asked the Minister for Energy the impact on the finances of the Irish National Petroleum Corporation of the terms of supply introduced by him during 1989.
35.
Ceisteanna — Questions. Oral Answers. - Irish National Petroleum Corporation.
2.
asked the Minister for Energy, in respect of the agreement made between him and the oil companies on 13 April 1989, and the subsequent joint statement issued, the way in which the Irish National Petroleum Corporation will produce additional petrol supplies at below world market prices and make these available to the oil companies; the meaning of the term "cost recovery basis"; and if he will make a statement on the matter.
I propose to take Questions Nos. 2 and 35 together.
The agreement referred to in Deputy Bryne's question was concluded between the Minister for Industry and Commerce and the oil companies. Part of that agreement was that INPC would make available to the companies an additional quantity of petrol at cost, and well below the prevailing market prices.
The additional quantities of petrol were over and above the normal 35 per cent Whitegate supply produced by INPC during April and May 1989, and amounted to a further 25 per cent of Irish market requirements for a period of six weeks. This additional volume was supplied to the oil companies on a cost recovery basis, that is, the price supplied ex-Whitegate was equal to INPC's purchase and production costs.
It was part of the agreement, also, that INPC would continue to supply its normal 35 per cent up to 40 per cent below market prices, which for this volume gave rise to a loss for the company in the period in question — April to June 1989 — but resulted in consumer prices being lower than they would otherwise have been during the same period. These losses are being recovered in current prices and INPC's accounts for its normal domestic market supply will have been restored by the end of 1989.
Could I ask the Minister what was the ultimate point in imposing these losses on the INPC if, as he says, the motorists have had to make up for them in the intervening years by having to sacrifice the reductions in the price of petrol that have otherwise accrued?
It was a decision made by the Government at the time and I am not party to the reasons why that decision was made.
Would the Minister, in the future, envisage a situation where he would ask a State company to incur losses of this nature on assets that they held by selling below market price?
I would hope not.