Summit in December with the British Prime Minister or has he taken any steps to resurrect that deal which could be of significant benefit to both the North and South?
If there is any possibility of reviving it, we will certainly do so. The memorandum of understanding provided that a capital contribution of £5 million sterling was payable to the Minister for Energy when the memorandum was signed. If the parties agreed not to proceed with the project this contribution would be refunded except for 50 per cent of the expenditure which had been incurred on the pipeline before the termination of the project. We do not accept that we have agreed not to proceed with the project.
Is the Taoiseach taking any steps to resurrect the deal?
Two weeks ago the Minister for Finance visited Dundalk. He was widely reported in the Drogheda Independent and Dundalk Press as saying that the natural gas pipeline would come to the Border and that a decision would be taken on it very shortly. In view of the difficulty of establishing this fact, I would be grateful if the Taoiseach would clarify the matter.
We are seeking money from the Regional Fund in order to proceed with the pipeline as far as Dundalk.
Is the Taoiseach saying that he kept the money that was paid in as a penalty?
By any interpretation of the agreement the £5 million is payable by the British Government.
There is no penalty for cancellation? So much for the good relationship that exists.
A one-sided relationship.